MANILA, Philippines — Among the opposing great forces of human nature are: self-interest and caring for others. In business, the former is simply called “corporate greed” while for the latter, we put many labels to it – “corporate philanthropy,” “corporate social responsibility,” and just recently, “social enterprise” or “social business.”
What is Social Enterprise or Social Entrepreneurship?
How do you define social enterprise and how is it differentiated from a profit-oriented business? The term was originated by Bill Drayton, a famed social entrepreneur and founder of Ashoka Foundation. As its central organizing principle, social enterprise aims to directly and deliberately address societal inequality. Its primary objective is to maintain or uplift social conditions that go far beyond financial criteria usually mandated by traditional corporate funders and other stakeholders. In contrast, the first priority of business is mainly geared towards economic accomplishment. A typical business by its very nature has to show profits at least equal to its cost of capital otherwise, it will fold up and cease to exist.
In doing its social mission, a social enterprise as a private organization, shares similar business characteristics. It applies most of the usual business strategies or methods to achieving its philanthropic mission. It also derives most of its revenues from regular trade operation. Thus, a social enterprise is not charity but a typical business in almost every sense. For instance, it sells high-quality products on a full-cost recovery basis but at subsidized prices to certain target markets. Profitability is equally important to a social enterprise to make it self-sustaining while attaining its social mandate.
There are no typical high monetary rewards associated with good job performance when you work for a social enterprise. It has to rely on the goodwill and/or non-pecuniary motivations from all key stakeholders involved. For example, funders may provide capital at lower lending rates or may decide later not to get their investments back. Goodwill and strong self-motivation are also critical for organizers, volunteers as well as employees (who are usually paid below standard rates) without which, they may not be able to maintain their strong zeal of enthusiasm in rendering their unconditional service to community.
Social enterprises also directly address social needs and other non-financial goals through their own products, services or through the work rendered by marginalized people or volunteer workers within the organization. This differentiates them from “socially responsible corporations” which create laudable social change indirectly through the practice of what we technically call ‘corporate social responsibility’ (CSR).
In addition to revenues earned from their main trade operations, social enterprises also receive charitable contribution and public sector subsidies. This also distinguishes them from traditional non-profit or non-government organizations, which rely primarily on philanthropic or government support.
It should also be noted that social business and social entrepreneurship are not one and the same. The latter is a very broad concept, according to Dr. Muhammad Yunus, Grameen Bank founder and recipient of 2006 Nobel Peace Prize. Generally, any innovative initiative to help people may be described as social entrepreneurship and that initiative may be economic or non-economic in nature. Social business therefore is a subset of social entrepreneurship and all those who design and run social enterprise are social entrepreneurs. But not all social entrepreneurs though are engaged in social business, Dr. Yunus added.
Encouraging Trends in Social Enterprise Development
The idea of social enterprise/entrepreneurship has a long historical origin, though under different names and varied priorities. Today, this concept has become a popular social movement currently initiated in a big way by Ashoka Foundation, Bill Gates Foundation, Skoll Foundation, Schwab Foundation for Social Entrepreneurship, and Grameen Bank, to name a few.
Just like CSR, the concept of social enterprise is slowly emerging in the Philippines because of our pervasive poverty and other growing concern and expectation of the community resulting from various social and environmental pressures. To start off, we have the Philippines Business for Social Progress (PBSB) which was founded in 1970 by a group of business executives coming from 50 Philippine corporations. In response to the social and economic needs of poor Filipinos, PBSB introduced among others, a social credit facility program for its underprivileged beneficiaries.
Gawad Kalinga is also worth mentioning with its wide presence not only in almost 2,000 communities nationwide but also in other developing countries such as Indonesia, Cambodia and Papua Guinea. Aside from being involved in building homes for the homeless, it has also undertaken among others, a nation-building movement in its rescue and rehabilitation efforts during major disasters and calamities.
Our other social “pathbreakers” at the domestic front include: Go Negosyo; MicroVentures that recently launched the Hapinoy Sari-sari Store Program nationwide with the end-goal to train 150,000 women small store owners within 5 years; Rags2Riches (rag-makers in Payatas dumpsite); Atikha (providing social services to OFW families); PhilSEN, Human Heart Nature, Ashoka-Philippines, Chit Juan’s ECHOstore, etc.
Behind every successful social business are the extremely generous and deeply committed social entrepreneurs who have the strong vision for social change without any personal agenda in mind. Not only are they highly motivated with strict ethical discipline and strong character, they also possess an admirable notion of stewardship for the organization’s social mission. As such, they set aside self-interest for financial gain but instead put a firm belief in their own ability to alter society at its core and make a difference.
After having said all about ‘caring for others,’ you may still want to ask: “How do we distinguish an ordinary person from a social entrepreneur?” Answer: “The former sees to believe; the latter believes to see.”
Happy New Year everyone!
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(The author is a member of the Financial Executives Institute of the Philippines (FINEX). For comments, his email address: email@example.com).