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Tax breaks, financial support for social enterprises to aid inclusive growth

Audit firm, social responsibility group launch award to support enterprises driving social change and inclusive growth in PH.
By Toni Antiporda |

 

TOP PRIZE. Iligan-based social enterprise Ecosystems Work for Essential Benefits, Inc. (ECOWEB), which produces natural fertilizers and pest repellents from the biological waste of different neighboring communities, bagged the top prize in Developmental Social Enterprise Awards 2015. Photo from ECOWEB’s Facebook page

 

Manila, Philippines – Tax breaks and other forms of financial support should be provided to homegrown social enterprises as they have the potential to boost inclusive growth in the country, especially in rural areas where agriculture is the primary source of livelihood.

 

This was the recommendation made during the launch of the Developmental Social Enterprise Awards (DSE Awards) 2016 on Wednesday, February 24.

 

"If we want to preserve the spirit of social entrepreneurship, social enterprises deserve a separate tax regime," said Alexander Cabrera, chairman and senior partner at audit firm PricewaterhouseCoopers Philippines (PwC Philippines), organizer of the DSE Awards.

 

Cabrera also suggested that social enterprises be given either a 5% tax break or a fixed tax rate in order to improve their profitability. "I believe in a progressive tax regime. Let's give the tax breaks to those who really need it," added Cabrera.

 

But even with the tax breaks and other exemptions, social enterprises will never be exempt from the high cost of doing business, noted Antonio Yap, chairman of social responsibility firm Benita & Catalino Yap Foundation (BCY Foundation), another organizer of the DSE Awards. "But they should make money in order to be sustainable, because they're using business as a tool to push for social change and inclusive growth," added Yap.

 

 

COMMUNITY-SHARED AGRICULTURE. Good Food Community, last year’s finalist, created an alternative distribution system which connects farmers with urban consumers. Photo from Good Food Community’s Facebook page

 

Recognizing social entrepreneurs

PwC Philippines and the BCY Foundation first launched the DSE Awards in 2014 to recognize and support social enterprises in the country. “We want to recognize entrepreneurs who use business as a tool to improve society and promote inclusive growth in the country,” said Cabrera.

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Developing SMEs (small and medium enterprises), most especially social enterprises, should be a part of the “strong ecosystem” which can enable inclusive growth in the Philippines, argued Cabrera, who also called for better partnerships between entrepreneurs, the academe, and the government.

 

"Dole outs are not enough. We need tools and mechanisms to promote inclusive growth—SMEs can help in promoting inclusive growth," said Cabrera. “It's just hard to put a number on the actual impact of social enterprises on the GDP (gross domestic product), because a lot of them still remain underground,” as some failed to properly register their businesses.

 

“The entrepreneurial spirit in the Philippines is high. But it can be very vague, which is why we need to educate people more about business and its best practices,” Yap added.

 

 

INCOME-GENERATING PROJECT. Coffee for Peace, another finalist last year, started out as an income-generating project of peace mission agency Peacebuilders Community, Inc., where they transformed civilians and rebels from war-torn areas into coffee farmers. Photo from Coffee for Peace’s Facebook page

 

Who can join

Social enterprises, from cottage industries to medium-sized businesses, that have been operating for two years, with well-defined social objectives, and an asset cap of P50 million ($1.05 million), can be nominated for the DSE Awards. "These are the businesses that really have an impact to the GDP,” said Yap.

 

Through these criteria, they can find out which social enterprises have demonstrated actual success in its operations and have shown commitment to scale up. “Social enterprises should agree to certain metrics and requirements, so that their social impact can be measured and not just serve as PR (press release),” stressed Yap.

 

 

What's in store for the winner

The winner will receive a cash prize of P250,000 ($5,245.35), plus free consultancy services with PwC Philippines. "The support [from PwC Philippines and the BCY Foundation] is actually more expensive," said Yap.

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In 2015, PwC Philippines received hundreds of nominations from all over the country, which included social enterprises in education, services, and the agriculture sector. However, the list was narrowed down as judges did ocular inspections in a nominee’s place of business.

 

"Determining the social impact of these social enterprises is hard. As part of our criteria, we also have that intangible of inspiration," added Cabrera.

 

But the DSE Awards is not just about the money. "The benefit of winning this award is not just the money, but the affirmation that they [social entrepreneurs] are on the right track, and that their social enterprise is worthy of replication and expansion.”

 

The deadline for nominations is on Thursday, May 12, 2016. The awarding ceremony will be held in July 2016. For more information, visit www.dseawards.com

 

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Toni is the deputy associate editor of Entrepreneur.com.ph. Follow her on Twitter, @toni_antiporda.

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