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What you need to know about social enterprises

Here are the basic information you need to know about social entrepreneurship.
By Press Release |

 

The term “social enterprise” has been making waves in the recent years. It’s already reached both the senate and congress where a Magna Carta for social entrepreneurship is in the works. Unfortunately, one of the problems that has stalled the movement of the bill is a definition of the term “social enterprise.”

 

There are many ways to define and describe a social enterprise. But for every definition, there’s always going to be another question waiting to be asked. It’s a discussion that begs to be shared, probed, and understood. Let’s get the ball rolling and start with a few basics on social entrepreneurship. 

 

 

1. What’s an easy to understand— but accurate—definition of a social enterprise?

Definition:
Think of it as the intersection of a social problem and a business. A social enterprise applies commercial methods to solve a problem in society, thus making a difference in people’s lives and in the environment.  Social Enterprises are sustainable, income-earning, and address an urgent social need.  

 

2. Businesses are solving the problem of unemployment by providing jobs. How come they aren’t social enterprises?

Business intentions:

Traditional businesses are essential to providing opportunities for employment, but what are their business intentions? They need to be committed to solving an urgent social problem and their benchmark for success must go beyond profit.  Despite their differences, this isn’t to say that traditional businesses can’t learn from social enterprises and vice versa. 

 

3. If it’s not like a traditional business, how is a social enterprise different from an NGO? 

 NGO’s vs. business enterprises vs. social enterprises:

There are characteristics unique to NGOs, Social Enterprises, and Business Enterprises. Let’s take a look at some of their differences:  

 

Business Enterprise

NGO

Social Enterprise

Benchmark

Financial returns

Social Returns

Multiple bottom lines- people, planet, and profit

Attitude towards earned income

Positive; part of life

Uncomfortable

Means to an end

Attitude towards profit

Reason to exist

Uncomfortable

Tool for sustainability

 

4. What are the multiple bottom lines that a social enterprises uses as its bench mark?

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 The multiple bottom line:

The bottom lines include People, Planet, and Profit. “People” refers to the fair and beneficial labor practices that affect the community and individuals with which a social enterprise does its business. “Planet” pertains to observing sustainable environmental practices. And finally, “Profit” is the organization’s earnings after cost of inputs and capital have been deducted. It’s important for social enterprises to make a profit. It assures their sustainability and enables them to scale up. It also counteracts the notion that social enterprises are unpredictable and risky. 

 

5. Apart from income augmentation, what else can a social enterprise do? 

Categories of social enterprises:

There’s a common understanding that social enterprises augment income. While this is true, they actually aren’t limited to this. For starters, social enterprises have also empowered women and provided solutions to health and environmental problems. 

 

There are three categories to which social enterprises can fall under, perhaps even more. But let’s start with three: (1) Livelihood provisions, (2)Bottom-of-the-pyramid support products (3) support services.

 

A brand like Human Nature works with communities that produce the materials needed for their products thus providing livelihood. Bottom-of-the-pyramid refers to marketing directly to marginalized persons and improving their access to basic goods and service. One example is a company called Botika Binhi that sells generic medicines to marginalized communities.  The stores are owned and operated by the community and trained by Botika Binhi. And finally, support services, as the term suggests, provide support to social enterprises. For example, Upland Marketing Foundation consolidates products from community-based enterprises, brands them, and sells them in major supermarkets.

 

Beyond these categories, a social enterprise can still do almost anything. What they’re doing today can change by tomorrow as more entrepreneurs innovate and challenge society. The same goes for traditional corporations and businesses that have the potential to implement practices similar to social enterprises. It may result in more questions but more solutions too.  

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Are you thinking of starting a social enterprise? Do you have concerns or questions about it?  Tag @BPISinag on Facebook and Twitter and let’s talk. BPI Sinag also believes in healthy discussions about social entrepreneurship in order to elevate the public’s understanding, and encourage more Filipinos to look into  it.

 

This article was created based on the presentation of Professor Jose Gerardo A. Cruz of the Ateneo Center for Social Entrepreneurship. It was delivered during the BPI Sinag Bootcamp for Social Entrepreneurs. 

 

Main photo from Flickr (Wenjie Lam)

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