Understanding Social Entrepreneurship _ Inquirer Opinion

8/12/2019 Understanding Social Entrepreneurship _ Inquirer Opinion

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3/9/13 Understanding social entrepreneurship | Inquirer Opinion

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For more than a decade, I have studied the phenomenon of socialentrepreneurship in the Philippines and other developing countries in Asia.And what Ive learned has given me renewed inspiration that it is possible tofind sustainable and innovative solutions to the problem of poverty.

Let me share with you some inspiring stories.

CARD MRI

With a dream to bring sufficiency to the landless rural poor, Aris Alip and14 other development practitioners started with P20 and a batteredtypewriter to set up the Center for Agriculture and Rural Development(CARD) in 1986.

In 2008, CARD MRI (Mutually Reinforcing Institutions) won the Ramon Magsaysay Award for Public Service for successfully adapting microfinance in the Philippines, providing self-sustaining andcomprehensive services for half a million poor women and their families.

Today, CARD MRI includes a microfinance institution, a microfinance bank, a bank for small andmedium enterprises (SMEs), a mutual benefit association, an insurance agency, a provider of

business development services, a provider of information technology solutions and a company promoting generic medicines.

ARIS ALIP

As of November 2012, it was reaching over 1 million poor people with an outstanding loan portfolioof P6.3 billion and a 99-percent repayment rate. Its outreach in terms of life insurance, retirementsavings and loan insurance was 7.8 million. Its total asset base was P14.1 billion with more than7,000 staff members in over 1,400 offices nationwide.

I had the opportunity to visit CARD MRI and personally interact with its founder and managingdirector, Alip, this January. Asked what he was most proud of, he answered: We have proven whatreal empowerment is all aboutthe ultimate is for our clients to own and manage their financial andcommunity development enterprises.

He explained that in all CARD institutions, the poor are part owners or substantial owners, and in


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the case of the Mutual Benefit Association, it is 100-percent owned by the nanays, referring to themothers who comprise the majority of their clients. He pointed out that the way to go in the futurewas to support rural-based SMEs.

From among the best of its microfinance clients, CARD MRI hopes to assist up to 10 percent of them to develop SMEs. Together with other rural-based small and medium entrepreneurs, CARDMRI also hopes to create a new momentum for wealth creation and employment generation towardnation-building.

BAMBANG ISMAWAN

Gandang Kalikasan

Anna Meloto-Wilk is cofounder and president of Gandang Kalikasan Inc. for which she received aGlobal Social Entrepreneur Award under the Schwab Foundation in September 2012.

Established in 2008, Gandang Kalikasan manufactures and markets a line of beauty and personalcare products under the brand name, Human Nature. Anna and her team have pioneered in the

pursuit of innovative strategies in transforming the lives of the poor as workers and supplier communities of Gandang Kalikasan, while providing consumers with affordable, health-enhancing

personal care products from organic and natural ingredients.

With pro-Philippines, propoor and proenvironment as their banner slogan, Anna says Human Nature traces its roots to Gawad Kalinga (GK), the nationwide movement for nation-building,therefore, everything we do must benefit the country.

Explaining the groups propoor policy and practice, Anna continues: We employ residents of GK communities and provide them fair living wages above minimum, as much as P675 a day plus full

benefits and healthcare, to promote dignity of work . We practice fair trade by paying above-market prices to our community partners and investing in their livelihood expansion. We see the poor as an investment and not as cost. We encourage our people to pay it forward.

MARIE LISA DACANAY AUTHOR


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Gandang Kalikasans propoor practice is clearly seen in the wayit has allocated profits. One of Human Natures best-selling

products is the Citronella Bug Spray. Initially, all the profits fromthis product go to farmers in Bicol to fund the expansion of their farms, from 7 to 47 hectares; an integrated extraction facility;

public school renovation; healthcare; and insurance for their families.

In the same vein, 100 percent of the profits from its Passion FruitHydrating Lipstick have gone to the supplier community, the GK Village Pueblo Antonio in Catigan, Davao del Sur, until such timethat it could purchase an extraction facility. This would allow the

GK community to become a producer and supplier of passion fruit seed oil, which commands amuch higher price and would provide it with a more sustainable and dependable livelihood.

Bina Swadaya

Financial sustainability has been a long-standing challenge for nongovernment organizations (NGOs) engaged incommunity empowerment programs. As grants from public and private sources have becomelimited, NGOs have innovated their way out of this problem. An exemplary case of an NGO thatshifted to a strategy of social entrepreneurship to deal with the challenge of sustainability is BinaSwadaya in Indonesia.

Since its founding in 1967, it has grown into a self-sustaining group of organizations serving more than100,000 farmers and creatively working to develop and empower their communities. Bina Swadaya

has 17 subsidiary companies engaged in ecotourism, agriculture, printing and publishing.Employing about 1,500 people and providing sustainable livelihoods for many others, these socialenterprises generate profits of over $5 million annually, which are used to finance 95 percent of BinaSwadayas budget for development work among the poor. Bina Swadayas Trubus agri-magazine,one of the 17 subsidiary companies, sells over 70,000 copies per month.

Leading Bina Swadayas development and growth is Bambang Ismawan, cofounder and chair. In1995, Ismawan received the Satya Lancana Development Award, granted by the President of Indonesia for his service in cooperative and economic development.

CARD MRI, Gandang Kalikasan and Swadaya may be seen as different models of socialentrepreneurship and as exemplifying different types of social enterprises. But what are socialenterprises? How are they different from regular business enterprises or even traditional NGOs?

In a study of what social enterprises meant for development practitioners in Asia, I led an actionresearch covering the Philippines, Indonesia, Thailand and India in 2002-2004 which came up with ageneral definition.


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Definition refined

This was later refined by a succeeding research on Social Enterprises and the Poor (Dacanay, 2012)as a definition relevant to social enterprises in the context of poverty and inequality in developingcountries:

Social enterprises are social mission-driven wealth creating organizations that have a double or triple bottom line (social, financial and/or environmental), explicitly have as principal objective povertyreduction/alleviation or improving the quality of life of specific segments of the poor, and have adistributive enterprise philosophy.

Three elements

There are three elements to this definition of social enterprises, aspects of which are exemplified byCARD MRI, Gandang Kalikasan and Bina Swadaya:

Firstly, social enterprises are social mission-driven organizations explicitly pursuing poverty reductionand alleviation as primary objective. The poor are engaged not only as workers, clients or suppliersof these social enterprises, but also as partners in social enterprise or value-chain management and insocial-enterprise governance.

At their best, the poor become full-fledged owners and decision-makers of social enterprises, andenact roles as change agents for themselves and their community, sector or society.

Secondly, social enterprises are wealth-creating organizations that have a double or triple bottom line(i.e. social, financial and/or environmental). Just like business or private enterprises, and unlike thetraditional NGOs that are dependent on grants or public subsidiesor wealth created somewhereelsesocial enterprises are engaged in the production and provision, and sale of goods and services.

However, unlike business or private enterprises that principally produce/provide and sell goods andservices to create profit for shareholders, social enterprises do so with the objective of financialsustainability. They create wealth to partially or fully cover their operations and to invest in other activities related to their social mission. Their financial bottom line plays a supportive role to their social bottom line.

Thirdly, social enterprises have a distributive enterprise philosophy. They create social and economicvalue that accrue to the poor as primary stakeholders. Unlike in a business or private enterprisewhere wages paid to the poor are considered financial costs to be minimized, these are consideredsocial benefits for primary stakeholders that need to be optimized.

Moreover, the distributive philosophy is expressed in the surplus or profits that accrue to the poor asdividends and are reinvested in the enterprise to sustain the fulfillment of its social mission or inactivities that benefit and assist the poor.

PH scene

I did a rapid appraisal using secondary data and interviews with key informants to establish a general profile of social enterprises in the country in 2007 (Dacanay, 2007). The rapid appraisal came up


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with an informed estimate of 30,000 social enterprises.

The biggest segment are cooperatives registered with the Cooperative Development Authority.Outside of cooperatives, social enterprises usually register under the Securities and ExchangeCommission as nonstock, nonprofit corporations and/or as stock for profit corporations.

On Feb. 16, 2012, leaders of social enterprises and major networks and resource institutionssupporting them came together to establish the Poverty Reduction through Social Entrepreneurship(Present) Coalition.

Magna Carta

The coalition united on pushing for a bill called the Poverty Reduction through SocialEntrepreneurship Act or the Magna Carta for Social Enterprises. The measure is meant to recognize,support and incentivize social enterprises serving the poor as major partners in poverty reduction.

The bill envisions a process of qualification for social enterprises serving the poor as stakeholders.Those qualified shall then have the right to financial and program support, preferential rights ingovernment procurement and tax exemptions or incentives.

Among the important provisions proposed which try to address the infirmities of current policiesaffecting social enterprises are: the setting up of Special Credit Windows for social enterprises thatcould provide noncollateralized loans supported by a Guarantee Fund Pool; a Social EnterpriseDevelopment Fund that would ensure resources for capacity development; and the establishment of an insurance system for social enterprises affected by natural calamities.

Program support shall include Social Enterprise Research and Development as well as SocialEnterprise Marketing Infrastructure Development.

The bill on Poverty Reduction Through Social Entrepreneurship codifies an ecosystem conducive tothe growth of social enterprises as dominant players in a vibrant SME sector in the country. Agovernment playing a developmental role in partnership with a proactive and innovative social-enterprise sector may just produce the elusive outcome of empowering a significant percentage of the poor and substantively reducing poverty in the country.

(Marie Lisa Dacanay, Ph.D., is founding president of the Institute for Social Entrepreneurshipin Asia. She was associate professor and guru of the Master in Entrepreneurship for Social and Development Entrepreneurs at the Asian Institute of Management from 2001 to 2007. Shehas been the lead faculty for the Master in Public Management [Social EntrepreneurshipTrack] at the Ateneo School of Government since 2011.)

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Tags: CARD MRI , Development Work , Gandang Kalikasan and Bina Swadaya , NGO , Poverty , Social Enterprise, social entrepreneurship

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