Tuesday, 25 October 2016

Social Enterprises - Fad Or Fact Of The New World

Social enterprises have become trendy and almost every donor, investor and entrepreneur’s favorite. Many believe these enterprises are the answer to every developing country’s myriad socio-economic woes. Quite a few disagree and feel that there is undue hype over what’s essentially old wine in a new and attractively packaged bottle! 

The economy of a country can be assisted when more jobs are created so I personally feel that we don’t need to define enterprises into separate categories of social enterprise and non social enterprise. Both should be creating opportunities for employment and this in itself filters down directly or indirectly to a wider population. By thinking of social endeavors as nonprofit companies it may shackle the whole thinking of growth. Without profit one can not necessarily set aside enough for capital expenditure and research and development of further products or services.

Social enterprise is not clearly defined so whilst one could argue that a processed food company that makes expensive foods for a high income population is not one, it could nonetheless be implementing technology and other strategies to help farmers increase their yield.  Similarly the law allows for a company that provides teacher training to both high fee paying schools and municipal schools to be set up as a section 8 company but is it a social enterprise? My sense is that people who are entrepreneurial by nature and have great ideas to develop products and services may not think as ambitiously about growth if they set themselves up as a section 8 not for profit company.

Rather than a separate category for social enterprises there can perhaps be better tax incentives for small companies or for those set up in very impoverished rural areas. Social Entrepreneurs need not think that profit is a dirty word. After all higher profits and income should also lead to higher donations. Similarly more taxes paid on profits mean more money available for better public infrastructure, roads, health care facilities etc which benefits the population at every socio economic level.

Tina Vajpeyi,Finance Consultant
(Tina Vajpeyi is qualified as a Chartered Accountant in the United Kingdom. She has held various roles such as is a Finance Consultant with Aangan & CAP and prior to that she was the CFO at The Akanksha Foundation.)
Social Enterprises can be game changers in solving India’s social sector issues. Social enterprises create innovative products and services to solve social problems through commercial strategies. Social enterprises are not business operators who simply wear a social tag. We’ve come across many founders with impeccable track records who have started social enterprises to solve social issues across health, energy, skills, livelihoods, water and so on.
Some great examples of social enterprises are Aravind Eye Hospital that was setup way back in 1976, LabourNet and Head Held High in skilling, Rural Shores for rural BPOs, SELCO, Tara and Ecozen in energy and GRoboMac and Kamal Kisan for agriculture.
Another important aspect that demonstrates the sustainability of the SE movement is the evolution of the roles of impact investors and large donors in actively supporting SEs. Aavishkaar, Acumen, Ankur Capital, Omidyar, Unitus, Villgro, Menterra, Michael and Susan Dell Foundation etc. are providing early stage grants or equity and guiding SE founders to scale up operations and service delivery.
Although many companies are interested in partnering with SEs, we have not seen a major shift in funding patterns when it comes to CSR. Companies prefer to fund NGOs as the laws are still evolving with respect to SEs after the Companies Act, 2013 was introduced. Few companies that have been early movers and have partnered with SEs for their CSR are the likes of Mphasis, Mahindra Finance and Genpact.

Anil Misquith, Exec Director, Strategic Initiatives, Samhita Social Ventures
(Samhita works with companies and foundations to deliver effective corporate social responsibility initiatives.)

Avanti Foundation in collaboration with BRM started Avanti Young Women Leadership Program in 2011. It was conceived with the objectives of:
  • Bridging the gender inequity
  • Developing leadership and social skills among young girls
  • Exposing them to social issues, thereby creating large scale social impact.
What started with 250 girls, has reached 13000+ girls in 5 years. Besides building life skills among the girls, more than 25000 citizens have been made aware about social issues through this initiative - a kind of ripple effect!

A cooperative, non-profit, for-profit or any other form are social enterprises as long as their objective is doing social good.

What differentiates them from their counterparts is that they:
  • Keep cause at the centre instead of wealth creation.
  • Collaborate and engage different stakeholders in the process of addressing social issues.

Based on these differentiating factors, the dynamics of social change and potential impact that social enterprises can create, can't be ignored.

More and more individuals and organisations are looking for ways and means to make a valuable contribution to society. Given this scenario, social enterprisess are surely here to stay, have a say and make a way!

Akshat Singhal,Co Founder-The Blue Ribbon Movement
(The Blue Ribbon Movement (BRM) is a hybrid social enterprise working towards building leadership for a better world.) 
 Recently, I attended an Executive Education programme on Social Entrepreneurship at an international business school. One of the case studies for discussion was about marketing by the sports apparel brand, Patagonia. The discussion got heated around the question: Is Patagonia a social enterprise, or is it just another business, apparently, with founders with social conscience and commitment to save the environment? The case study quoted the founder of Patagonia saying that he believed that business had the potential to alleviate the world’s problems and inspire positive change. The class was divided among those who thought Patagonia was a social enterprise and those who thought it was not since its raison d’etre was to make profits.

In the world of impacting social change, evidently, social enterprise and “NGO” are not binaries. Given the scale and complexity of the problems that they both want to address, it will take all kinds of players and approaches, playing to their strengths and expertise to make a difference. The distinction if at all (and there will always be exceptions) is that social enterprise, being located within the framework of business, responds to manifested demands and fields competition, while “NGOs” often have to unearth latent needs and address them despite adversaries, and not competitors in the conventional sense. Low-cost, primary, health care and caste-based discrimination, even when it was not considered an issue that needs intervention, are examples of both categories. 

Being located in the business framework, financial viability lies at the central core of the strategy with an uncompromising focus on building replicable models and this may come closest to being the differentiator for social enterprise. Not coincidentally these are the two aspects that funders and “NGOs” have locked horns on more often than any others in the last two decades at least. Beyond that, we are all facilitators, working in interlinked synergies, with marginalized communities who will ultimately make that definitive change in their situations. The effort to define one category as distinct or superior is really futile.

Rukmini Datta,Corporate Social Responsibility, Cipla Foundation
(Cipla Foundation takes Cipla’s socially focused business legacy forward. It mirrors Cipla’s relentless commitment to improve lives and fight inequities on key fronts. To build accessibility and affordability, initiatives focus on Health, Skilling, Education and Disaster Response.)

We would love to hear your opinions. Write to us at conenct@capindia.in

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