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What you need to know about social enterprises

BPI Sinag

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?
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.

The BPI Foundation aims to discover, develop, and support social entrepreneurs all over the Philippine through its project, BPI Sinag. A total of 169 business proposals were submitted to BPI Sinag for a chance to receive funding, access to finance and training.

Forty semi-finalists were chosen for training and the top ten will go on to pitch their ideas to a panel of expertise in various fields. Thirty-eight percent of the top 40 semi-finalists are currently working on manufacturing and production businesses while 15% and 13% are involved in IT Business and wholesale respectively. Other fields include Agribusiness, Education, Health, Services, Finance, Tourism, Financial Literacy, Aquaculture, Environment, and Utilities. The young social entrepreneurs come from all over the country with 80% hailing from Luzon, 15% from Mindanao and 5% from the Visayas. Visit http://sinag.bpifoundation.org/ for the complete list of the 40 finalists.

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 of it, and encourage more Filipinos to look into.

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.

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Eli

Eli has 26 years of extensive IT sales expertise in Data, voice and network security and integrating them is his masterpiece. Photography and writing is his passion. Growing up as a kid, his father taught him to use the steel bodied Pentax and Hanimex 135mm film and single-direction flash, Polaroid cameras, and before going digital, he used mini DV tape with his Canon videocam. He now shoots with his Canon EOS 30D. Photography and blogging is a powerful mixture for him.

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