Partnering with social enterprises for scalability and impact
Characterised by innovation and purpose beyond profit, social enterprises use and adapt business strategies to advance positive social and environmental outcomes. We have seen a rise in the number of social enterprises in Asia. According to the Singapore Centre for Social Enterprise (raiSE), Singapore’s social enterprise sector grew by 32 per cent over the past year, with 401 registered social enterprises – up from 303 enterprises in 2016.
Several businesses are also now seen to be supporting social enterprises, often times through their community investment and volunteering programmes. Some companies have also created competitive funds opening up opportunities to social enterprises to pitch their wining ideas. Is this trend set to stay? Are companies looking to move more of their philanthropic dollars away from non-profits, believing that social enterprises may potentially have more efficient win-win solutions to development challenges?
Asian Venture Philanthropy Network’s (AVPN) recent reports – Social Investment Landscape in Asia showed that whilst we see a mushrooming of social enterprises in the region, many of these social enterprises are still in their early to mid-mw0913stages of growth where viable pipelines are small, and deal volumes are low.
Source: AVPN Social Investment Landscape in Asia report – social economies in Asia from nascent to mature.
State of play – snapshot of regulatory environments in Asia supporting social enterprises
South Korea is the only East Asian country that legally recognises social enterprises and offers multiple incentives including payroll subsidies for three years, sales channel development and preferential procurement from social enterprises in addition to funding and ecosystem-building support for the growth of SEs.
Hong Kong: Of the 574 SEs documented in 2015, two thirds of them (248) were started by seed capital provided by the government via the USD 64 million Social Innovation and Entrepreneurship (SIE) Fund. The Social Enterprises Promotion Unit strengthens SEs through cross-sector collaboration, incubation and enhancing public awareness.
Philippines: Two proposed bills currently pending in the Philippine Senate which seek to introduce a legal structure and several incentives for SEs —the Poverty Reduction Through Social Enterprise (PRESENT) Bill and the Social Value Bill.
Singapore: Launched in 2015 and funded by the Ministry of Social and Family Development and the Tote Board, raiSE currently administers a total funding of SGD 30 million which it distributes to qualified social enterprises in grants.
Taiwan: 2014 was declared ‘the year of SEs’ and the government introduced various measures to fund, support and promote SEs, including a 3-year promotion plan, by deregulation, deregulation, networking, financing and incubation.
The spotlight on social enterprises is no longer just about innovation but for social enterprises to deliver scale and growth. AVPN’s report emphasises the importance of a nurturing ecosystem to support the establishment of an investable pipeline of social enterprises, and businesses are increasingly asked to be a part of this development.
Going beyond charity, social enterprises require businesses to look at a different engagement model and to consider the following:
Are businesses equipped to support social enterprises? At the moment conversations on supporting social enterprises seem largely contained in CSR departments, who would use the same partner approach with social enterprises as they would with non-profits. Many are uncomfortable with the idea of a focus on financial return (commercial viability of a social enterprise) where profit is viewed with equal importance as social impact. Should businesses use a different set of criteria to evaluate the effectiveness of social enterprises that take into account important business aspects such as longer term financial viability, scalability and profitability in addition to meeting social goals? Are corporations looking at different ways to work with social enterprises, such as investing in intermediaries and accelerators to mentor and support these social enterprises as they look to develop and scale?
Beyond charity dollars and buying that one-off item produced by a social enterprise as it feels like the “right thing to do” – what is the opportunity for businesses to incorporate social enterprises as part of their supply chain and value chain, procuring services and supplies from social enterprises? Are social enterprises competitive enough – providing the same level of quality and efficiency (at comparable pricing) as any other provider, for procurement teams to switch to buying from social enterprises? What are the opportunities and challenges for businesses to move from these traditional areas of CSR and grant-making approaches towards incorporating new opportunities like impact investing to make direct investments in social enterprises?
The above and more will be explored in an interactive workshop at CSR Asia’s upcoming Summit in Bangkok (26-27 September). Join facilitators – Caroline McLaughlin from AVPN, Yasmine Khater, Community Builder of B Corp Singapore and Laetitia Lienart from Credit Suisse to learn from their insights on social enterprises in Asia. This workshop aims to equip organisations to expand their perspectives on partnering with social enterprises for scalability and impact. We look forward to seeing you and continuing the conversation in Bangkok!
I would like to especially thank Caroline McLaughlin, Director – Partnerships from AVPN for sharing the report (Social Investment Landscape in Asia) and for taking the time to give her inputs for this article. A full copy of the report can be downloaded here.