• The enterprise that matters most

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    Ben D. Kritz

    Ben D. Kritz

    THE idea that business activities can address a social ill while remaining profitable and sustainable is not a novelty, but it is not a concept that is applied as often as it could or should be.

    Recently, a partnership between Isla Lipana and Co., the Philippine office of the PricewaterhouseCoopers (PwC) network, and the Benita and Catalino Yap Foundation (BCYF), was formed to recognize and provide substantial support to promising social enterprises through the Developmental Social Enterprise Awards (DSEA).

    In a ceremony last month, 10 social enterprises were honored for their business success and contributions to improving their communities, with the grand prize winner being Ecosystems Work for Essential Benefits Inc. (ECOWEB), which partners with local farmers and women to produce natural fertilizers and pest control products under the brand name “EcOrganic.”

    Other finalists included 3846 Social Enterprises Inc., which provides scholarship grants to poor but deserving students; Coffee for Peace, whose affiliates—mostly retired rebels—produce and market Arabica coffee; Global Organic and Wellness Corp., which provides a marketing platform for organic farm products; and Good Food Community Inc., which manages an alternative farm-to-market distribution system for farmers in Tarlac, Benguet, and the Mountain Province.

    Also receiving special recognition were the Medical Mission Group/Metro Manila East Hospital and Health Services Cooperative, which provides access to low-cost medical services; the Alternative Indigenous Development Foundation Inc., a technology development concern; SEDPI Development Finance Inc., a microfinance facilitator; and manpower agency Staff Search Asia Service Cooperative.

    The enterprises underwent a stringent assessment process, wherein they were judged against a set of basic, specific criteria: To qualify as a successful social enterprise, the “social” aspect of the business activity must be an integral part of the business plan; at least 50 percent of the enterprise’s income must be reinvested in the business; the business plan must be viable—five-year sustainability is considered a basic benchmark—and the business plan must be scalable, capable of expansion.

    As part of the recognition, the winning company ECOWEB received a P250,000 grant, and all the recognized enterprises will have access to business consultancy services; PwC uses the program to apply its core capabilities toward its own corporate social responsibility objectives.

    The DSEA program is a welcome encouragement for social enterprises, because it highlights the potential for both profit and positive social impact that a well-planned and effectively supported social enterprise can have. If there is a downside to the PwC/BCYF project, it is only that the effort is the proverbial drop in the bucket.

    That is obviously not a criticism of the efforts being applied by PwC and BCYF, because the scale of the demand for viable, productive social enterprises is so great. Citing unverified statistics, PwC Philippines Chairman and senior partner Alex Cabrera pointed out that there may be as many as 30,000 businesses and other projects that can be broadly defined as ‘social enterprises,’ mostly located in Mindanao, historically (and currently) the poorest part of the Philippines. Clearly, social enterprises are not making much of a dent in the country’s broad problems of unemployment, poverty, lack of financial inclusion, and access to education, although as the DSEA honorees show, social enterprises can have a significant impact at the community level.

    Several obvious conclusions that can be drawn from this: Even if there are not really 30,000 social enterprises in the Philippines, the actual number must be very large, numbering in the thousands. Whether this is still just simply too few, or an indication that existing social enterprises— with some noteworthy exceptions—are ineffective is unclear; in all likelihood, the problem is a bit of both.

    There are reportedly at least two social enterprise-related measures working their way through the tedious legislative process; social enterprise advocate Sen. Bam Aquino 4th, who also served as a judge for the recent DSEA rewards, is an author of one of them. Ideally, any measure intended to support social enterprise development would take into account the fairly narrow but practical criteria formulated for the DSEA rewards to identify worthwhile social enterprises while creating a more enabling environment for them, perhaps through tax incentives or simplification of business registration and reporting procedures.

    And any measure enacted by the government, in the view of the PwC officials and some social entrepreneurs I spoke to later, should—perhaps paradoxically—limit government intervention to “enabling” the social enterprise sector rather than attempting to “manage” it. Social enterprise at its best is a very organic endeavor, one that evolves responsively to meet the needs of the community and the market it serves; government, not being particularly nimble-minded, is likely to do more harm than good if it intends to ‘guide’ social enterprise in a particular policy direction, or toward rigidly-fixed objectives based on broad indicators.

    ben.kritz@manilatimes.net.

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