Landscape of Social Entrepreneurship in India - Madhukar Shukla

2010 Social Entrepreneurship Colloquium @ Said Business School, Univ of OxfordMadhukar Shukla

Landscape of Social Entrepreneurship in India- an eclectic inquiry

Note: these slides are based on a draft-report of an on-going study, prepared specifically for sharing at the Colloquium


Growing popularity of social entrepreneurship


social entrepreneurship: definition-in-practice?

Social Entrepreneurs are:

entrepreneurs with a social mission,

who find and implement innovative

and sustainable solutions

To solve social problems

Specific toSocialContext


Purpose of the Study

To understand and delineate:

what does “social entrepreneurship in India” mean to its practitioners/stakeholders in this sector – the social entrepreneurs, social investors, support organizations, etc.?

what distinguishes social-entrepreneurship-in-practice in India as compared to its counterparts in other developed and less developed countries?

what are the specific opportunities and challenges for Indian social entrepreneurs which facilitate (or hamper) their efforts to make a change in the society?


Respondents

2Social Sector Journalists

7Academics

8SE Foundations & Support Organisations

3Investors/ Funders

7Hybrid/ Earned-Income Model

7Not-For-Profit

12For-Profit

Social Entrepreneurs


Questions to stakeholders in the sector

In the Indian context, are there any specific local conditions/issues (e.g., social, political, economic, legal, etc.), which facilitate (or hamper with) social entrepreneurship?

In your experience, are there any significant ways in which Indian social entrepreneurial ventures differ from those in the more developed and developing countries?

Are certain social entrepreneurial 'models' - and targeted areas of social impact - more relevant to India, and more likely to succeed?

Are there any conditions, specific to India, which facilitate (or hamper with) the long-term sustainability and scalability of social entrepreneurial ventures?”


Landscape of Social Entrepreneurship in India:Themes from “sense-making” of the responses

1. Socio-Cultural Milieu & Historical Context

2. Role of Government

3. Socio-Economic Context

4. Size & Diversity of “market”

5. Regulatory Environment


Socio-Cultural Milieu & Historical Context

Cultural ValuesDuty towards community/ othersPower through “giving’Social achievement motivation

Tradition of Voluntary Social ActionSocieties Registration Act 1860: “promotion of science, literature, or the fine arts, for instruction, the diffusion of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or reading rooms for general use among the members or open to the public, or public museums and galleries of paintings and other works of art, collection of natural history, mechanical and philosophical inventions, instruments or designs.”Indian Trust Act 1882: “established for a number of purposes, including the poverty alleviation, education, medical relief, provision of facilities for recreation, and any other benefit to the general public.”


Socio-Cultural Milieu & Historical Context

National Freedom Movement – Gandhi’s InfluenceGram Swaraj (village level self-rule)Economic (not just political) freedomBusiness as “trustee” of wealth for society

Large and Active Voluntary Not-for-Profit Sector1.2 mn NPOs, 20mn engaged as paid employees or as volunteers

• 73.4% with one or no paid employee; only 8.5% with more than 10 paid employees

• 49.6% not registered$3.8bn funds raised in 1999-2000

• 80% raised locally (fee, charges, donations)• 75mn (40%) households “give” to causes• 40% givers come from poor households (4% from tax-paying

segment)


Socio-Cultural & Historical Context: Implications

1. Large reservoir of human capital which is culturally inclined to voluntary action/ social philanthropy / engaging with society

2. Significantly large proportion of social ventures are small and invisible, and are rooted in local context

3. Culturally, social change and impact interlinked with voluntary non-profit ventures


Role of GovernmentRole of NPOs/NGOs in state’s development initiatives/ policies: “any plan for social and economic regeneration should take into account the services rendered by these (voluntary) agencies and the state should give them maximum cooperation in strengthening their efforts.” (1st 5-Year Plan, 1951-56)9 areas of participation by NPOs (6th 5-Year Plan, 1980-85)1. Optimal utilization and development of renewable source of energy,

including forestry through the formation of renewable energy association at the block level

2. Family welfare, health and nutrition, education and relevant community programs in the field

3. Health for all programs 4. Water management and soil conservation 5. Social welfare programs for weaker sections 6. Implementation of minimum needs program 7. Disaster preparedness and management (i.e. for floods, cyclones, etc) 8. Promotion of ecology and tribal development, and 9. Environmental protection and education


Role of Government

Advantages of NPO/NGO engagementBetter outreach, mobilisation of local resources and participationGreater flexibility and more adaptive to local contextGreater accountability to ‘beneficiaries/ customers’, etc.

Areas of engagement:Policy planning and implementation of government programs. Monitoring the impact of development programs initiated by the governmentPolicy advocacy to influence state’s development programs, andCapacity building of the grassroots community, and of governmental agencies


Role of Government: Implications

1. Peculiar nature of interdependence between state and NPOs/NGOs

2. Both serve the same ‘market’ for similar/identical services.

3. Uneasy Partnership: Advocacy/ Monitoring Role: NPO/NGO sector organisationsquestion and critique govt policies and implementationOverlapping Markets: Competition between State’s welfare-oriented interventions vs. market-based interventions of NPOs/NGOs


Socio-Economic Context

2nd fastest growing economyOne of the BRIC nations11th largest nominal GDP (4th

largest in terms of PPP)Per capita income of Rs.38,000, growing at 14.4% annually2nd largest technically qualified manpowerRobust industrial infrastructureIndigenous space program, super computer5th in list of number of millionnaires

Etc.

134/182 on Human Development Index65/ 84 on Global Hunger Index42% of World’s malnourished children77% population with daily income of <Rs.20 (~ $0.40)93% employment in unorganised/ informal sector67% workforce has below primary level of education600mn dependent on agriculture; average farm size 1.4 hectare; high indebtnessWorld’s 1/3rd population without water and sanitation

Etc.

Disparities across “two Indias”


Socio-Economic Context

Reason’s for failure of developmental efforts:Size of the population and geography to be servedInappropriate policies & poor implementationIneffective institutional framework to provide/ monitor delivery of basic services

Very large BoP population, without access to basic services (education, healthcare, information, credit, etc.)

opportunity for social entrepreneurship => attractive market forinstitutional commercial players (e.g., micro-finance, telecom, skill-development, healthcare, etc.)…but also, significant “below subsistence-levels” segment lives outside the “market”


Socio-Economic Context: Implications

1. Large “BoP population” =/= Large “BoP market”Large below subsistence level populationDiverse, Dispersed, Unconnected = “Challenge of Aggregation” to create a viable “market unit”, e.g.

640,000 villages, 72.2% (866mn) population42% villages with population < 50044% rural households “connected to electrical grid”50% villages connected by roads7% villages have a bank branch, etc.


Socio-Economic Context: Implications

1. Large “BoP population” =/= Large “BoP market”Large below subsistence level populationDiverse, Dispersed, Unconnected = Challenge of aggregation to create a viable “market unit”…Therefore, the inadequacy of (or challenge for) “for-profit market-based solutions” to meet the needs of this segment

2. Entry of large commercial player blurs the definitional boundary between social and commercial entrepreneurship


Size & Diversity of the “Market”

Geographically, 3rd largest nation: snow-peaked mountains, deserts, rain-forests, flat green pastures, plateaus, coastal regions, etc.2nd most populous nation: 17.31% of world’s population living in 640,000 villages, 5100 towns, 380 urban agglomerationsAdministratively 28 federal states: different regulations for labourpractices, taxes, law & order, education, healthcare, etc.Linguistically, no “common language”: 22 official “scheduled”languages, 5 different language families (different scripts), 1600 dialectsUneven development across regions: e.g., income/poverty, healthcare, education, access to societal resources, etc.Ethnic Diversity: Estimated 2000 ethnic groups, 8 major religions, different sects, etc.

i.e., “One Large Market”…fragmented by qualitatively different regional requirements/ needs/

aspirations/ languages/ beliefs/ regulations, etc.


Size & Diversity of the “Market”: Implications

1. Size: meaning of “scale”/ “scaling-up” for 800+mn “market”

SKS Micro-finance touches 5.3mn borrowersSEWA has 1.2mn members – 90% from 2 states“Scaling-up of enterprise” or “scaling-up of impact”? –replicable models?

2. “Unevenly distributed diversity”Local solutions for local context are viable solutionsChallenge of replication - what is “core” and what (how much) can be customised


Regulatory EnvironmentVariety of legal instruments for registration

Not-For-Profit: Public Charitable Trust, Registered Society, Section 25 CompanyMember-Owned/ Based: Cooperative Society, Producers’ CompanyFor-Profit: Non-Banking Finance Company, Private or Public Limited Company, Limited Liability Partnership

No legal form which allows a mix of for-profit and not-for-profit (e.g., L3C in US or CIC in UK) => growth of hybrid structures


Regulatory Environment: Implications

1. Form of legal registration determines type of activity, funding option, regulatory support, etc. i.e., choice of the legal identity is a strategic choice

2. Emerging regulations discourage Not-For-Profits to adapt earned-income strategies

3. Tax structure does not differentiate between for-profit social ventures & pure commercial ventures

4. Hybrid structure seems to be a viable form


Landscape of Social Entrepreneurship in India: Some Key themes

1. “Doing good to others” a cultural value, but linked to voluntary, not-for-profit action

2. Government as part of the eco-system - Uneasy partnership

3. Large BoP population, but significant portion lies outside the “market”

4. BoP Market serviced by both commercial institutions and SEs – are all entrepreneurs are social entrepreneurs?

5. Diversity and size a challenge/ barrier to scaling-up –scaling of venture or scaling of impact?

6. Evolving regulatory framework – “legal entity” as a strategic decision.


Thanks!Q?

Landscape of Social Entrepreneurship in India - Madhukar Shukla

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