Social enterprise

Janelle Kerlin

Asst. Professor Nonprofit Studies Program

Georgia State University

CIES/Barcelona Program May 7, 2012

Social enterprise is the use of market-based

approaches to address social issues in specific, often innovative, ways.

Specific conceptualizations are shaped by the regional context.

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Notas de la presentación

Most social enterprise outside of the United States addresses unemployment.

Civil society organizations that receive earned income in exchange for products or services.

Social cooperatives.

Micro-finance lending institutions and enterprises. “Recuperated” employee-owned companies.

Is corporate social responsibility a form of social enterprise?

Social enterprise only occurs where the main purpose of the organization is social benefit.

OR Some forms of CSR may be viewed as social enterprise

such as high levels of corporate philanthropy.

What is a social entrepreneur? Anyone who operates a social enterprise.

OR A highly innovative social activist who creates scalable

and lasting change (whether or not it is market-based).

The Economic Dimension a) A continuous activity, producing and selling goods

and/or services

b) A high degree of autonomy

c) A significant level of economic risk

d) A minimum amount of paid work

The Social Dimension e) An explicit aim to benefit the community f) An initiative launched by a group of citizens g) A decision-making power not based on capital h) A participatory nature, which involves the parties

affected by the activity i) A limited profit distribution

A response to unemployment, hard-to-employ

populations.

Multi-stakeholder ownership–-workers, managers, volunteers, costumers, donors, public authorities.

Democratic management style. Limited distribution of profits. Receive government subsidies.

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Social exclusion

Law specifically for disadvantaged workers.

30% of the employed must be disadvantaged.

Disadvantaged must be members of the cooperative.

Tax relief for cooperatives and exemption from social security payments for disadvantaged.

Considered first for public work contracts.

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(Disadvantaged = Physically/mentally handicapped, substance abusers, minors from families in hardship, prisoners on probation)

Six cooperatives created through the efforts of deinstitutionalized mental health patients and staff.

Cooperatives provide services in the areas of

cleaning bookbinding photography and video graphics carpentry (furniture for schools and hospitals) restaurants, pubs, hotel hairstyling building renovation landscaping home health/caseworker services

Response to underdeveloped economies, high rates of unemployment, deep poverty.

Small loans to develop agricultural or craft-related small businesses.

Loans given to solidarity groups due to the absence of collateral among individual borrowers.

Goal is long-term sustainability of initiatives.

Most enterprises operate in the informal market due

to restrictive business laws.

Both microfinance lending institutions and international NGOs provide financing.

A motive for INGOs is to reduce the dependence

syndrome in local communities.

In the majority of cases, loan repayment rates have reached 90 percent.

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Indigenization and Economic Empowerment Act of 2007 requires businesses to sell 51% of their shares to indigenous Zimbabweans.

2004 2005

Local resources mobilised 20,000 USD 67,000 USD

Loans disbursed 12,416 USD 15,125 USD

Repayment rate 85% 89%

Profitability 5% 15%

Outreach Country-wide Country-wide

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Established in 1989, scheme started as an association of SMEs eager to pool savings for purposes of lending to members. Hivos and the European Commission were among the donors who provided critical funding that enabled the scheme to set up infrastructure and systems during the early years of its existence.

Response to 2001 economic crisis that resulted in

21% unemployment.

Abandoned companies taken over by workers under a system of self-management.

170 recuperated companies employing 12,000 workers.

Supported by large local community networks.

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Owners abandon due to bankruptcy or administrative embezzlement. Organized predominantly into cooperatives. The manufacturing sector includes activities such as the metallurgic, textile, graphics, and foodstuffs industries, while the other sector includes health and education services along with the hotel and restaurant industry. Decisions are made collectively, income is redistributed more fairly, and the viability of the factory does not depend on the rate of return on investment but rather on the level of well being among the workers.

Owners abandoned company having not paid workers in several months.

Workers restarted the company only to have police throw them out several months later.

Over 10,000 people unsuccessfully tried to help workers retake the factory.

After two years, a judge declared the company bankrupt and passed the assets to the cooperative.

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Collective response to the problem of unemployment.

Definitions:

“An activity intended to address social goals through the operation of private organizations in the marketplace.” Dennis Young

“Organizations or ventures that achieve their primary social or environmental missions using business methods.” Social Enterprise Alliance

“A continuum from for-profits engaged in

social activities to hybrids that mediate profit goals with social objectives to nonprofits engaged in commercial activity.”

For-profits Hybrids Nonprofits (with social activities) (with profit & social goals) (with commercial activities)

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a continuum from profit-oriented businesses engaged in sizable social commitments (corporate philanthropies) to dual-purpose businesses that mediate profit goals with social objectives (hybrids) to nonprofit organizations engaged in mission-supporting commercial activity (social purpose organizations, for-profit subsidiaries of nonprofits, nonprofit-business partnerships, etc)

‘Business’ Social Enterprise: – Corporate Philanthropy (?) – Dual Purpose Business (hybrids) – Business-Nonprofit Partnerships

‘Nonprofit’ Social Enterprise:

– Social Purpose Organization – Trade Intermediary – Nonprofit/For-Profit Subsidiaries – Nonprofit-Business Partnerships

The main purpose is to provide a revenue stream to support any socially beneficial activity (it is not focused primarily on unemployment).

By some accounts, commercial revenue makes up more than 50% of total nonprofit revenue.

Compared to W. Europe, the government has had limited interest in strategically financing social enterprise.

Georgia Justice Project Provides ex-offenders with employment and job

training in a landscape company. Provides limited income for the nonprofit.

Goodwill Industries

Provides income to the nonprofit through thrift shop operations.

Thrift shop provides limited jobs for the hard-to-employ.

United States

Western Europe

Zimbabwe/ Zambia

Argentina

Outcome Emphasis

Economic Sustainability

Social Benefit

Economic Self-Sustainability

Social/ Economic Benefit

Common Organizational Type

Nonprofit/ Company

Association/ Cooperative

Microfinance/ Small Enterprise (Company)

Coop/ Mutual Benefit

Societal Sector

Market Economy

Social Economy

Market Economy

Social Economy

Strategic Develop Base

Foundations Government/EU

International Aid Civil Society

STATE

CIVIL SOCIETY

INTERNATIONAL AID

MARKET

United States

Western Europe

Southern Africa

Argentina

1) Discuss examples of social enterprises from your countries and list them on Worksheet #1.

2) Complete the comparison table in Worksheet #1 for each country in your group.

3) Using your responses on Worksheet #1, think about how much social enterprise in your country/countries relies on or involves the Market, the State, Civil Society, and International Aid. Place your country/countries on the diagram in Worksheet #2 in the place that best reflects their relative reliance.

Social enterprise

Education

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