8/22/2012

1

How Social Enterprise Contributes to

Development Effectiveness in terms of

Poverty Reduction

Alissa CaronAlissa CaronAugust August 2525, , 20122012

The Poverty Dilemma

• Poverty

– 30% of Cambodian population

lives below national poverty

line (R5000 per day)

• Inequality

– Increasing between rural and

urban, and within rural areas

• Lack of access to job market

• How can we improve this??

Social Enterprises: One Solution?

Social Enterprise

• A business that exists to

meet a social or

environmental need

• Social enterprises aim to

maximize a triple bottom

line: economic, social, and

ecological

Profit-Maximizing Business

• A business that exists to

maximize profits for its

shareholders

• Business aims to maximize

economic gains only

(bottom line = net earnings)

What is a social enterprise?

• Like any good business, a SE must fill an existing gap in the

market!

• First step: assess the market!

• Strengths Weaknesses Opportunities Threats (SWOT) analysis:

– Look for existing market failure

– what are consumers looking for?

– who are the competitors?

SEs: Opportunity Recognition

What is a social enterprise?

• Your product/service should be coherent with your social

goal!

• SEs must consider the 4 “typical” Ps and a few extras:

– Price

– Product

– Place

– Promotion

– People

– Process

– Purpose: Can you prove the impact that your social purpose makes?

SEs: Opportunity Recognition Population and Community Development Association (PDA)

• Established in 1974, one of Thailand’s

oldest NGOs

• Mission: “To empower Thai communities

to shape and sustain their own

development”

• 920 staff

• 19 rural development centers

• Has worked in 16,000 villages in 46

provinces

• Founder: Mechai Viravaidya

8/22/2012

2

PDA’s Project Areas

Health

family planning, HIV/AIDS

Poverty alleviation

income generation, community-led

microcredit

Institutional development

community empowerment

Environmentconservation,

water and sanitation

Educationscholarships,

nutrition

Democracy

gender equality and youth

development

PhilanthropyCorporate Social Responsibility

Emergency relief

PDA’s Social Enterprises

• PDA established its first business - a separate legal entity – in

1975:

Population Development Company Limited (PDC) Independent

business entity with by-laws requiring it to donate all profits to

PDA

• Business-minded, technical staff

Today, PDA covers over 70% of its annual budget from its own

resources and hopes to be 100% self-sufficient in the future

PDC has supported PDA’s operations for 37 years

Restaurants & CateringRestaurants & Catering

ShopsShops

Examples of PDA/PDC’s Social Businesses

Resorts & HotelsResorts & Hotels

http://www.ruralhope.com

First product: Rice

8/22/2012

3

Outcomes of PDA’s Social Enterprises

• NGO financial self-reliance

• Diversification of skills for staff

• Income generating opportunities for rural communities

• Decreased migration from rural communities

A win-win-win situation for PDA, Thai communities, and

business partners!

UNAIDS

Best Practice

2001

Population Services International (PSI)

• Est. in 1970, PSI

(www.psi.org) is one of the

world’s largest NGOs

• PSI uses social marketing

strategies to promote family

planning and other health

products•First oral contraceptive

campaign began in 1976 in

Bangladesh

•Developing new initiatives now

in Cambodia to offer different

products (OK, Number One)

based on the population’s ability

to pay: total market approach

• Franchising health care services:

– creates a private network of doctors who provide a high-quality

primary health care and RH service for a fee

– first franchise was in 1995 in Pakistan

– today: 24 franchises on 3 continents

Population Services International (PSI)

Lessons Learned?

• Social enterprises are businesses, which need to

be desirable to customers in order to be

profitable and sustainable!

– Do market research to assess demand

– Set up skilled management and leadership

– Pay attention to the cash flow and financials

– Be dynamic: adjust to changing market conditions

Lessons Learned?

• Don’t lose sight of your social goal…

….this is what distinguishes an SE from a typical

business!

• Thus, need to strike a balance between social

aim and profit-maximizing aim

8/22/2012

4

Business/Company

Board of DirectorsShareholders

Profits

3. NGO

1. Reserve 2. Expansion

Community

Model A Model B

Community

Profits1. Reserve

2. Expansion

3. Dividends

Business/Company

Board of DirectorsShareholders

Social Enterprise Models Example of Model A: Target Community is Involved in SE

• Push Pull Cambodia (pushpullcambodia.com):

social enterprise based in Takeo that works with silk weaving

artisans who weave in ikat style

• Objective: link artisans with Western markets and provide

solid income-generating opportunities

• Opened a self-sufficient weaving center to produce silk by

hand. Designs are modern to fit worldwide tastes

• Employees (nearly 50) are paid fair wages, provided training

opportunities, access to health care, eye care, personal

savings, and a community savings fund

Example of Model B: Business and NGO are independent

PDC Profit PDA Community

Example of Hybrid Model

• Friends International (http://www.friends-international.org/)

– (est. 1994 in Phnom Penh)

– operates training businesses in hospitality, mechanics, hair and beauty,

which provide skills and income-generating opportunities to

vulnerable youth

– organizes home-based and workshop-based production of handicrafts,

cooperative production groups, and stalls to sell products in Siem Reap

and Phnom Penh

Example of Hybrid Model

• Friends International (http://www.friends-international.org/)

– A portion of earnings goes directly to the trainees and

handicraft producers

– A portion of earnings supports other Friends projects:

• social services

• education

• health care for children

• ChildSafe initiative

• community wide protection network for children

• drug prevention

• migration prevention and reintegration services

Wrapping Up about SE Models

• The model you choose depends on your specific social

mission:

– what are you trying to achieve?

– who are you trying to help?

• Each model has a unique implication for:

– how resources will be distributed

– role of the business in the community

– ETHICS of the business

• Commonalities:

– All models create jobs poverty alleviation

8/22/2012

5

• Be consistent:

– match your social goal (for SEs)

• Be a role model:

– model good social behavior within your business

for community

– invest in human capital

• Corporate Social Responsibility: philanthropy

• Make it profitable to be socially responsible:

– e.g. carbon credits

• Transparency and accountability:

– social accounting

• Passion!

Role of Business in Social Change/Development

• SEs still have trouble accessing traditional forms of investment

• If there was more government support for SE’s to have special

status – e.g. tax exemptions based on their social mission -

they might become more competitive with other businesses

that are trying to maximize profit without social aims

• Some countries have done this already:

– Singapore (Cooperative Society; 2009)

– South Korea (Social Enterprise Promotion Act; 2007)

– Some states in USA (benefit “B” corporation; est. first in

Maryland 2010)

– UK (Community Interest Company; 2006)

A Caveat and Point for Advocacy

Sponsored by

Village Development Partnershipfor Sustainable Health Development and Poverty Alleviation

PDI - Cambodia

An empowerment, community participation model that

increases income and improves health practices, leading

to better quality of life.

Income generation and business skills

training

Microfinance -Village

Development Bank (VDB)

Maternal and child health Education

Environmental conservation

Youth development Community

strengthening

VDP Project Summary

PDI-Cambodia’s SE Efforts:

Social Enterprise Development Training

Objective: Build capacity for Social Enterprises/NGOs

to start social businesses

Target:

- Train 12 NGOs by end of 2013

- Provide seed funds to capable NGOs in order to start small

business enterprises

Implementation:

- January 2012: Began training for 5 local NGOs in Siem Reap

- June 2012: NGOs presented their business plans

PDI-Cambodia (PDI-C)www.pdi-cambodia.com

Village Development partnership (VDP)www.villagedevelopmentpartnership.org

Mechai Viravaidya Foundation (MVF)www.mechaifoundation.org

Population and Development International (PDI)www.pdi-global.org

For More Information