Charity vs Social Entrepreneurship – 5 Differences

Acs, Z.J. et al. (2010) The social value of productive entrepreneurship, George Mason University, Washington

This paper compares the social value created by one social enterprise – the Grameen Bank – and one commercial enterprise – Microsoft. They suggest that social entrepreneurship creates both commercial and social value and that if:

“… the entrepreneurship (with all that entails in the entrepreneurship literature) creates social value, then it is social entrepreneurship.”

They have opened up the definition in this case to include commercial enterprises that create social value. Social entrepreneurship even within Microsoft.

Suddenly I feel nervous.

But the main point of this post was to summarise their five points of comparison between charity and social entrepreneurship … something else that I’d love to have a discussion about.

Role of Social Value Creation

  • charities exist to redistribute income from the haves to the have-nots
  • social entrepreneurship’s role in social value creation is to be a change agent through innovation and mutually benefit exchanges

Social Structure

  • charity works within give structures in society
  • social entrepreneurship creates opportunities for social structural change

Purpose

  • the purpose of charity is to alleviate immediate suffering rather than deep social change
  • social entrepreneurship’s purpose is to improve social conditions

Financing

  • charity is primarily financed through donations
  • social entrepreneurship is funded through a business model

Sustainability

  • charity is not sustainable as it is reliant on donor funding and is a vehicle for income redistribution
  • by definition social entrepreneurship is sustainable as it uses a business model

Time Frame

  • charity is designed to alleviate immediate suffering, the response is quick and the impact is short lived
  • social entrepreneurship can be short-lived or run for decades just like any enterprise

I look at the picture of charities Acs et al. have drawn and see one of charities being a conduit between the haves and have-nots, of being stuck within the structures of society rather than challenging and forcing them to change, of not creating deep social change and only having a short lived impact.

At first glance it’s not a picture that I have heard Charity CEO describing of themselves, but maybe this needs a closer look as to just how true it is?

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Social Return on Investment … the early days

Richmond  B.J. et al. (2003)  ‘Social accounting for nonprofits: two models’  Nonprofit Management & Leadership  13 (4)  308-24.

I’ve just been reading what is now quite an old article on Social Return on Investment (SROI) – all the way back from 2003.

As I’m thinking about models of Social Impact Measurement that would be appropriate for social enterprises in South Africa, where I now live and work, I wanted to look back at the beginnings of SROI to understand where it came from.

This is, of course, just one small piece of the puzzle, but their model of Community Social Return on Investment and Value-Added Statements is interesting.

Richmond et al. start by explaining the origins of social accounting as being:

“based on a critique of the limitations of financial accounting, particularly the limited range of items that it considers, its exclusion of items that do not have an established dollar value (nonmonetized), and its focus on shareholders and other financing providers to the exclusion of other stakeholders—employees, users or consumers of the service, society, government, volunteers, and members.” (p.308-309)

We hear a lot about the limitations of financial accounting to tell the whole story of social enterprises and nonprofits – not so much, on the exclusion of other stakeholders – at least not that I have seen.

It interests me that if one of the drivers is the inclusion of other stakeholders, then why have we been so quick to resort to trying to monetize that which is ‘nonmonetized’? If we are developing accounting systems for the non-financiers, because they previously have been excluded, should we not be talking their language of ‘nonmetization’ rather than that of the financiers.

Maybe monetizing everything is just simplier in the end? Maybe it seems more legitimate if it has a cash value – but then what are we inferring about the legitimacy of the other stakeholders?

Richmond et al. define social accounting as:

“a systematic analysis of the effects of an organization on its communities of interest or stakeholders, with stakeholder input as part of the data that are analyzed for the accounting statement” (p.309)

The three elements – systematic analysis, effects on stakeholders and stakeholder input – can be found in many other definitions of social accounting. The paper lists a number of them if you are interested.

Richmond et al. refer to the work of the New Economics Foundation, AccountAbility and REDF in passing, but the paper is focused on the model they themselves developed in their book What Counts: Social Accounting for Nonprofits and Cooperatives (Quarter, Mook, and Richmond, 2003).

Their model effectively restructures the financial statements to include a monetary value for those nonmonetized or ‘social’ values, including input from volunteers on the income resources side, and a calculation of the monetary value of outputs of the organisation.

The model breaks down the outputs into three categories:

  • primary: direct effects of the organisation’s services on its beneficiaries
  • secondary: indirect effects on its beneficiaries
  • tertiary: effects on groups others than clients – the wider stakeholder group

The paper gives some examples of how they calculated these values, if you want more detail. The final stage of the process is to calculate the value added ratio – in the same way the contemporary SROI models do – to show how much value is created for every dollar invested.

As the years have past the SROI model has been refined and developed – and for very good reasons. But there is a part of me that is longing for the old days when you didn’t need an economist to work out your ratios.

When I think about the projects I’m working with at the moment … only one has the resources to pay for something like SROI and even then I’m not sure it’s the best place to start for them.

So the questions I’m left with are about just how necessary is the complexity of the contemporary SROI systems. What would happen if we returned to a more simplistic system as an entry point into social impact measurement for social enterprises?

 

 


A Magnificent Nation

I have been looking forward to writing this post since the beginning of April – for various reasons I put it off, but last week I was having a conversation with some colleagues about wise leadership in South Africa and the Royal Bafokeng Nation was mentioned as such an example.

As part of the Social Enterprise World Forum 2011 in Johannesburg earlier in the year I took part in a two day study tour to this area. The Royal Bafokeng Nation is the ethnic homeland of the Bafokeng people in the north-west province of South Africa. They have retained their traditional leadership structures and the nation is led by the hereditary Kgosi (king), Kgosi Leruo Molotlegi. It’s a beautiful part of the world up round Rustenberg and Phokeng, bordering on the Pilanesberg game reserve.

Previous generations of the nation fought to buy their land; and then when platinum deposits were found they took the Government on to ensure that their ownership of the land included the platinum below the surface. With the royalties from the mining companies they have invested in civic administration and social services.

There is still a long way for them to go – and they this say themselves – some of the villages still do not have electricity or running water. Not all children are in education. There is real poverty. But these are the issues the 20 year plan is trying to address.

The nation has not always had a positive profile in the press, focusing on the wealth they have gained from the platinum resources below the ground. Could it be that the concept of a region having access to such significant resources, and choosing to invest them wisely for the benefit of future generations rather than just a few individuals is just too strange a concept for some to understand?

One of things I was particularly impressed by was the level of the thinking of those that are involved in the future planning of the nation.

From generation to generation, from Kgosi to Kgosi, decisions have been made and agreed upon to create a better place for the generations to come. This has meant great sacrifices have been made by the then current generation, for the sake their children, and their children’s children. In the early 1900s the young men of the Bafokeng travelled far distances to Kimberley to work in the diamond mines. The money they earned came back into the community; for the community to buy the land they lived on. Those working on the mines never saw the benefit of the sacrifices they made; that would be the privilege of the generations to come. They didn’t know at the time the land was rich with platinum, the reason for buying the land was purely so they would own the title deeds to the land they have lived in; to safeguard it for the coming generations.

Decisions are being made by the current generation of Bafokeng, not for their own sake but the next generation and the generation after that. The decision makers of today know that the current situation is not sustainable. They could spend all their wealth now and enjoy its benefits now – with fast cars and flash lifestyles – but they choose not to, wise decisions must be made today, so that their community can be better for the generations to come.

There was a real humbleness in the people that we met. They were keen to celebrate their successes, but quick to admit where there were gaps and work still needed to happen.

Stories were told of the Kgosi arriving at the stadium, full of his people, being taken around in a cart pulled by a donkey, before heading off for his inauguration at the palace with 1000 invited guests. Others of the Kgosi and the Queen Mother taking part in the annual fun run, the Queen Mother coming last and the Kgosi, who is an athlete, slowing down in the last legs of the race to let someone else take the prize. These are a humble people, who are led by humble leaders.

The full story of the Royal Bafokeng Nation is well worth a read.

In this post I want to focus on my experiences of visiting social enterprise in this nation.

On our arrival in Phokeng, the administrative capital, we were shown the plan for the development of the nation. It was nothing short of impressive. The Royal Bafokeng Nation is in itself a social enterprise – all the profit from its different elements goes back into the development of the nation itself. There are four entities that make up the nation – an investment company, the town planning unit which handles service delivery, the institute that focuses on improving education and sports which is part of the investment unit and handles the sports facilities – including the Royal Bafokeng Sports Palace which was one of the venues for the 2010 FIFA World Cup.

The Kgosi’s aim is that the nation will be a self-sufficient community by the second decade of the 21st century. At the moment much of their income comes from the platinum mines – but this won’t last forever. Their 20 year plan is focusing on developing other industries to diversify their income. Tourism will be one of the key areas, another will be manufacturing.

We visited the sports complex and hotel – incidentally where the England football team were based during the World Cup – the thought that we may have been sitting on the chairs that David Beckham had sat did get us a bit excited!

The hotel is spectacular – and as it should be. The current Kgosi trained as an architect, which becomes obvious when you see the high standard to which the hotel and the surrounding sports facilities are built. The complex was designed to generate as much income as possible, so that the profit can be put back into development – a true social entrepreneurial endeavor.

We also visited the recently opened Academy and were shown round by the Head of the school. It is a stunning building, but more importantly the quality of the education and the values behind it were really impressive.

The Bafokeng have employed a community development manager, Mamakie Mothiba, who works with individuals and groups to establish social enterprises to address social needs within the community. This is all part of the 20 year plan.

We were privileged to be shown some of the goods made by these social enterprises – there were some beautiful pieces of work.

Mabolawane Mngadi set up Moi Toi Creations to make clothing for local women. Her bestselling product is a beautiful dress based on a design she saw in a dream. We also visited a social enterprise that grows vegetables that they sell to local businesses. This social enterprise was set up by a local group of blind people.

Talking to Mabolawane and the other social entrepreneurs we met the same issue came up repeatedly – access to markets. This was the one thing that they really struggled with. And it not just social entrepreneurs from the Royal Bafokeng Nation that have this problem – I have spoken to social entrepreneurs from across South Africa and this same issue keeps coming up.

How do social entrepreneurs from across the corners of South Africa get access to the appropriate markets to sell their goods?

It isn’t always easy to travel to where potential buyers are, or even affordable. Where in the UK, US or other developed countries the internet would provide an easy solution. There have been various attempts at this in the form of online marketplaces for social enterprises, the most successful of these to date has been SETAS. But when only 10% of the population have access to the internet, and the postal system is not always reliable this may not work.

Is there a role for an intermediary organisation that can gather the goods and services together and market them to the appropriate markets?

This has previously been done locally in Cape Town but it wasn’t sustainable; it has been done in other places too. And then more recently in Cape Town the Mother City Craft Collective has set up an online shop for Zimbabwean crafters to sell their goods, rather than them selling them on the streets.

I think with some creative thinking we can come up with a way to address this problem in a way that is sustainable and that gets these fantastic products out to those that would buy them. Who’s up for some brainstorming?


An African model of Social Impact Measurement

In November (14th – 16th)  the Graduate Business School at the University of Cape Town is hosting the Business of Social and Environmental Innovation conference. An abstract Bev Meldrum submitted has been accepted, so she’ll be presenting a paper at the conference.

We’ve replicated the content of the abstract below. If anyone has any comments or suggestions we’d love to hear them!

An African model of Social Impact Measurement: testing European knowledge in a the context of social innovations in the Western Cape region of South Africa

This paper looks to develop an African narrative on Social Impact Measurement, particularly focusing on case studies of social innovations in the Western Cape region, learning from the knowledge and experience gained in the European third sector.

There is a growing body of research that is coming out of the third sector in European countries and other developed economies relating to social impact measurement in social innovation projects (Richmond et al., 2003; Zappala & Lyons, 2009). Much of this comes from within the discourse around social entrepreneurship (Gordon, 2009; Ryan, 2008) and in a slightly different form from within the Corporate Social Responsibility arena (Shaikh & Jakpar, 2007).

In the UK, the focus of this paper’s research into Social Impact Measurement methodologies from developed economies, significant funding from the national Government is behind the adoption of Social Return on Investment (SROI) as a tool to be used in the third sector (Arvidson et al., 2010; Ryan, 2008). This tool is particularly suited for large organisations that have contracts with local, regional or national government, due in part to the tool’s ability to show the monetary value of the social impact their services are having – a useful tool for government who want to show value for money.

Social Return on Investment has not been adopted by the whole of the sector, and a number of other methodologies and tools are being used to a lesser or greater extent (Gordon, 2009; Stevenson, 2010). In the UK, Social Impact Measurement has in fact become an industry in itself with software tools being developed and sold and individuals training up as consultants in this very specific area and offering their services for a price.

So if in developed economies one methodology has yet to prove suitable for all, how does an emerging or developing economy find any that are suitable for their own context? In fact, are there any that have been birthed of Western knowledge that are flexible and adaptable enough to work within African contexts; or do we need to start an entirely new discourse and build our own knowledge? These are the central questions of this research.

It is assumed, in this research, that benefits of measuring and reporting on social impact for the different stakeholders – be they funders, beneficiaries, staff or partners – have been proven and therefore no time in this paper will be given over to this debate.

So if being able to ‘prove’ the extent of the social impact of social and environmental innovations can be of considerable benefit to stakeholders; the question is then what model of Social Impact Measurement would work in a developing economy such as South Africa?

Case studies of five social innovations in the Western Cape region of South Africa will form the basis of this paper. These case studies will range from individual social entrepreneurs, to newly established social enterprises to developed non-profits and social enterprises. The projects themselves will be based in a variety of communities from the Cape Coloured township of Macassar to the informal settlement of Sweet Home Farm, populated by Black Africans from a number of different cultures from within South Africa and beyond. The innovations will be targeting a range of different social challenges, although creating employment will be a theme for the majority of them.

This paper will review a number of Social Impact Measurement models used in the UK and analyse their effectiveness for use in the social innovations highlighted in the case studies. The testing of Social Impact Measurement systems that were birthed in the developed ‘third sector’ of European countries and the ‘non-profit sector’ of the US, in a developing economy such as South Africa will provide an insight into their adaptability and suitability in different environments and cultures.

Just as in developed economies the creators of social innovation come in all shapes and sizes in South Africa – from individual social entrepreneurs, to grassroots community groups, to established social enterprises and large corporations going beyond a traditional Corporate Social Responsibility approach. They work across sectors in hybrid organisational structures with access to different levels of resources. There are also many different cultures represented with different understandings of community and social impact (Fury, 2010). Any methodology of Social Impact Measurement must be flexible enough to work throughout such a diverse sector – crossing boundaries in the way the innovations themselves do.

The structures that grow up around the social innovations are not static either. As a social entrepreneur moves from stepping out on their own, to gathering a community around them, to establishing an organisation, to registering a legal identity; the structure around them is constantly adapting and changing. As external actors influence these changes we witness isomorphic behaviour, with the social innovations themselves, or at least the structures around them, becoming more like each other as they develop (DiMaggio & Powell, 1983; Reid & Griffiths, 2006).

Can models be built that reflect the constant adapting and changing nature of these structures? Do the models coming out of the European third sector account for this, or does the Social Impact Measurement industry provide a better, more suitable tool to change too when it is needed?  Is a Social Impact Measurement model that is dynamic in nature, following social innovations through every stage of their life cycle, even possible?

References

Arvidson, M. et al. (2010) The ambitions and challenges of SROI, Working Paper no. 49, Third Sector Research Centre, Birmingham.

DiMaggio, P.J., & Powell, W.W. (1983) The iron cage revisited: Institutional isomorphism and collective rationality in organisational fields. American Sociological Review, 48 (2), pp.147-160.

Fury, B. (2010) Social enterprise development in South Africa – creating a virtuous circle. Tshikululu Social Investments. Johannesburg.

Gordon, M. (2009) Accounting for making a difference. Social Enterprise Magazine. 23 November 2009. http://www.socialenterpriselive.com/section/features/people/20091123/expert-feature-accounting-making-difference?quicktabs_2=1 Accessed on [23 March 2011]

Reid, K., & Griffith, J. (1996) Social enterprise mythology: critiquing some assumptions. Social Enterprise Journal, 2 (1), pp. 1-10.

Richmond, B.J. et al. (2003) Social accounting for nonprofits: two models. Nonprofit management & leadership. 13 (4). pp.308-324.

Ryan, P.W. & Isaac, L. (2008) Social enterprise and the measurement of social value: methodological issues with the calculation and application of the social return on investment. Education, Knowledge & Economy, 2 (3) pp.223-237.

Shaikh, J.M. & Jakpar, S. (2007) Dispelling and construction of social accounting in view of social audit. Information Systems Control Journal. 2. pp.1-6.

Stevenson, N. et al.(2010) Social Impact Measurement (SIM) experiencing and future Directions for the third sector organisations in the east of England. Working Paper. Social Enterprise East of England, Bradford.

Zappala, G. & Lyons, M. (2009) Recent approaches to measuring social impact in the Third Sector, Background Paper no. 5, The Centre for Social Impact, Sydney.


Big Society, Big Bank

It was originally suggested ten years ago by Labour – a bank to invest in social ventures to get them off the ground. Now it’s been repackaged as the Big Society Bank (BSB), part of David Cameron’s Big Society plan. One of its goals are to encourage public sector workers to set up social enterprises to provide services to the public sector.

New Philanthropy Capital, an organisation that works with funders and charities helping them to increase the impact they have, undertook a piece of research to look at what the potential role of the BSB might be. It’s one of three reports commissioned to look into the options for this going forward, presented at an event in April.

The report, Understanding the Demand and Supply of Social Finance, calls for the BSB to be clear about the role it is looking to play – it can either help social enterprises and charities access capital, in order to increase their social impact, or invest for financial returns – it can’t do both.

The report looks at the three areas of social finance, financial inclusion and social housing.

Their proposals focus on the BSB taking on the role of investing in the investors – the social finance intermediaries who provide finance to the social enterprises, charities and businesses with a social purpose.

Social housing as a potential area they suggest is outside of the scope of the BSB. The needs of the sector are too big for the amount of money available through BSB to have any sort of impact. The other two areas, they are more positive about.

When discussing social finance the report suggests a number of gaps the BSB can fill – commerical loans/investments, soft loans/investments, capital for intermediaries, capital to fund intermediary overheads, building the capacity of the sector and developing new products.

In terms of financial exclusion the report focuses on a role for the BSB in making the third sector lenders, in particular credit unions, self-sustainable. Their proposal centres on the merger of the 271 existing unsustainable credit unions, to create larger more efficient credit unions and by the creation of a Central Service Organisation to minimise costs across the credit union network.

The report also suggests that the BSB should play a role influencing the legal, regulatory and tax environment and calling for greater transparency in the market.

Reading through this report two questions come to mind. Firstly, in regards to the credit unions, I wonder if any of the authors have had any experience of working in a local credit union?

I don’t know what your experience is, but the idea of giving money to three local credit unions so they can merge doesn’t sound as if it’s going to be quite as simple as the report suggests.

Those that set up local credit unions, in my experience, tend to incredibly passionate people completely committed to the needs of local people. It takes a lot of work, from a lot of people, to establish a credit union – even an unsustainable one.

I’ve worked in a credit union, and at other times in advisory role with other credit unions, that are looking to merge. It’s a difficult option for many credit unions to consider – after all the work they have put in, the thought of the credit union losing its identity as it is subsumed into others can be a scary one. Fears are voiced about how such a large credit union could possibly meet the specific needs of their clients, in the way they have been able to, of losing their local feel. Concerns are felt about who will survive the cut as roles are consolidated.

There are many good reasons to merge unsustainable credit unions; it could be a very positive move, creating the opportunity for credit unions to reach more potential customers and to do it in a sustainable way. It makes logical sense.

But what is really needed to make this a success is good leadership to bring those involved through a process that, however much we would like it to be professional and logical, will be an emotional one for many. I am interested in seeing whether the £100,000 or so per merger is going to be enough to address these issues.

The second question that has been bothering me as I read the NPC’s report is whether the BSB playing the role of investor in investors is really the best approach to create the greatest impact.

I think we have become incredibly good at creating industries and new layers of bureaucracy, without really asking whether they are actually needed.

Do we really need to create a new organisation – the Big Society Bank – with new salaries to pay, marketing costs and overheads. Surely we can be more creative and use what is already in existence, one of the larger social finance organisations, to take on as part of the what they do the BSB.

It would mean some people wouldn’t get new jobs, marketing companies wouldn’t win a new contract, utility companies would lose out … but instead more of the money would go to the organisations that actually need it, that are actually creating a social impact in their communities.

I’ve seen this approach of creating new industries and new layers of bureaucracy in other areas of the social enterprise and non-profit sector. With the introduction of social impact measurement models we now have training and opportunities for people to turn themselves in social impact measurement consultants. The social impact measurement industry just didn’t exist five years ago.

This isn’t necessarily a bad thing, help with implementing social impact measurement models, can be very helpful. More investment into social ventures is always welcome. My point is just that if our first response is to create a new industry, or a new intermediary, or a new organisation then maybe we don’t ask the hard questions about whether using existing structures would be a more efficient way to provide the services, so that as much money as possible gets into the hands of the social enterprises and non-profits on the ground actually doing the work.

Having left the UK over a year ago, and now working in Africa, I think I have developed a different perspective on this. I used to be the one who would step into these new industries and position myself as a consultant offering help navigating these new arenas.

This worked in the UK, and other developed countries, mainly I think, because the money was there to sustain these new industries. I, as an independent consultant, did fairly well to be honest.

Investment and funding is more scarce here in Africa, and the need is greater. I think I just don’t feel comfortable seeing such industries – such as the social impact measurement consultant industry – developed here in the same way as I saw in the UK.

Here the odds are greater – we need to be ensuring that as much money as possible gets into the hands of those that are changing the lives of the people in our communities. We need to be more critical of the approaches used in the developing countries, and really test them to see if there’s not a better way to do it here in Africa.

Back to the Big Society Bank. Credit unions are great, and anything we can do to help them become sustainable is a good thing – but lets not be naive about what happens when we work with real, live people. Investment into social ventures – I would just love to see 100% of the money actually in the hands of the social ventures, but maybe I’m the one that’s naive and it just doesn’t work that way.


What does social enterprise and the social economy look like for South Africa, Africa and the rest of world?

This is a summary of one of the breakaway sessions at the Social Enterprise World Forum.  The moderator was Ethel Cote (RIPRESS, Canada) with panelists David Kario (KCA University, Kenya) and Lee David (Nesst, East Europe & South America).

The session began with an overview of the global context of social enterprise and the social economy. There was discussion of the many different terminologies used in different continents and national contexts – from ‘social enterprise’,to ‘community enterprise’, to ‘third sector’ and ‘fourth sector’ and many more; and the social economy as the expression of the re-appropriation of the economy by its citizens.

The International Labour Organisation (ILO) was introduced as a key organisations working with social enterprises and social solidarity organisation across Africa. The ILO is trying to identify the common elements in all of those communities and bring them together.

Their focus is on the primacy of people and work over capital and the development of flexible and innovative enterprises. There is also a focus on solidarity, mutuality, building social capital and creating social benefit, and the use of voluntary participation.

Their definition of the social economy includes:

“… enterprises and organisations, in particularly co-operatives, mutual benefit societies, associations, foundations and social enterprises which have a specific feature of producing goods, service and knowledge while pursuing economic, environmental and social goals.”

The moderator talked in terms of not everything within the social economy is a social enterprise. The space also includes co-operatives, fair trade organisations and social businesses – the Three Systems diagram from John Pearce’s “Social Enterprise in Anytown” was used to illustrate these distinctions.

Ethel Cote talked about the long history of community economic development, community finance, worker ownership and the nonprofit sector involvement in community revitalization in the US. There has been considerable public investment into community financial development institutions and an Office for Social Innovation has been created. The US Solidarity Economy Network (USSEN) and the Social Enterprise Alliance (SEA) have been established to create a voice for the social economy.

Peter Holbrook was invited to talk about his experience in the UK. Peter heads up the Social Enterprise Coalition (SEC) which has 10,000 social enterprises as members. Social enterprise in the UK is supported by the Social Enterprise Unit in the Government.

Before the Social Enterprise Coalition was established there were a range of organisations supporting different types of social enterprises including Social Firms UK, Co-operatives UK and many more. It was recognised that there was an opportunity to come together to form a coalition. The Social Enterprise Coalition was established in 2002.

SEC now work with the Social Enterprise Units in each part of the UK Government, and work alongside the Government on developing the national social enterprise strategy.

In 2005 a new legal structure was established specifically for social enterprises, called the Community Interest Company (CIC).

Social enterprise in the UK is not just about operating in areas of market failure – it’s a different way to do business that is sustainable and robust.

Ethel Cote spoke more generally about the social economy In Europe. There are two movements – the social economy and the social solidarity movement, which includes co-operatives. In France there is a move towards the social economy working with the public sector at regional and municipal levels. In Belgium the public sector support for the social economy is focused on labour market integration. In Italy and Spain there is hundreds of years history of the use of co-operatives.

In countries in Latin America, Brazil, in particular, there is a strong civil society and government has created a Solidarity Economy Secretariat. There are emerging civil society networks in Bolivia, Argentina, Mexico and Venezuela. In Ecuador a new constitution was adopted in 2008 which established the importance of the social and solidarity economy development model.

In Africa we are seeing an emergence of solidarity economy networks in several countries in West and North Africa. In October 2010 RIPESS Africa (Intercontinental Network for the Promotion of the Social Solidarity Economy) was created. In Mali the Government approached the RIPESS network to work with them on a developing social enterprise.  The ILO are supporting these activities and at the last World Social Forum the social solidarity economy is key to social development. RIPESS is creating the space for social enterprises, co-operatives, social financial and other players in social economy to come together and learn from each other.

Ethel Cote also referred to the social economy in Asia saying there are two networks that are bringing social enterprises together, however she stated that  there is little information available on actual social enterprise activity.

A partnership between RIPESS in Canada and Mali has brought investment to support peer learning between social entrepreneurs in the two countries, including the opportunity to run a Train the Trainer course.

In Canada there are many social enterprises in a variety of sectors. A few examples include sewing social enterprises and immigrant communities setting up gardening projects to grow traditional food. It did so well that they had surplus food which they sold at farmers markets. Other social enterprises run cafes, work in the agricultural sector and the elderly poor.

A social enterprise incubator was established of nine social enterprises. In order to ensure their sustainability partnerships were developed with other social economy organisations and private enterprises.

It is possible to spend 15 years talking about the definitions, but actually we need work on the ground.

Ethel introduced David Kairo, from KCA University in Kenya. There are six countries in the region that are part of the East African community. There are very developed and well known social enterprises in Kenya including Kick Start.

The challenge in the Kenyan economy is that there has not been an institutional framework in which to address the social economy.

KCA University came together with the Social Enterprise Development Consultants to look at the factors affecting social enterprise development in Kenya. The concept of social enterprise is new and has yet to be acknowledged by government. What is needed is to create a place in which to engage government.

It was decided to incubate a network. This has now become the East African Social Entrepreneurs Network, and it now works in partnership with ASEN, the African Social Entrepreneurs Network. The purpose of the network is to drive the agenda of social enterprise in the east African region and to sensitize citizens on issues of social enterprise. It also provides expert services on the issues relating to social enterprise.

The government in Kenya has created a policy that 10% of all procurement must be delivered by youth. So the network is working to support young people to develop and sell products and services to the government.

The network is now looking at undertaking a mapping activity to identify where the social enterprises in the region are.

There are a number of challenges faced by social enterprise in the region. The sector is fragmented. There are many players but not a common voice. There are issues of definitions and discussions that need to happen about the structures that can be used by social enterprises and how we operate. There is also a lack of assistance available for social enterprise.

There have been successes in EASEN. The network is now a registered company and has a board of six members. The study that was undertaken has now been published as a book. They are working in partnership with Government and the private sector to build a space for social enterprise, aiming to speak together in one voice.

Ethel introduced Lee Davis, from Nesst which is based in Eastern Europe and South America.

Lee spoke of a lack of infrastructure in these areas, and a lack of a common voice speaking for social enterprises.

Nesst started 15 years ago in central Europe, before the concept and terminology around social enterprise had been developed. When the walls came down in eastern Europe a lot of international funding came into the region. The organisations that were established in this time found that once the international money left, they were no longer sustainable. Nesst worked with these organisations to look at how to diversify their income. There was no local foundations or local government support, so the key was to look at how they could sustain themselves.

Five years ago they started using the term social enterprise, but the words weren’t there in the languages spoken in the countries, they had to create new phrases that would explain the concepts. Nesst started to run national competitions to raise the profile of social enterprises and to show the public and private sector the depth of the market.

The challenge them was how to finance this. The question they were facing was whether to focus on getting government or the private sector into that role. It actually worked out differently in the two regions.

In central Europe the countries were becoming part of the European Union (EU) so reflected more of a western European approach to the social economy, with a strong government involvement and with funding coming from the EU. Lee’s reflection was that the EU money often caused more damage than help, as it artificially sustained social enterprise in the region – creating problems when it ran out.

Nesst encouraged organisations to use the EU money to buy assets, rather than use it for cash flow. If it had been used for the purchase of assets at least they would still own those assets at the end of the process.

There were similarities in the Latin American region as this region was evolving out of a post-dictatorial era. The social enterprise movement came out of the solidarity movement, and as such had a politically charged background. In other parts of the world it is unusual to hear for a social enterprise as a human rights organisation, but that is what happened in Latin America and there are some great examples. However, being potentially controversial causes they cannot rely on government to fund them. There is very little involvement from the government, almost all investment is coming from the private sector.

There is not the infrastructure around social enterprise – there are no networks or social exchanges – just a few players. There are challenges too around legal issues and regulation. Many social enterprises struggle to decide how to incorporate – 90% end up as a non-profit with a profit subsidiary or as a project within a non-profit. There is a lack of transparency as well, as social enterprises have to work creatively within existing, restrictive structures. There is also the question of how we raise the profile of social enterprise – particularly with the government and amongst the public.

There is however the opportunity to bring capital investment into the sector. There a couple of the large bank looking at social enterprise, as well as the development banks who started with micro-credit and are now looking to social enterprise as an option.

At the end of the presentations a number of questions and comments were made.

There was a suggestions that the basic values of what social enterprise is all about is not clear. If we could come to agreements in this area that we would be able to all talk in one voice in our networks.

A comment was made that social enterprise itself if not new, it has been around for many years. The panel agreed with this, but suggested that now is the time to sensitize government to it as a way of doing business.

A question was asked around how you support people to consider diversifying their income but avoid mission drift. Lee from Nesst responded saying that that is a real issue and that they address when they reach the business planning stage with a social enterprise.

Nesst were asked whether they had considered expanding to Africa. They had considered it, but not at this time. Ethel commented also that there are many organisations already supporting social enterprises on the continent. Mapping exercises have tried to identify them.

Another question was asked around engaging with the policy agenda in different countries.  Research has been carried out as to what policies on social enterprises have been developed across the world. David commented that in Kenya there is an economic strategy that they are working with, however they cannot engage the government as individuals; the network must be built, they need more members, so that they have a bigger voice and a greater impact when they approach government.


Social Enterprise World Forum 2011 – Keynote Speakers

“our challenge is to take social entrepreneurship out to the world, to bring social change” – Viv van Vuuren, ILO

I recently spent a week in Johannesburg taking part in the 4th Social Enterprise World Forum 2011. I had attended the first Forum in Edinburgh, but for various reasons didn’t make it to Sydney or San Francisco for the second or the third.

Before the main conference began I headed off on a study tour to the Royal Bafokeng Nation – it was a fascinating trip, but I’ll blog about that another time. In this post I’ll summarise some of the most interesting quotes from the main sessions.

Dr Susan Steiman, head of the Centre for Social Entrepreneurship at the University of Johannesburg, was our host for the Forum.

“you may not get rich from social enterprise, but you’ll see dividends in community change” – Susan Steiman 

The conference was opened on the Monday evening by Ebrahim Patel the Minister of Economic Development. He spoke about the commitment of the Department of Economic Development to social enterprise. There was a strong emphasis on co-operatives as social enterprise from the Minister – but I guess that’s not surprising as there has been considerable investment in the co-operative movement.

“that which we count is often that which receives policy attention” – Ebrahim Patel, Minister of Economic Development

On the Tuesday evening we headed into the centre of town for drinks and networking at one of the bars in the city. There was a great view of Johannesburg from the top!

On the Wednesday morning we heard from Kevin Lynch, author of Mission, Inc.: The Practitioner’s Guide to Social Enterprise (Social Venture Network). He talked about his social enterprise and how they see each client.

“each person they work with, is a person who the Prison Service can no longer profit from” – Kevin Lynch

He reminded us that we should be looking after ourselves physically, emotionally and spiritually as social entrepreneurs – we can’t be achieving incredible social impact if we’re ill and in bad shape.

social entrepreneurs … we need you around, so take care of yourselves” – Kevin Lynch

Now is the time for social enterprise to rise to the challenge and achieve the potential we’ve been talking about.

“we are on the brink of massive social collapse at the hands of the traditional economy, it’s time for social entrepreneurs to mobilise” – Kevin Lynch

Dr Mamphela Ramphele spoke on the Wednesday session. As a key figure in the struggle against Apartheid there were many of us at the conference very keen to her speak.

“why given our starting point and our development are we under-performing compared to our peers” – Mamphela Ramphele

She challenged us to ask hard questions about why South Africa hasn’t developed as quickly as everyone expected, or as other countries, that are considered our peers such as Brazil, have. What would it take for South Africa to resolve its social problems for good, and not just catch up, but overtake our peers, in terms of development?

“philanthropy not the right vehicle to create sustainable enterprises … free money corrupts free enterprises” – Mamphela Ramphele

Dr Ramphele talked about the how social enterprise can help with addressing the social problems in the country, and across the continent.

“it’s time to move beyond a search for success, it’s time to strive for significance” – Mamphela Ramphele

On the Thursday morning it was Africa Day at the conference and we had the pleasure to hear from Jay Naidoo, former cabinet minister of South Africa and now from the Global Alliance for Improved Nutrition. Another hero from the history of South Africa, in particular due to his involvement with the trade union movement, it was a honour to hear from him. His book Fighting for Justice is at the top of my must read list!

As with Dr Ramphele, Mr Naidoo, talked about the need for social entrepreneurs to take action and address the challenges we face across this continent.

“communities are disempowered and unorganised … that’s why we aren’t taking action against problems in our communities” – Jay Naidoo

It was an incredibly inspiring few days at this year’s world forum. I went to a number of excellent breakaway sessions, and met some amazing social entrepreneurs – I’ll post about them another time.

“distinction between social or profit enterprise bringing social change not helpful the beneficiaires don’t care” – Brian Whittaker

Next year’s Social Enterprise World Forum is in Rio de Janeiro in October 2012 – I’ll be hoping to be there!

“what thing in your community is impossible to do, but if done would bring dramatic social change?” – Jerr Bosche


It’s a New Blog …

We’ve been asking ourselves recently … what could we do here at Social Enterprise Stuff that would be helpful for social enterprises and social entrepreneurs?

Talking to social enterprises and social entrepreneurs we hear the amazing stories of what social enterprises are achieving across the world. But we also hear that many feel isolated and feel like they are on their own. Many aren’t making the most of the networks or tools and resources available from around the world – often because they aren’t aware they are there. As for the research that is available, much of its stays within academic circles. We’d love to see more research be available for practitioners and opportunities created to discuss any practical implications – we are hoping that this website will be able to play a role in this.

There is so much information buzzing around the internet and so many exciting things happening around the world, things that we can all learn from. Our aim is to bring together the most useful bits … we’ll trawl the internet for you, so you don’t have to!

As we are based in Cape Town, South Africa our blog will have an African focus. We are particularly interested in looking at what’s going on in other parts of the world and seeing how they can be of use in an African context. And, finding ways to spread African social innovations across the globe. It’s going to be a fun journey!

In our About Us page you can read more about who Bev Meldrum is and her work with social enterprises. The Networks and Support page lists a number of social enterprise networks that you might find useful to be part of. The Research page will provides summaries of research papers and reports and comments on how they might be of benefit to practitioners. In the Tools & Resources page we’ll provide links to anything we find that we think will be helpful.

If you have anything that you think we should add to our pages just let us know!

Our next few posts are going to be focusing on the Social Enterprise World Forum held in Johannesburg at the beginning of April. Look out for those!