Making an impact through business
What is Social entrepreneurship? We asked Rico Gonzalez, former director for the Ateneo Center for Social Entrepreneurship and the founder and managing director of xchange, an incubator for social enterprises.
Social entrepreneurship is, in a nutshell, “development work with a business model.” It functions as a for-profit business with the goal of earning revenue, but this is meant to subsidize the social work. It is often seen as a novel approach for ensuring a more sustainable means of achieving the social agenda. Each social enterprise has its own unique set of objectives, but the common denominator, explains Gonzalez, is that the objective “is not the maximization of financial gain.”
Social entrepreneurship, as a discipline, is still quite young in the Philippines. At present, many local social entrepreneurs are of a younger demographic (mostly in their 20s and 30s).
According to Gonzalez, we are seeing a paradigm shift in the way millennials view their career paths. Most do not aspire to climb the corporate ladder one step at a time; instead, they focus on choosing a job that makes them happy and gives them meaning. Thus, many are drawn to the social enterprise model. However, given their young age, extensive business experience or training is often lacking, and so investors and mentors are crucial to their business development process. In fact, there is a growing class of investors called impact investors, who aim to work with such social entrepreneurs. As the name suggests, this type of investor looks not only to earn, but to also accomplish quantifiable social change. He/she evaluates the success or failure of the investment through the financial return and the social impact of the company.
Gonzalez set up xchange with similar goals in mind. His group aims to provide assistance and capital investment to grow and scale social enterprises in the Philippines. As virtuous as social entrepreneurship sounds, it is not without its challenges. One of the main questions social entrepreneurs often ask themselves is, how do we balance profit and social impact? There is no one answer to this complex question. Gonzalez reminds us that as much as it is important not to lose sight of the company’s social agenda, it is just as important to focus on the financial sustainability of the business. That said, focusing on financial viability also should not take away from the social objectives of the business. For what sets social entrepreneurs apart from commercial entrepreneurs with a corporate social responsibility is that making a social impact is at the core of the company’s vision, mission, and operations.
Social enterprises can arise in any industry. We interviewed a few notable, local, social entrepreneurs who are making an impact in varied fields as food, education, and health.
Charlene Tan, founder of GoodFood, wanted to start a business that emphasized community shared agriculture (CSA).
Through her company, consumers receive fresh, organic produce from local small-holder farmers, and also experience the abundance and scarcity of harvests along with the farmers. With a technical partner, SIBAT (Sibol ng Agham at Teknolohiya), GoodFood currently works with three communities and approximately 50 farmers.
The company is particular about staying true to the definition of organic farming, which is more than just the removal of chemicals from the process; it is about taking care of the soil that nourishes the plants, and creating an ecosystem wherein all the different elements in the garden contribute to their sustenance. GoodFood aims to create a nurturing, interdependent community where consumers and farmers care for each other.
Similarly, Zhihan Lee, a Singaporean national and engineer, founded Bagosphere, a vocational training program that adheres to the co-sharing model.
Founded as an LGU project in 2008, the Bagosphere program provides out-of-school youth with an intensive two-month course in English communication, I.T., financial literacy, and customer service. After training, the students are referred to call center partners in nearby Bacolod City and are guided through their recruitment process and professional growth.
As a business, Bagosphere operates using a model that emphasizes self-sustainability. The company teaches its students hard work, discipline, and a spirit of paying it forward.
The company partners with microfinance institutions and nonprofit lending groups to initially finance the students’ tuitions. Employed graduates are then required to pay their tuition back, and this income sustains the training of the incoming batch of students.
The company aims to train 10,000 graduates by 2020 and has currently graduated close to 400 students, with an 80 percent hire rate and 70 percent retention rate. Additionally, Bagosphere helps students develop self-confidence by showing them they can accomplish things they previously thought impossible.
Another noteworthy social enterprise is Four Eyes, a company that sells prescription eyeglasses online at a significantly lower price. For every pair of eyeglasses purchased, the company donates a pair to someone in need.
In 2012, the founders, Pavan Challa and Jiten Lalwani, created Four Eyes as a response to the commercial need for affordable eyewear, and to the social need of providing eyeglasses to the 10 million Filipinos who needed-but could not afford-one.
The company targets to donate at least 10,000 pairs of eyeglasses per year. According to the founders, their goal is to grow as “a sustainable startup that is able to generate a profit, but has the social aspect built into its roots.”
As businesswomen and entrepreneurs ourselves, we wondered about the challenges and supports that social entrepreneurs have.
Gonzalez validated that social enterprises sometimes face challenges that are more difficult than those faced by commercial businesses. Thus, we were glad to learn there are organizations that can provide support specifically for startup social entrepreneurs, such as Ashoka and Co.Lab.
Ashoka, a global pioneer and the largest non-profit organization for social entrepreneurs, supports more than 3,000 fellows globally. Fellows receive a living stipend for three years to enable them to focus full time on their social-change ideas. Beyond financial support, Ashoka provides a powerful global network of innovators, mentors, and peers that fellows can tap and collaborate with.
Locally, a group that provides a similar supportive network is Co.Lab.
The company provides a shared space for startups to gather, discuss, and grow. It encourages both social and commercial entrepreneurs to join, and invites specialists from different industries to participate, to ensure an expansive exchange of ideas and knowledge.
Talking to the different individuals we featured moved us to reflect on our own role in the realm of social change. Indeed, we all do not aspire to be social entrepreneurs, and we all do not need to be. The common theme we found while interviewing these individuals is that they are all motivated to simply make a change.
More importantly, the change they often seek is not to re-invent something or to create the yet-unimagined. These individuals seek to simply even the playing field, to make things more just, more fair: for the farmers tilling their modest lands, for the youngsters who do not receive proper education, for the poor who cannot afford eye care.
Ultimately, we realized, it is about us coming together as a society, as one ‘human’ community, to help resolve problems that inadvertently affect us all. The social entrepreneurs take that extra step to actively create solutions to these problems, but we too can be a part of this effort, in our own unique ways. Perhaps by being more conscientious about the way we spend; by making an extra effort to support fair trade; by teaching our children the value of fairness; or, by getting involved in a social enterprise. Whichever ways we employ, it seems what is most important is for us to keep in mind that we are all a part of this undertaking, and to fully believe that even as lone, single individuals, we can certainly make a dent in the seemingly overwhelming endeavor of making a difference.