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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
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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
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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
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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
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• 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