WEEK 3 BUSINESS BEYOND PROFIT

MOTIVATION
What is social enterprise?
A social enterprise is a business model to solve
social issues and problems while providing goods
and services. It is a kind of entrepreneurship that
attempts to use business techniques in tackling
social, cultural, or environmental problems. One
common thing about it is that profit is not their priority.

Differentiating a Social Enterprise from

Commercial Enterprise and a Non-profit/Charity
Principles of Social Enterprise
There are seven principles of social enterprise which
serve as a guide to social entrepreneurs in achieving
their goals and broaden their impact on their
beneficiaries.
1. Cause-driven: A social enterprise is a business
without a profit maximization purpose where the
objective and purpose is to overcome or alleviate a
global or local issue such as poverty, education,
health, technology access, or the environment.
2. Financial and economic sustainability: Like any
other business, financial numbers and cash flow must
be in line with what is expected and sustainable in
the long term.
3. Investor returns: Investors will receive a return on
their investment amount only — no dividend.
Investors must only receive back what they put in.
4. Profits generated remain: Once the investments
are paid back, profit will stay with the company for
expansion and improvement.
5. Gender-sensitive and environmentally
conscious: Tackling gender discrimination and
inclusion is vital as well as integrating environmental
impact actions.
6. Employees are treated fairly: More emphasis on
well-being at the workplace is given, fostering long-
term relationships with employees, and striving for
their happiness.
7. Joy in their work: Businesses that work for the
purpose of helping a cause do it with joy.

TYPES OF SOCIAL ENTREPRENEURSHIP

Based on Service
1. Community Enterprises are businesses that
serve a particular geographic community or
community of interest and have representatives
from the community that sits on the board of
directors.
2. Social Firms are enterprises that seek to
place people who might otherwise find it difficult
to enter the mainstream job market, such as
those with learning difficulties or mental health
problems.
3. Cooperatives are organizations owned,
controlled, and run by their members.
4. Credit Unions are community-based financial
institutions that provide savings and loan
facilities for their members.
5. Community Development Finance
Institutions provide loans and other types of
investment to support social enterprises and
other small businesses.
6. Development Trusts aim to develop a
community through the ownership and
management of the property.
7. Public Sector Spinouts are independent
social enterprises that deliver services that were
previously provided by public sector
organizations.
8. Trading Arms of Charities are set up to
undertake trading activity to raise money for its
charity parent company.
9. Fair Trade Organizations are companies
committed to ensuring that producers are paid a
fair price for what they produce.
Based on Profit Models
1. Subsidized Social Enterprises is the more
conventional type, wherein the business relies on
funding, grants, donations, and other forms of
traditional funding to pay for operational costs.
2. Self-sustaining Social Enterprises are self-
sustaining social enterprises, on the other hand,
do not receive grants and can cover operational
costs through the revenue generated by their
sales.
3. Profitable Social Enterprises operate with
an income and are considered profitable.

A social business model is a structure, design,

or framework that a business follows to bring
value to its customers and clients. Social
entrepreneurs can use a combination of the nine
business models to reach more people who can
benefit from their social services.
Social enterprises are in the position and hold
responsibilities to solve social problems in the
community. Social enterprise can create lasting and
sustainable solutions for social and societal change.
Some of the examples of solving social problems in
the community are providing a cheap lamp for areas
where electricity is unreliable, providing livelihood for
non-working mothers in the community such as
teaching them to weave rugs, gabs, wallets, and
other products out of scraps of cloth.
A social issue or problem is any condition or
behavior that has negative consequences for large
numbers of people and that is generally recognized
as a condition or behavior that needs to be
addressed.
Some Social Issues that Small Businesses may
encountered:
 Worker Health and Safety
 Some Environmental issues
 Workplace and Community responsibility
 Global Climate Change
 Customers Satisfaction and preferences
 Profitability issue
 Complying with legal requirements.
History of Social Enterprise Activity in the Philippines
The rise of non-government organizations (NGO’s) triggered the
emergence of social enterprise in the Philippines. NGO’s are recognized
as the government’s partner in bringing social services to the poor. This is
evident in the 1987 Philippine Constitution which provides for the
involvement of representatives from various sectors in various
government programs.
NGOs are non-profit organizations that uphold worthy and noble
causes. Their operations and social missions are sustained by grants and
donations from international and local companies that put a portion of
their profits to charitable endeavors. They also engage in income-
generating activities like training, consultations with start-up companies,
and other management services. The need to sustain the organization is
a primary concern of NGOs. This focus sustainability brought about new
developments, such as the establishment of social enterprises. The
success of social enterprises in raising profits became an opportunity for
small scale businesses (with a similar objective of helping marginalized
communities) to flourish.
The SEPPS definition can be traced to the social enterprise
movement in the Philippines which started in 1999. A group of NGOs
formed the Philippine Social Enterprise Network (PhilSEN) to be the
venue for consultation and discussion among various social enterprises
activities. PhilSEN defined social enterprise as “a social mission-driven
organization that conducts economic activities providing goods and
services directly related to their primary mission of improving the
wellbeing of the poor, basic and marginalized sectors and their living
environment.”
In the academe, Ateneo de Manila University spearheaded the
offering of a degree program in Social Entrepreneurship and established
the Institute for Social Entrepreneurship in Asia. Soon, another group of
social enterprise and advocates formed the Poverty Reduction through
Social Entrepreneurship (PRESENT) Coalition headed by the Ateneo
School of Government and the Foundation for a Sustainable Society, Inc.
(FSSI). The coalition consisted of about 20 networks of social
entrepreneurs, small producers, members of the academe, and
microfinance institutions. It promotes the SEPP definition and emphasizes
the role of social enterprise in social and economic development.
 In 2007, there were already 30, 000 social enterprises consisting of
cooperatives, microfinance institutions, and associations operating in the
country. Microfinance and cooperatives have become a channel for
poverty reduction by providing capital to small start-up businesses.
There are no specific legislations for social enterprises in the
Philippines except for Republic Acts and a number of government
programs such as those made available by the Department of Social
Welfare and Development.
In 2014, the government enacted the Go Negosyo Act which assists
small-and medium scale enterprises in starting up their businesses. There
is also the Micro Enterprise Development Institution Act which provides
tax exemptions for microenterprises.