Social Enterprise: an impactful contributor to development outcomes
This purpose of this blog post is to provide an introduction to social enterprise and, through the provision of a case-study, outline how it can contribute to international development work and rapidly enable sustainable social change.
2. An Introduction to Social Enterprise
A social enterprise is an organisation established through which the power of business is leveraged to enable social change. There is much confusion about what is meant by the term social enterprise and, when entering into discourse on social enterprise, it is important to seek clarity as to at which end of the ethical capital scale a contributor to the discussion is positioned. Bull et al. depicted the ethical capital scale diagrammatically as shown below:
3. The Impact Effect
The Impact Effect is the social-sector arm of Rakata International Ltd (founded in 1997). The Impact Effect serves to strengthen the social sector and provides the vehicle through which NGOs, and/or their beneficiary communities, are able to identify, establish and build successful social enterprises.
In this way, The Impact Effect is positioned firmly in level 5 of the ethical capital scale; it supports the paradigm that the overriding key purpose of social enterprise is to achieve social change, and seeks to assist NGOs and communities in their accomplishment of this.
The Impact Effect social enterprise methodology is a series of visual, inclusive and participatory processes which is structured in a step-by-step and easy to understand manner. Through partnerships with NGOs and communities The Impact Effect facilitates effective capacity development to build entities which leverage ‘the power of business’ to enable social change. The Impact Effect social enterprise methodology is designed to contribute to the process of optimising the impact of development work. It operates through a human rights based approach, and is focused on ensuring the sustainability of development work, empowering people themselves - especially the most marginalized - to participate in redressing unjust distributions of power that impede development progress.
4. Early Beginnings
Following the completion of a doctorate focused on the diffusion of practices between the private, public and non-profit sectors, Dr Jacqueline Parisi continued research to identify an effective process to support the creation of social enterprises for NGOs and communities. The result was a social enterprise process called The Impact Effect, i.e. a method to enable the development of an entity that leverages the power of business to enable social change.
In brief, the social enterprise process comprises three phases, namely inception, incubation, and early acceleration:
Inception is typically a 3-month period whereby through participatory processes the team selects the right product appropriate to the location and establishes a business plan.
Incubation is a 12-month process to pilot the concept, learn, improve, refine and document.
Early Acceleration is the subsequent 12 months, whereby the concept is operationalised.
Project based management techniques are applied and the process is designed to be simple and effective and easily modified to suit any organisation engaged in social enterprise activity, in any location. The journey has been systematised, enabling replicability and ease of scaling.
5. Case Study
This section serves to provide a case study in which The Impact Effect has facilitated the development of a social enterprise in a community which has suffered extreme social injustices. It has resulted in success measured in a currency that money cannot buy.
In 2014, Jacqueline was asked by an international NGO, Anesvad - based in Spain, to help NGOs and communities build social enterprises. This short case study is just one example of where the social enterprise methodology has been applied - in the remote village called Maowandgong, in Yunnan Province, China. The village is home to approximately 200 people affected by leprosy, many of whom have been stigmatised and isolated for more than 40 years.
As contextual background information, in China in the 1940s, 50s and 60s, people affected by leprosy were treated through isolation. The stigma attached to leprosy was so strong that many were driven away from their villages and turned upon by their families. People affected by leprosy retreated to isolated areas and formed small impoverished communities, known as leprosy villages.
Leprosy can be treated through multidrug therapy – an inexpensive and effective way to cure leprosy. However, through fear, ignorance and the existence of social stigma, people were often refused treatment. For many of those who did access multidrug therapy, the treatment was provided too late and they were consequently left with serious nerve damage and deformities of the hands, feet and eyes.
In the remote rural villages where the people affected by leprosy established themselves in isolation and without support, conditions were harsh. Without access to food, clean water, power, and often experiencing harsh climatic conditions, life was very challenging and involved gruelling physical labour. Heavy farming practices were required to survive and this together with a lack of education and knowledge as to how to self-protect and care for limb deformities often aggravated the deformities. Loss of sensitivity in the hands and feet often lead to the development of serious ulcers, and subsequently to the development of osteomyelitis. Many people lost fingers, hands and/or feet, and their lives. Lagophthalmos (an inability to close the eye) and insensitive cornea lead to keratitis and then to the loss of eye sight.
The people affected by leprosy were denied their basic rights and dignity. However, despite this and the many physical disabilities experienced, the people affected by leprosy learnt to implement livelihood activities and to this day make conscious efforts to improve themselves. They learn different skills, hoping to better their lives. One NGO called HANDA, a local NGO in China, assists the leprosy villages through the following practical approaches:
Education to the people affected by leprosy: Raising awareness among people affected by leprosy and their communities about their rights, facilitating social mobilisation and enabling people have improved knowledge about their rights and improves self-confidence to ask for their own rights.
Education to the people living in general communities:Organising public education activities in urban communities, universities and through internet, trying to improve the public awareness about the disease and the people it affected and their rights, they aim to engage and inspire more people to join them in the fight for the rights of people affected by leprosy.
Education to medical staff working at hospitals:Health workers, in spite of their knowledge, may often be the worst offenders. Education on the scientific knowledge of leprosy, the health rights of people affected by leprosy is provided to medical staff.
Increase capacity for economic development:The people affected by leprosy and their families live in abject poverty with poor living conditions and community infrastructure. Self-support and mutual help is the only way out of this difficult living situation, with income generation activities such as farming, livestock breeding or planting.
Work with local government:The government is promoting the strategy of ‘Harmonious Society’, which includes the equal rights of everyone in society. However, for many years the condition of leprosy has not been viewed as a high priority for the government. As such, self-support and mutual help is considered the best way to accomplish a successful outcome.
Collective action: People affected by leprosy need to engage more widely with each other in order to promote the rights of all. Mutual support awareness and capacity building with a rights based approach is important for people seeking solidarity and their own rights.
Despite the assistance provided by HANDA, the people affected by leprosy continue to experience many challenges due to the still ever-present stigma attached to leprosy. They are frequently discriminated against and others often taken advantage of their vulnerability. It is difficult for them to command a fair price for goods at farmers markets, they are often turned away from medical facilities due to fear of the disease, and the children from leprosy villages are frequently refused schooling. These circumstances understandably contribute to perpetuating low self-image among the villagers, which in turn is counterproductive to social integration.
In an attempt to help rectify this, in January 2015 a project was launched to create a social enterprise for the people of Maowangdong. The focus of the social enterprise is both 1) establishing a profit making entity to assist the villagers achieve financial sustainability, and 2) social change.
As part of ‘Inception’ the village was selected, and the social enterprise concept of bee-keeping with the production of pure honey was identified. The stated purpose of the social enterprise is as much, if not more, about social change as it is about generating profits.
Throughout the implementation of the social enterprise methodology, the challenges were plentiful. Many of the villagers were significantly impacted by the long-term effects of their leprosy. They had little formal education and rudimentary technical skills. Yet using the social enterprise methodology, and working in partnership with HANDA (a local NGO in China), it has been possible to help the people of Maowangdong to build a successful business producing honey.
Three years into the project, 15 families in the village now participate in the social enterprise. All have embraced the concept wholeheartedly. They have learnt new skills and a new livelihood, have built 152 hives, have plans to increase the number of hives to 160 by the end of 2017, have noticeably increased confidence, and are dealing directly with distributors and retailers who transport and sell the honey. The village participants (initially an all-male group) now comprise more than 40% women and their progress is attracting more women in the village. The project has a village ‘Management Group’, established specifically for the project, which is actively involved in facilitating activities.
The social enterprise methodology has been applied from inception, through the myriad of challenges, to a successful business outcome. To date, the enterprise has exceeded every expectation. Now overseas customers travel to Maowangdong to buy this unique, high quality honey directly from the source.
The success of this enterprise, and the methodology that underpins it, is about much more than dollars and cents. It has led to villagers being accepted by, and integrated into, their wider society. It has created a raft of new-found social skills. It has delivered purpose, dignity and pride, and has fundamentally changed the expectations of the people involved. At a recent evaluation, many of the villagers spoke about not only the income generation, but about the social benefits and changes that have occurred in such a short time. One villager said: I now feel like a worthwhile human being.
The outcomes of this project contribute towards 15 or the 17 Sustainable Development Goals, and in particular towards:
SDG 1 - No Poverty;
SDG 5 - Gender Equality;
SDG 8 - Decent Work and Economic Growth;
SDG 10 - Reduced Inequalities;
SDG 11 - Sustainable Cities and Communities.
The total cost of the project over the 3-year period has been less than USD125000.
6. The Future
An opportunity exists for The Impact Effect to work together with innovative progressive development organisations, and platform and scale The Impact Effect social enterprise methodology.
The adoption of The Impact Effect methodology is not viewed as a replacement for development projects and activities. It is instead viewed as a compatible mechanism, the implementation of which will allow development activities and The Impact Effect social enterprise methodology to co-exist in harmony.
The implementation of a social enterprise methodology, as a complimentary development to development activities, will enable synergies and optimise the impact of development outcomes.
Dr Jacqueline Parisi
Chatroom - TVHB, New Zealand - Creating sustainable social enterprises
Business enabling social impact
Leprosy. It is a terrifying word. We imagine disfigurement of biblical proportions, and people losing fingers if they slam a door too hard. Leprosy is caused by a bacterial infection, which affects the nerves, the skin and the respiratory tract.
The most tragic aspect of leprosy is that it can be easily treated, with nothing more complicated than a course of drugs that have been around for many years, and which are not much more expensive than M&Ms. Yet in some places in the world, people afflicted by leprosy have been banished to colonies (more modernly called “communities”), where they have limited support and rarely interact with other members of society. Despite the discrimination and the stigma, and the fact they had been compelled to live at the furthest edge of the beaten track, I found a group of people in Maowangdong who seemed only intent on celebrating the positive things in their lives.
The drive from Kunming took nearly 8 hours. On the way back I realised the scenery was beautiful. But on that first visit to the village of Maowangdong, home to the best part of 200 of these people affected by leprosy, I gave no thought to the journey, because I was so concerned about what I would find when I arrived. And Maowangdong was everything I expected it to be.
I had accepted the challenge of helping the villagers develop a sustainable source of income, working with HANDA (a Chinese charity), funded by Anesvad (an international charity based in Spain). At first the locals were confused by the very concept of sustainable income, and it took a lot of patience and creativity to get the message across. To be fair this is not simple even when you are operating in your own language, so imagine the opportunities for confusion and chaos when such a strange notion is being proposed by a strange visitor in an incomprehensible language.
It took me less than an hour to come to the conclusion that the people in this village would teach me a lot more than I could ever hope to teach them. Of course I knew a lot more about sustainable income generation than they did, but they seemed to be expert practitioners in everything that was important. They treated me, and my colleagues from HANDA, like they had known us since the day of our birth. They were genuinely delighted we were there to help them, and they became even more enthusiastic when it became clear we wanted to help them help themselves. It sounds like such a cliché, from the worst management book your boss ever made you read. Yet in Maowangdong it worked out exactly like that. These people had never been considered capable of doing anything much for themselves, except surviving. So this was an opportunity they were prepared to cherish and nurture and bring to fruition.
I quickly realized I was at the opposite end of the spectrum from what do you get the person who has everything - because my dilemma was attempting to address the question what do you do for the people who have nothing? Sure they had nothing much, but they had so much enthusiasm it was scary. We considered making and selling orange juice. Then we thought about mushrooms, organic tea and generating methane from compost. Finally we decided on honey, on the basis the community at least had some limited experience in bee-keeping. But it’s one thing to grab a handful of honey from your own bees when you need it, and quite another to develop a viable, credible, sustainable honey business. Every decision was interminable, because every concept had to be explained (in English, then translated into Chinese then translated again into the local dialect), and everybody in the village wanted to participate and had something to offer. I had no idea I possessed such depths of patience and perseverance, but I soon came to appreciate that I wanted this to be successful just as much as my new colleagues.
We aimed our sights low, low enough to ensure everybody could see the overall objective, and we set off on what has become our own remarkable journey. Within 2 months we had developed a business plan. Within 6 months we had invested in purpose-built hives capable of generating enough honey to meet our initial requirements. By that time the project had such momentum it would’ve been easier to stop a runaway train.
Now, a little over a year after I took my first hesitant step out of the truck, the village of Maowangdong has produced its first commercial batch of honey. It’s a big deal that the community has generated their own source of income from their own efforts. It’s a much, much bigger deal that they have proven to themselves what they are capable of achieving. This first flush of success has come through collaboration, partnership, teamwork and mutual respect. In our world we toss these words around, hoping they will encourage some of us to sell more gadgets, or more insurance or put in a couple of hours extra at the office. In Maowangdong collaboration, partnership, teamwork and mutual respect are essential elements of survival, so it should’ve been no surprise that they approached this new-fangled concept of business in exactly the same way.
From a personal perspective, this has turned out to be one of the greatest challenges, and greatest achievements, of my career. Little over a year ago I could never have imagined the very existence of a place like Maowangdong, nor could anybody have expected what such dispossessed, disregarded and disenfranchised people might be capable of achieving. I helped them understand the challenges, understand the principles and get started. I have pushed and pulled them in the meantime to keep them on the path they decided they wanted to follow. I have encouraged the community to think about concepts like branding, marketing and sales margins that were probably as alien to them at the time as drive-through banking and waxed dental-floss. I sowed the seeds, and threw on some water occasionally. But theirs’ is the achievement. It is my new-found friends in Maowangdong who have demonstrated the strength of character to rise above every challenge, and who have consumed every opportunity like they were eating chocolate for the first time.
Regardless of how successful this honey business becomes, and how much self-respect and self-determination it engenders, it will not change the cruel daily reality for the older people of Maowangdong. They have lost limbs, and suffered horribly, and it has all been entirely unnecessary and avoidable. They have been let down, and left behind. Yet they shame me, and every other visitor to their community, by the ferocity of their optimism and enthusiasm. Despite what they have endured, they don’t dwell on missed opportunities, and they refuse to see leprosy, and what it has cost them, as anything other than the consequence of unfortunate circumstances. They have friends and family and they have children and grandchildren who have not been so needlessly afflicted by this disease. They sing, often spontaneously, just for the joy it brings them. It’s all the more remarkable, then, that the original plan was for the old people of Maowangdong to learn something significant from me.
Cross-sector practices helping to make social impact more effective
The philosophy of The Impact Effect is that organisational practices, systems and process typically used in the private and/or public sectors, can be innovatively utilised by a non-profit in order to strengthen the organisation, enable sustained financial viability, and optimise its social impact. Likewise, methodologies used in the non-profit sector can be utilised effectively in the private sector to enable a business's corporate social responsibility. In these ways, cross-sector practices are helping to make social impact more effective.
EXPERIENCE and RESEARCH tells us:
- Organisational capacity development practices, methodologies and processes can be leveraged across sectors, despite the different complexities in each sector
- While private sector businesses are focused on effectiveness and efficiencies, non-profit organisations also value these qualities – they recognise that in order to optimise social impact, non-profits also need to strive to be the best they can be organisationally, so as to ensure optimal benefits for beneficiaries and stakeholders
- The private sector is increasingly incorporating social meaning and non-profit methodologies, in order to establish social foundations and corporate social responsibility streams to their businesses
- Global economic trends and pressures have resulted in funding for non-profit organisations becoming increasingly competitive. Securing funds and ensuring sustained financial viability is increasingly a growing focus and concern
- Non-profit organisations can achieve sustained financial viability through the development of a 'social enterprise', i.e. a business venture specifically established to facilitate social change and generate profits which are reinvested into the non-profit organisation and/or directed towards the social actors participating in the social enterprise, and/or social change efforts
- An effective method of scaling social impact is through ‘social franchising’, i.e. the development of partnerships with a view to replicate a social entity’s model, processes and systems, while retaining a connectivity to ensure cohesiveness, quality control, and leverage of scale. It is possible to franchise both a non-profit organisation and a social enterprise.