Change is afoot in the not-for-profit sector. Donors are now expecting a higher rate of return in terms of civic society development and the financial sustainability of communities than has been available before. The time honoured model of charity grant giving towards some difficult-to-measure future objective is fast becoming less attractive, spurred on by the current global economic crisis where donors have considerably higher expectations to be met. Charity giving is increasingly evolving in the direction of investment with a social purpose.

Enter the social enterprise. This is not charity. Neither is it grant giving with a distinct humanitarian purpose. What sets a social enterprise apart from a commercial enterprise is that the social purpose is central to its existence. This is different from a commercial enterprise with a social objective as one of its reasons for doing business.

An example of a social enterprise would be a garments factory established with the core purpose of providing disabled people with employment opportunities. Or an export-focused enterprise established with the core purpose of providing better distribution and sale opportunities for local organic farm products originating from impoverished rural communities.

It is unlikely that the growth of social enterprises would originate from INGOs or domestic NGOs due to the skills requirement to manage the social enterprise as a viable business venture. Successful social enterprises are more likely to be founded and led by successful and matured professional or business folk who would want to leverage on their expertise and success to help others, by contributing their time and skills to develop sustainable income streams for less fortunate communities, particularly in developing countries. Social enterprises would be additionally useful in areas where the beneficial impact of microcredit practices may be diluted due to the saturation of income generating opportunities in the local economy, by providing employment or new business opportunities with an export-driven focus.

A critical success factor towards the development of social enterprises is the ability to attract skilled entrepreneurs with the passion and drive to help individuals and communities help themselves. The challenge is to develop viable sustainable businesses, which can be eventually managed by the local community, based on applying the BOT model of build, operate, and transfer to medium-sized social enterprises. These social enterprises would be highly attractive to donor organisations keen to see a more visible return for their dollar.

James Meyer