THE BUSINESS OF DOING GOOD: SUPPORTING PRO-POOR BUSINESS
SOLUTIONS TO POVERTY
The Case for Social Enterprises Natalia Agapitova and Elaine Tinsley
Innovation and Entrepreneurship Unit, T&C
Intro
■ Caribbean Growth Forum Webinar Series
■ Innovations and Entrepreneurship Unit – Trade & Competitiveness GP
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Entrepreneurship Offerings AGRIBUSINESS DIGITAL CLEAN TECH
WOMEN INCLUSIVE INNOVATION
ACCESS 2 FINANCE
Outline
■ Definition and Rationale
■ Social Enterprise Models
■ Public Policies to Support SE
ANNEXES
■ Success Story: The UK Case
■ Resources
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RATIONALE Defining the benefits of the social enterprise sector
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What are Social Enterprises?
Social enterprises create innovative solutions to service marginalized populations, using business methods and leveraging market forces to achieve social objectives that are
cost-effective.
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Market Failures to Meeting Base of Pyramid Needs
Governmentchallenges:• Lackofresources• Lowcapacity• Lackofinfrastructure• Lackofincen9ves• LackofunderstandingBoPneeds• Bureaucracyrigidness• WeakM&E,limiteddata
Privatefirmsmaynotbeinterested:• Tooriskyandlowreward• Uncertaindemand• Lowprofitmargins• Unknownmarket• Unclear/unfriendlyregula9on• Lackofproveninnova9ons• Difficul9esadap9ngnewmodel
Social Enterprises
Wheregovernmentsdon’treach,or
tradi9onalprivatefirmsarenotinterested
Benefits of SE ■ Fillsaneed:Fillaccessgaptopublicservices,orwherethere
isservice-improvesquality,affordabilityandequityofservices
■ Pro-poor:Targetedtotheunderservedormarginalizedgroups–eitherascustomers,producers,oremployees,focusedonimpactoverprofit.
■ Innova6ve:EasierforSEtoinnovate,testoutnewideasanditerateontheirmodelstofindthesolu9onthatworks.
■ InclusiveJobs:Morevestedinsuppor9ngandtrainingthelocalemployment,par9cularlyofmarginalizedgroups(women,youth,disabled)
■ Cost-Efficient:needtoprovidevalueformoney–otherwisethereisnomarket
■ Sociallyandenvironmentallyconscious:lookingatthelargerpictureofimpactratherthannarroweconomicreturns.
Ø CanbeGovernmentalliesinpromo6ngdevelopment:helpingthegovernmentovercomeeconomic(e.g.,budgetpressure),andsocial(e.g.,inclusion)challenges.
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Social Enterprises
Tackle Challenge
Pro-Poor
Innovative
Inclusive Jobs
Cost-Efficient
Social /Enviro
SEs can generate sizable national-level returns
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• SEs have outperformed profit-driven small-sized enterprises on a number of indicators. • For example, according to the 2015 Social Enterprise UK Survey, 41% of SEs created jobs in
the past 12 months compared to 22% of small-sized enterprises for the same time period. (SEUK 2015). They also hired more women as leaders.
• SEs reduce inequalities by providing stable employment to those typically excluded from the labor market, and reduces fiscal transfer benefits. • In Manitoba, Canada, the SE sector contributed more than USD 200 million each year in
saved costs associated with unemployment (O’Connor et al. 2012). • Returns on the investment in SEs in the United States include an economic multiplier of 2.23,
and a savings for US taxpayers of USD 1.31 for every dollar invested in SE due to reductions in government transfer benefits (Maxwell 2015).
• SE sector can become a major contributor to gross domestic product and a driver for sustainable and inclusive economic growth. • In South Korea, the social economy, which includes newer types of SEs as well as more
established cooperatives, accounts for 3% of gross domestic product (British Council 2015).
SOCIAL ENTERPRISE SOLUTIONS
Designing solutions to critical development challenges
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Business Models: Development Challenges & Social Enterprise Solutions
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• Decentralized water treatment ATMS (Waterlife)
• Serviced Toilets (Sanergy)
Access to WASH
• Last mile grid connection (Barrio Electrico)
• Solar home systems (Mobisol)
Access to Energy
• Empowering Community Health Workers (Living Goods)
• Mobile Health Clinics (Rides for Lives)
Last Mile Quality Health Access
• Specialized clinics (salaUno)
• Telemedicine (Meradoctor)
• mHealth (Dimagi)
Affordable Health Services
• Low Cost Chain Schools (Bridge)
• Teacher Quality (STIR) • School Ratings and
Management (Gray Matters)
Improving Educational Outcomes
• Agriculture Productivity (Esoko)
• Media-based farmer education (Digital Green)
Agricultural Productivity
Service Delivery SE Models
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Educa9on
• LowCostSchools
• LearningCenters
• ImprovingTeacherQuality
• SchoolManagementSupport
• RapidITSkilling
Health
• SpecializedClinic
• Telemedicine• mHealth• FoodFor9fica9on
• Microhealthinsurance
• Women’shealth• CommunityHealthWorkers
• FemaleHygiene• AmbulatoryServices
WaterandSanita9on
• DecentralizedwaterTreatment
• Servicedtoilets• Market-ledRuralSanita9on
• WaterBeyondPipes
Energy
• SolarHomeSystems
• Off-gridProduc9veAppliances
• Mini-gridsforVillages
• GridConnec9onforBOPhouseholds
Waste
• WastetoValue• WastetoEnergy• WasteCollec9onServices
• WastewaterTreatment
• IntegratedWasteManagement
• WasteManagementAwareness
Livelihood SE Models
Agriculture
• DirectMarkettoFarmLinkages
• ICTExtensionServices• Non-ICTExtensionServices
• StorageSolu9ons• PostHarvestSolu9ons• Produc9vityEnhancement
• Mul9-stakeholderPla_orm
• End-to-EndSupport• Index-basedAgricultureInsurance
SkillsDevelopment
• RapidITSkilling• Educa9on-orientedOutsourcingServiceProviders
• EmpoweredCommunityHealthWorkers
• EarlyChildcareProviders
• JobsPla_orm
Financing
• ConsumerFinancing• EntrepreneurFinancing
• StudentFinancing• HealthFinancing• AgricultureFinanceProviders
• AgricultureFinanceIntermediaries
• MobileMoney/Banking
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Waste to Value– Building Materials Example: 360 Recycle Jamaica (http://www.360cycleja.com/)
SE: 360 Recycle
Waste Upscaling
Results
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Addressing unemployment
and waste management in
an island country
• Upcycling of plastic bottle, cardboard, and Styrofoam into building materials
• Building material is lightweight but sturdy, modular for easy assembly.
• Also used for the creation of playground equipment and sculptures
• Employs 35 people with expected expansion to 100 in the next year
Solution Challenge
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Youth Employment– Rapid IT Skilling Example of SE: Daproim, Digital Divide Data, Tunapanda
IT Skilling
Trained Youth
Results
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Rapid IT Skilling provides students a
means to earn money and work experience while staying in school
Addressing youth
unemployment and financing of
higher education
studies
• Offers disadvantaged youth a work/study program to pursue higher education while earning an income as digital service providers
• Trainyouthandyoungadultsindigitalskills-abouta2monthperiod.
• StudentsthenworkonpiecemealITprojectsforthelocalbusinesscommunity.
• TheprofitsgeneratedfromtheirBPOac9vi9escross-financepre-andin-servicevoca9onaltraining,educa9onscholarshipsorstudentloans
• Results:Increasesemployabilityofyouth,higherearnings,andabilitytocon9nuestudies
Solution Challenge
Improving Educational Outcomes Example of SE: Bridge Academy provides quality education to low income students
SE: Bridge
Students
Results
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• Provides standardized content, ensuring quality of material being delivered in a timely manner
• Centralized administration and other features lowers costs
• Employs and trains from the local community
• Families pay $7/month – a cost about the 1/3 of government expenditure per pupil
• Over 450 primary schools serving over 100,000 students
• National exams – mean score of 264, with 250 being passing.
• Bridge’s pioneer students had a 40% higher chance of passing the national primary exit exams than their counterparts
Challenges: Poor quality education in low income areas impedes educational attainment and limits income potential
Affordable Healthcare – Specialized Clinics Example of SE: Aravind Eyecare
Specialized Clinics
Results
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Standardized high volume patient care – model also used for dental, treating diabetes (Mexico’s
sugar clinics), dialysis treatments, cardiac and other chronic diseases
• High cost of specialized surgery
• Traveling costs to get screened, diagnosed and treated
• High cost of lens
High rates of blindness due
to treatable cataracts
• Specialize only in cataract surgery, • Streamline of surgical process to
allow for high volume – 6 patients/hr
• Cross-subsidization of patients, with tiered services so poor are treated for free
• Rural outreach with mobile clinics for screening, and transport to hospital for surgery
• Over 32 million treated, many free • Cost is about $20/ surgery
including 2-night stay and medication
Impact from India
Solution Challenge
Service related business model • Accessibility • Affordability
Improving Agricultural Productivity Example of SE: Esoko Extension Service Model Empowers Farmers
SE: Esoko
Farmers
Results
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• Esoko provides SMS messages on weather, market prices, farming tips
• Call centers to answer questions • Connects them to traders • Mobilizes local community leaders
• Subscribers pay a small fee to receive SMS with price information
• Over 350,000 farmers served in 10 countries
• Esoko clients experience 11% increase in income, solely based on access to price information
• Esoko has reduced cost of transacting business and searching for market information
• Due to greater price transparency, farmer have gained greater negotiating power
Challenges: Poor flow of real-time market information within agriculture sector among farmers and traders that affects supply and demand
Why Social enterprises? Targeting the Poor
Awareness: Raising awareness to the problem
Acceptability: Designing an appropriate solution
Availability: Making it easily available or accessible
Affordability: Providing value for money, spreading costs
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POLICIES Public policies to seed and support social enterprises
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Ecosystem
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Policies
Seeding Social Enterprises ■ Compe66on–Surfacingandsuppor9ng
exis9ngenterprises.■ Incubators/Accelerators–Crea9ngthespace
andsupportservicesforSEtodeveloptheirbusinessmodels.
■ TrainingandCapacityBuilding■ Replica6on–Invi9ngorcopyingexis9ng
enterprisestoreplicate.■ Financing:– ImpactInves,ng–Providingcapitalfundstoseed
grassrootsinnova4onorexpansion– FiscalIncen,ves–taxreliefforthoseinves4nginSE– Grants/FundingWindows
■ Externalsupport
Scaling Social Enterprises ■ Regula6ons-Lowerbarrierstoentry,addresssector
constraints■ Public-privatecollabora6on:
– Subsidized(e.g.capitalcostsonWaterATM)– Divisionofresponsibili4es–e.g.government
takesonawarenesscampaign– Adop4onofprivateinnova4onintothepublic
system(Liberia-Bridge)■ SocialProcurement–Governmentprocurementthat
takesalsosocialexternali9esintoconsidera9on■ SocialImpactBonds–FinancinginstrumenttouseSEto
achievedevelopmentresults.Sociallymindedinvestorsprovideupfrontcapital,andgetreturnsoninvestmentswhenoutcomesareachieved.
■ Na6onalframeworkstosupportSE
Legal Definition vs Working Definition vs Legal Forms ■ Adoption of a legal definition can play a positive signaling effect for the private
sector and impact investors, by providing a predictable framework for public and private investments and support to social enterprises. However, a legal definition alone appears insufficient to boost the social enterprise sector. (Korea, Italy)
■ Offering a working definition provides a number of the same advantages as offering a legal definition. It signals that government is focused on social enterprise. It helps entities determine whether or not they should be viewed as social enterprise, which in turn will help them attract public recognition and relevant financing sources. However the lack of a certification process can create abuse. (UK)
■ Where no legal or working definition exists, the creation of legal forms for social enterprise can reduce confusion on what constitutes social enterprise without locking in the parameters. By offering new legal forms, social enterprise status can be protected, making them attractive investments for socially minded investors. (US- Social Purpose Corporations, Benefit Corporations)
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SUCCESS STORY: THE UK CASE
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Results 70,000 social enterprises
ü Contribu9ng£24 bn totheeconomy
ü 31% work in 20% most deprived communities
ü Genera9ng1mjobs
ü Sustainable(50%profitableand26%breakeven)
Source: Social Enterprise UK. The State of Social Enterprise Survey 2015. 2015.
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Social Enterprises outperform SMEs in the UK
Source: Social Enterprise UK. The State of Social Enterprise Survey 2015. 2015.
31% work in the 20% most deprived communities
40% female leadership
59% employ disadvantaged people
35% of start-ups
52% grew turnover
41% created additional jobs
59% introduced new product or service
SMEs Social Enterprises
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UK: Legal and Policy Regulation
SocialEnterpriseUnitcreatedwithinDepartmentofTrade&Industry
AlegalformforCommunityInterest
Companiesintroduced
-ARegulatoryAgencytoregisterandmonitor
compliance-Communitybenefit
Test
SocialEnterprise:AstrategyforSuccess
published-Webpage-Regionalassistancecenters-Impactmetrics-£10minvestmentfunds
TonyBlair,LabourParty(1997-2007)
Socialenterpriseac4onplan:Scalingnew
heightspublished
2001 2002 2005 2006
Tony Blair commitment
1997
SocialEnterpriseCoali9on(nowSocial
EnterpriseUK)established
Red-Awareness Blue–Regula9onsGreen – Financing
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Launch of Big Society Capital with £600m
of investment for social enterprises
and charities
PublicServices(SocialValue)Act2012
“demandingpublicorg.tohaveregardto
economic,socialandenvironmentalwell-
being”
Socialinvestmenttaxrelief
DavidCameron,Conserva9veParty
2009 2012 2013
Prime Minister David Cameron launches the G8 Social Investment
Taskforce
First ever Social Impact Bond
launched
2011
All main parties manifesto’s
commitments to SEs
Social Enterprise
£100M Investment
Fund: health and social care
services
UK: Legal and Policy Regulation 2010
SEs features in Queen’s speech
Red-Awareness Blue–Regula9onsGreen – Financing
Social investment market
Source: Doeringer, Matthew F. "Fostering social enterprise: A historical and international analysis." Duke Journal of Comparative & International Law 20.2 (2010): 315.
Connects general public with impact
investments
SIB
Financial Instruments, i.e. Micro Genius
allows people to buy shares in community-based
projects
Crowd funding platform for social
investment
Infrastructure Intermediaries
ü Social banks ü Impact investors ü Venture
philanthropy funds ü Community
Development Finance Institutions
UK Social Enterprise Ecosystem
Legal,economicandpoli9calrecogni6onofsocialenterprise
sector
SocialEnterpriseSectorakracts
skilledprofessionals
Dynamicandfastgrowing
socialinvestmentmarketand
Intermediaries
SocialEnterpriseUKadvocatesfortheSEsectorandprovidesinforma6on
Expansivesupport
networksandintermediaryorganiza9ons
RESOURCES 4.
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Additional Info SocialEnterpriseModels
■ hSps://www.innova6onpolicyplaUorm.org/content/social-enterprise-business-models
WBBlogs
■ hkp://blogs.worldbank.org/dmblog/business-doing-good
■ hkp://blogs.worldbank.org/dmblog/10-policy-tools-governments-are-implemen9ng-spur-social-enterprise
■ hkp://blogs.worldbank.org/dmblog/procuring-social-impact
■ hkp://blogs.worldbank.org/dmblog/reaching-last-mile-social-enterprise-strategies
■ hkp://blogs.worldbank.org/dmblog/innova9ve-business-models-beker-impact-why-elearning-social-entrepreneurs
Courses
■ Self-pacedonlinee-learningforsocialenterprises:https://olc.worldbank.org/content/innovative-business-models-better-impact-self-paced
■ CourseforPolicyMakersonEngagingtheSocialEnterpriseSector(byrequest)
Formoreinforma9on:
ElaineTinsley–[email protected]–[email protected]
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