social enterprise and csos in the philippines: an introduction

www.unladkabayan.orgwww.unladkabayan.org

Maria Angela dlc. VillalbaUnlad Kabayan Migrant Services

Foundation73 Maningning St, Teachers Village, Quezon City

Phone: 794 1399/ Telefax: 433 1292 / [email protected]

Social Enterprise: Social Enterprise: A Strategic PropositionA Strategic Proposition

by


Considering entrepreneurship and

social enterprises?

1st system

2nd system

3rd system

Planning-regulatory

Public sectorState/government

LGU/National/GOCC-GFI

Mutual helpSocial sectorCommunity-CSO

Voluntary groups/Faith-based/

Profit-motivated

Private sectorBusiness

HH economymSMEMultinationals

Blackeconomy

cooperatives


Why focus on the Why focus on the social system?social system?

Inadequacies and excesses of the private systemInadequacies and excesses of the private system> Private profit orientation> Private profit orientation> Inefficiencies of the market> Inefficiencies of the market

Failures and abuse of the public systemFailures and abuse of the public system Weak planning and regulationWeak planning and regulation Wasteful government spending – corruptionWasteful government spending – corruption Inadequate social safety netsInadequate social safety nets

Vulnerability of the social systemVulnerability of the social system Dependency on the 1Dependency on the 1stst and 2 and 2ndnd systems systems Lack of access to resourcesLack of access to resources Redress socio-economic injustice and democratize economyRedress socio-economic injustice and democratize economy Vulnerability to disastersVulnerability to disasters


Similarities–differences of the Similarities–differences of the 3 systems3 systems

IndicatorsIndicators BusinessBusiness GovernmentGovernment Social Social

Motivation financial value Motivation financial value common good common good social valuesocial value

Core value profitability quality of life human dignityCore value profitability quality of life human dignity

Resources financial capital laws & policies commitment Resources financial capital laws & policies commitment innovation national income innovationinnovation national income innovation efficiency state machinery community efficiency state machinery community

Governance shareholders bureaucracyGovernance shareholders bureaucracy social stakeholderssocial stakeholders

Outcome increase national Outcome increase national improved quality of life improved quality of life shareholder value developmentshareholder value development of community of community

Measures of ROI-NPV-ROE GNP/GDPMeasures of ROI-NPV-ROE GNP/GDP sustainability and sustainability and

SuccessSuccess resiliencyresiliency


What is Entrepreneurship?What is Entrepreneurship?Who is an entrepreneur?Who is an entrepreneur?

It is the pursuit of It is the pursuit of opportunityopportunity beyond the tangible resourcesbeyond the tangible resources that is currently within controlthat is currently within control. . (Stevenson)(Stevenson)

Entrepreneurship had been a key element in the process of Entrepreneurship had been a key element in the process of advancement of the economy and society. advancement of the economy and society. (Schumpeter)(Schumpeter)

Seeking outSeeking out new business opportunities, new business opportunities, innovatinginnovating and and commercializing commercializing newnew goods and services. goods and services.

An An entrepreneurentrepreneur is one who undertakes the is one who undertakes the risksrisks in in establishing and runningestablishing and running a new business. a new business.

Innovative, opportunity-seeking, resourceful, value-creating Innovative, opportunity-seeking, resourceful, value-creating change agents. change agents. (Jean Bapiste)(Jean Bapiste)


Social EntrepreneurshipSocial Entrepreneurship

Social entrepreneurship Social entrepreneurship is about finding new and better ways to is about finding new and better ways to

create social value (rather than personal create social value (rather than personal and shareholder wealth/value). and shareholder wealth/value). (Dees)(Dees)

> An innovative, social value-creating > An innovative, social value-creating activity that can occur within or activity that can occur within or across the non-profit, business or across the non-profit, business or government sector. government sector. (HBS)(HBS)


Qualities of aQualities of aSocial EntrepreneurSocial Entrepreneur

1. Committed to a social mission1. Committed to a social mission2. Highly motivated2. Highly motivated3. Passion for the work3. Passion for the work4. Opportunity seeking4. Opportunity seeking5. Innovative 5. Innovative 6. Risk taker6. Risk taker7. Creative 7. Creative 8. Problem solver8. Problem solver9. Inspiring9. Inspiring10. Unifier – builds 10. Unifier – builds esprit de corpsesprit de corps


Social Entrepreneur Social Entrepreneur as Leader & Manageras Leader & Manager

ManagerManager LeaderLeader

Focus on thingsFocus on things Focus on peopleFocus on people(manages things)(manages things) (Leads people)(Leads people)AdministersAdministers InnovatesInnovatesShort-range viewShort-range view Long-range perspectiveLong-range perspectiveAsks how & whenAsks how & when Asks what and whyAsks what and whyEye on bottom lineEye on bottom line Eye on the horizonEye on the horizonAccepts status quoAccepts status quo Challenges status quoChallenges status quo

• Leadership Leadership is about inspiring your team to achieve high is about inspiring your team to achieve high performance and creating as compelling vision of the future.performance and creating as compelling vision of the future.

• ManagementManagement is about making an organization run better. is about making an organization run better.


Opportunity

People Deal

Context

PCDO FrameworkSource: Stevenson, Stahl, HBS

Key elements in the social Key elements in the social entrepreneurship processentrepreneurship process


PCDO FrameworkPCDO Framework

PEOPLE PEOPLE – those who actively participate in the venture or bring – those who actively participate in the venture or bring resources to the venture: skills, attitude, knowledge, contacts, resources to the venture: skills, attitude, knowledge, contacts, goals, values.goals, values.

CONTEXT CONTEXT – elements outside of the control of the venture but – elements outside of the control of the venture but influence its success or failure: macro-economy, regulatory influence its success or failure: macro-economy, regulatory structure, taxation.structure, taxation.

DEALDEAL – substance of the bargain that defines who are in the – substance of the bargain that defines who are in the venture, what they bring, what they get and when: economic venture, what they bring, what they get and when: economic contribution and benefits, social recognition, autonomy and contribution and benefits, social recognition, autonomy and decision rights.decision rights.

OPPORTUNITYOPPORTUNITY – a desired future state different from the present – a desired future state different from the present and the belief that the future state is possible, or achievable.and the belief that the future state is possible, or achievable.It is any activity acquiring the investment of scarce resources in It is any activity acquiring the investment of scarce resources in hopes of a future return.hopes of a future return.


Nuggets to consider:Nuggets to consider:

Small operations are an endangered speciesSmall operations are an endangered species Demonstrating impact and ability to fund raise Demonstrating impact and ability to fund raise

is at best tenuousis at best tenuous Market forces neither reward nor punish poor Market forces neither reward nor punish poor

performance readilyperformance readily Impact of contextual factors are ambiguous Impact of contextual factors are ambiguous

and may manifest over a long period of timeand may manifest over a long period of time Unfavorable context (market failure) is often a Unfavorable context (market failure) is often a

social opportunitysocial opportunity


Migration and Unlad Kabayan experience

OFW destinations


Remittance & capital flows


Private sector

Migrants

Social sector (CSOs)

Labor supplyLabor supply

Remittance marketRemittance market

Consumer marketConsumer market

Source of foreign Source of foreign

exchange exchange

Ease unemployment Ease unemployment

pressurespressures

Investor for private sectorInvestor for private sector

Public sector

Philanthropic donorsPhilanthropic donors

Target for social Target for social

servicesservices

Social investorsSocial investors

EntrepreneursEntrepreneurs

3-sector dynamics in migration


Applying PCDO Applying PCDO to migration to migration

PEOPLEPEOPLE:: OFWs, families, communities, OFWs, families, communities, governmentgovernment

CONTEXTCONTEXT:: unemployment, poverty, job unemployment, poverty, job insecurity abroad, vulnerability to abuse insecurity abroad, vulnerability to abuse

DEALDEAL:: Savings mobilization, planned Savings mobilization, planned reintegration and jobs at home, family reintegration and jobs at home, family reunification, reduced vulnerabilityreunification, reduced vulnerability

OPPORTUNITYOPPORTUNITY:: Remittances, capital, Remittances, capital, enterprise building, job creation enterprise building, job creation


Social Value Proposition Social Value Proposition (SVP)(SVP)

SVP

SVP is the driver of social entrepreneurs.

SVP is the organization’s theory of change. It is about how scarce resources are used for social value creation.

Opportunity

PeopleCapital

Regulatory

Socio-cultural

Macro-economy

Political

Demographics

Taxation


SVP in MSAI-CDRSVP in MSAI-CDRMSAI-CDR: Migrant Savings for Alternative MSAI-CDR: Migrant Savings for Alternative Investments – Community Development and Investments – Community Development and ReintegrationReintegrationPeoplePeople: : OFWsOFWs

CapitalCapital: : Disposable income/savingsDisposable income/savings

OpportunityOpportunity: : Building capital Building capital

Building enterprisesBuilding enterprises


Desired change Desired change

Crafting the Crafting the missionmission

Vision: A people who can build their own livelihood and a sustainable economy for society

Mission: Promote social entrepreneurship and social enterprises by mobilizing migrant workers, the marginalized and their resources to build a sustainable local economy


Social Enterprise Building Efforts

•


Core benefits of Social Enterprises

•Financial value: Capital and profit generation

Incomes

Increase in purchasing capacity

New products developed and

commercialized

•Social value:Jobs and livelihood

Improved nutrition, health and education

New skills & knowledge

Entrepreneurial mindset and practices


Current Framework

- Social sector an adjunct to the economy

- Trickle down

- Primacy of finance capital and financial value creation

- Making the social sector bankable

Framework Shift

- Social sector is integral to the economy

- Trickle up

- Primacy of human capital and social accounting

- Financial architecture appropriate to the needs of social sector and social enterprises

Shifting the Framework and Focus


Management issuesManagement issues PEOPLEPEOPLE

Inefficient labor marketInefficient labor market Short-term job vs. long-term sustainability Short-term job vs. long-term sustainability

CONTEXTCONTEXT Vagaries of the macro-economyVagaries of the macro-economy Conflicting regulatory regimesConflicting regulatory regimes Ethical vs corrupt practicesEthical vs corrupt practices Market disorderMarket disorder

DEALDEAL Shifting focus and priorities of partnersShifting focus and priorities of partners Slow shift in mindset and practices of partnersSlow shift in mindset and practices of partners Lack of appreciation on rigors of business practiceLack of appreciation on rigors of business practice

OPPORTUNITYOPPORTUNITY Inadequate and impatient capitalInadequate and impatient capital lack of access to technologylack of access to technology Low entrepreneurial literacyLow entrepreneurial literacy


Constraints of Social EnterprisesConstraints of Social Enterprises

BusinessBusiness Competitive & Competitive &

competent personnelcompetent personnel Technology accessTechnology access Access to diverse Access to diverse

capital sourcescapital sources Performance easy to Performance easy to

measuremeasure Punishment and Punishment and

rewards are quickrewards are quick

SocialPersonnel lower than market qualityLong gestation periodUnable to offer equity optionsReliance on SVP Performance and outcomes are difficult to measure


Challenges faced byChallenges faced by social enterprises in the social enterprises in the PhilippinesPhilippines

Policy:Policy: Absence of an enabling legislation for social enterprises to be built Absence of an enabling legislation for social enterprises to be built

and growand grow Lack of coherence and clarity on development policy and priorities Lack of coherence and clarity on development policy and priorities Conflicting policies and mandates (e.g. DTI, DOLE, DA, etc.)Conflicting policies and mandates (e.g. DTI, DOLE, DA, etc.) Export-oriented growthExport-oriented growth Cost: Cost: High cost of capital (money)High cost of capital (money) High business tax (30% - a disincentive for growth)High business tax (30% - a disincentive for growth) High cost of energy/power (a major input) and other inputsHigh cost of energy/power (a major input) and other inputs Corruption and cost of development Corruption and cost of development • Government support:Government support: Lack of incentives to micro-small entrepreneurs (insistence on Lack of incentives to micro-small entrepreneurs (insistence on

“level playing field”)“level playing field”) Lack of access to resources (R&D, technology)Lack of access to resources (R&D, technology) Bureaucratic processes and requirementsBureaucratic processes and requirements• CompetitionCompetition Competing economic and political interestsCompeting economic and political interests Competition for scarce resources among SEs, NGOs, etc.Competition for scarce resources among SEs, NGOs, etc.


Social Entrepreneurship & Social Social Entrepreneurship & Social Enterprises: The way forwardEnterprises: The way forward

For CSO and NGOFor CSO and NGO:: Develop entrepreneurial mindset and aptitudeDevelop entrepreneurial mindset and aptitude Build ethical values and practicesBuild ethical values and practices Instill the rigor of business Instill the rigor of business Enhance CSO/NGO capacity to generate Enhance CSO/NGO capacity to generate

earned income and reduces reliance to donorsearned income and reduces reliance to donors Lead to financial and organizational Lead to financial and organizational

sustainabilitysustainability


For the community:For the community:

Enable them to appreciate and harness Enable them to appreciate and harness local assetslocal assets

Build their spirit of self-reliance and self-Build their spirit of self-reliance and self-worth and dignityworth and dignity

Reduce dependency and patronage Reduce dependency and patronage mentalitymentality

Crucial lever in negotiations and social Crucial lever in negotiations and social dialogues with private and public sectors dialogues with private and public sectors

Start for building sustainable and resilient Start for building sustainable and resilient local economylocal economy


For the government-nationFor the government-nation

An important asset and pillar in nation-An important asset and pillar in nation-buildingbuilding

Reduce the pressure for out-migration Reduce the pressure for out-migration and dependence on remittancesand dependence on remittances

Provide the push for good and effective Provide the push for good and effective governancegovernance

Stimulate internally driven developmentStimulate internally driven development


Overcoming BarriersOvercoming Barriers

•Lobby for Social Enterprise Legislation•Entrepreneurial Literacy Program in Education curriculumMindsets, values and practicesTechnical expertiseFinancial competence

* Changing the way society is managedFoster common goodAppreciation and respect for the social sector


Development Bank of the Philippines (DBP)

Migrant Associations

Local Government Units


MAG-IMPOK, MAMUHUNANITATAG ANG KABUHAYAN

SA SARILING BAYAN!

Maraming Salamat Po!

social enterprise and csos in the philippines: an introduction

Business

social recognition

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pursuit of opportunity