Social enterprises in PH: challenges and opportunities

A RECENT report by the British Council on social enterprise in the Philippines revealed that a shortage of people with business skills in the social enterprise workforce poses a barrier to the sector’s growth. It also found that the Philippines needs more social enterprises that focus on providing social services. The report was prepared by the Overseas Development Institute, a leading UK think tank.

The British Council supports the development of social enterprise around the world, because we believe it offers a sustainable approach for addressing a wide range of societal challenges, and contributes to making societies more prosperous, inclusive and secure. Our programs draw on expertise from the United Kingdom, which has one of the world’s most developed regulatory structures for social enterprise—a sector that contributes £24 billion to the economy.

Since 2009, our focus in the Philippines has been to support young social entrepreneurs through capacity-building. This includes I am a Changemaker, a social-enterprise competition that develops young people’s creativity, fosters new networks, and offers a space to exchange ideas. We now aim to broaden our work into policy support, mainstreaming social enterprise in higher education, and embedding social-enterprise approaches in development.

The definition of a social enterprise is important, because it can determine how funding and support are targeted. For example, the UK government defines a social enterprise as a business that has primarily social objectives and whose surpluses are principally reinvested in the business or in the community to support those objectives, rather than being distributed to owners.

At present, there is no official definition of social enterprise in the Philippines, although the proposed social-enterprise bill uses one developed by the Institute of Social Entrepreneurship in Asia, which defines them in terms of the poor as primary stakeholders.

The principal characteristic of social enterprises is that they use business methods to achieve social outcomes. That is, they must be able to create customers, generate a surplus, and achieve an optimal scale. It takes perseverance, hard work and creativity to be successful, but the rewards—measured in terms of social impact—can be substantial.

In the United Kingdom, for example, there is a social enterprise called Women Like Us that offers career support for women with children. In 2012, it launched an online job-search service and a qualified recruitment agency. It works directly with employers to promote flexible recruitment as a way of attracting and retaining talented employees. The firm has become a recruitment powerhouse, with a revenue of £2.3 million in 2009.

As for the Philippines, it is clear that the social-enterprise sector is vibrant and growing. One enterprise that was frequently mentioned by our interviewees is Rags2Riches. It has trained over 800 artisans in poor urban communities in Metro Manila to weave rags and clothing scraps into stylish products. Another good example is Coffee for Peace in Davao, which runs a coffee shop and a coffee-trading system that buys coffee from local producers at above-market prices.

However, one of the more striking findings in our report is that the majority of social enterprises in the Philippines are product-based, with a strong focus on livelihood-based producer goods. In most of the countries where we work, by contrast, we see more services-based social enterprises, especially in critical sectors such as health, education, and water and sanitation. This suggests that Philippine social entrepreneurs have opportunities to address unmet demand by moving into new sectors.

Golden Sun, in China, is one good example of a services-based social enterprise. Launched in 2007, it seeks to provide high-quality care for the elderly at low cost. Each member is given a mobile phone and can call Golden Sun’s 24-hour hotline to access services, such as food delivery, home cleaning, companionship, medical consultations and emergency assistance. As of June 2014, Golden Sun was running hundreds of service centers in Fuzhou, supporting around 100,000 members. It has received support from the British Council’s Social Investment Programme in China, which provides training and funding opportunities to outstanding social enterprises.

Our report also found that there is a strong geographic concentration of social-enterprise activity in major urban areas, especially Metro Manila, followed by Cebu and Davao. This suggests that there are opportunities for social enterprises to scale up activity elsewhere.

The report also pointed to a shortage of business skills among social-enterprise staff, particularly skills such as business development and management, accounting, legal, tax, marketing, logistics and distribution. This is important because a strong social mission by itself will not bring about the desired outcomes: Business skills are critical if the social mission is to succeed.

Finally, the question of defining and measuring social impact also stood out during the stakeholder interviews. If and when government legislation on social enterprise is passed, the definition used may be critical in determining how the sector develops, and could contribute to more rigorous impact reporting if it is made a requirement of access to government support.

Nicholas Thomas is the country director of the British Council in the Philippines. To request a copy of the full publication, please e-mail changemaker@britishcouncil.org.ph.