Monday, August 13, 2007

Who are you calling a "social enterprise?!"

By Mal Warwick

QUICKLY—define “social enterprise” in 25 words or less. No cheating now. No peeking at your neighbor’s paper!

Are you finished? Good. Now compare what you’ve written with your friends and neighbors. Are you all on the same page? No? Well, welcome to the crowd.

I’ve read a fair amount about this phenomenon we so loosely refer to as “social enterprise,” and I’ve spoken personally to many of those who are most often publicly identified as among its leading advocates—and not just here in the United States, but around the world. (For that matter, I’m even a member of the Advisory Board of the newsletter, Social Enterprise Reporter, that originally ran this article.)

Guess what? The “experts” don’t agree, either. In fact, their contrasting definitions appear to come from completely different mindsets. They might as well be from different planets. In an effort to sort through all this confusion, I’ve devised a nifty little diagram. Maybe it will help you, too, to find your way more smoothly through the field.

Here goes:
As you can see below, Quadrants 1 and 2 correspond to the revenue-generating model. In Quadrant 1, you’ll find parking garages operated by nonprofit hospitals to help underwrite their budgets and a plethora of other for-profit enterprises launched by nonprofit organizations to make money, pure and simple. Quadrant 2 holds such remarkable ventures as Newman’s Own, Working Assets Long Distance, and Give Something Back, all of which operate traditional businesses and dedicate most or all the profits to support a range of social-sector organizations. This quadrant also includes any businesses established independently of the nonprofits they support, but whose primary function is to funnel their profits to those particular organizations—if, in fact, there are any such businesses. (I, for one, can’t think of any.)

Defining Social Enterprise

Social Sector

Business Sector


1. NGO generating revenue through a business enterprise to support its social mission

2. Business generating revenue to support the social mission of one or more NGO's


3. NGO established to address a social problem in an entrepreneurial manner

4. Business established to address a social problem in an entrepreneurial manner

By contrast, Quadrants 3 and 4 include those enterprises established primarily to address one or more social problems. Quadrant 3 includes such organizations as Goodwill Industries and Rebuild Resources, both of which engage in business to provide training and jobs to people who would otherwise face barriers to employment, and environmental organizations such as the Environmental Management Institute that operate as businesses but are organized as nonprofits. In Quadrant 4 lie those enterprises established as for-profit businesses rather than nonprofits, but whose nature is centered on its social mission. Shorebank comes immediately to mind—a precedent-setting bank operated and regulated like any other but dedicated to creating “economic equity and a healthy environment.”

What you won’t find in this typology are those businesses such as my own, Mal Warwick Associates as well as others much better known—that characterize themselves as “socially responsible” and pursue the “triple bottom line.” There are thousands of us, companies that operate with a view toward serving all our stakeholders,not just the owners. Many folks include us in the category of social enterprise. Wikipedia, for example.

I could shoehorn my company into Quadrant 4, since from the beginning our mission has been to raise money for progressive nonprofit organizations and political candidates, but most other triple-bottom-line companies don’t fit so neatly into that little rectangle. (Ben & Jerry’s? Selling flavored fat? Where’s the social mission in that?) That’s one reason why I think we don’t belong under the label “social enterprise.”

Another, much bigger reason is that I’m convinced all for-profit businesses will eventually be forced to acknowledge their responsibility to their customers, their employees, their suppliers, the community or communities where they do business, and to the environment. If that ever comes to pass, then presumably every business would be considered a social enterprise—robbing the term of all remaining sense. There are some who contend that every business already is, but from my perspective that just confuses matters. To my mind, a social enterprise is something special—not just another company. A social enterprise is conceived to address a social problem or challenge,either directly (Quadrants 3 and 4) or indirectly (Quadrants 1 and 2).

One more point: If you have more than a passing familiarity with the field, it will be obvious to you that many social enterprises straddle one or more of the quadrants in this typology. These are the enterprises generally referred to as “hybrids.” Greyston is an excellent example. Originally founded as a business to provide employment for the “unemployable,” the Greyston Bakery has since spawned several nonprofit enterprises which benefit from, but aren’t dependent on, its profits. That’s a hybrid operation in anyone’s book! Another fascinating example is Pura Vida Coffee, which is “changing the world, one cup at a time.” There are dozens of other brilliant examples. Still, most of the organizations that are normally described as social enterprises appear to fall into one or another of the four quadrants of this typology. I find it useful. I hope you do, too.

Giving Back: Why 'Social Enterprise' Rarely Works

By Ben Casselman

For more than a decade, a number of nonprofits have been embracing the tactics of the for-profit world, starting businesses such as bakeries or catering companies that employ disadvantaged people while using the proceeds to help break free of the shackles of fund-raising.

But now some nonprofit leaders and academics argue that this "social enterprise" model is flawed. Few if any of the businesses set up by nonprofits are truly self-sustaining, they maintain, and many have failed. Moreover, some experts say an overemphasis on creating a viable business can detract from an organization's social mission.

In a report set to be released Monday, the Seedco Policy Center -- a newly formed research arm of a New York nonprofit called Seedco -- argues that "overzealous encouragement may have pushed too many nonprofits into ill-advised commercial projects." The report advocates a new model that embraces the entrepreneurial spirit of the business world without expecting social-service groups to be self-supporting. "There's no shame in subsidy," says Neil Kleiman, who heads the Seedco policy center and is one of the report's authors.

"Social enterprise" gained prominence in the 1980s and 1990s, as cutbacks in government grants and a downturn in private funding pushed many organizations to seek ways to generate revenue. Prominent grant-making organizations such as Pew Charitable Trusts and Kauffman Foundation began asking recipients develop plans to sustain themselves. Many nonprofits saw social enterprise as a way to become both more efficient and more independent.

Some nonprofits started businesses that generate a significant percentage of their budget, and a few approach self-sufficiency. FareStart of Seattle, which trains homeless people for food-service jobs and provides related services, generates about $1.5 million of its $3.5 million annual budget by providing food to soup kitchens and child-care centers, among other ventures.

Baltimore's Harbor City Services, a nonprofit moving and document-storage concern that hires workers with histories of mental illness and drug abuse, comes even closer to funding its entire budget. The organization has certain advantages, including loan guarantees that chief executive John Herron acknowledges wouldn't have been available to for-profit competitors. But Harbor City has operated for more than a decade without direct government support and without soliciting private donations.

Many efforts have been less successful, however. Mr. Kleiman and his fellow researchers say they failed to find a single subsidy-free social enterprise. Other studies, using different definitions, have found at least a few examples, but experts agree they are the exception. A 2001 survey, published in the Harvard Business Review, found that 71% of social enterprises lost money, even without factoring in indirect costs covered by their parent nonprofit.

Samantha Beinhacker, president of New Capital Consulting, which advises social enterprises, says most will always rely on grants or other subsidies -- and that isn't necessarily a problem. The risk, she says, is that in striving for self-sufficiency, nonprofits will miss other opportunities to achieve their missions.

That's what happened at Seedco. In 2001, the organization -- a 20-year-old nonprofit that runs work-force development and small-business support programs -- launched a program to provide emergency backup child care to low-income workers so that they wouldn't miss work when their primary child care fell through. It was set up as a social enterprise: Seedco contracted with child-care providers, then sold the program to businesses as an employee benefit. Seedco thought the program would cover much of its budget, help working parents keep their jobs, ensure quality care for their children and give business to small child-care providers.

But few employers joined the program, in part because it couldn't accommodate sick children or late shifts. And relatively few employees signed up, preferring to stay home with their kids rather than send them to a stranger's house. Seedco shut the program in 2003.

Mr. Kleiman says Seedco missed a chance to help its clients through more traditional means, such as looking for sustained government or foundation support to subsidize the program. "A lot of it was getting caught up in the [social enterprise] mantra," he says. Seedco President Diane Baillargeon adds that the program proved too complex, especially for an organization without experience in either business or child care.

Ms. Beinhacker says there's a lesson in such failures: "Stick to the thing that you know," she says. "Business is hard."

[Source: The Wall Street Journal: June 1, 2007]

Friday, August 10, 2007

A third of us live on Rs 20 a day

By HT, Friday August 10, 2007, 01:09 AM

WHAT CAN Rs 20 possibly fetch? For 836 million Indians, Rs 20 per day, or Rs 600 a month, essentially buys them their daily sustenance. Technically, a large chunk of these 836 million Indians - 77 per cent of the country's population - are above the poverty line at Rs 12 per day.

But the reality is that they remain dismally poor, comprising largely of STs, SCs, OBCs and Muslims, according to the Report on Conditions of Work and Promotion of Livelihood in the Unorganised Sector - the first authoritative study on the state of informal or unorganised employment in India - compiled by the National Commission for Enterprises in the Unorganised Sector (NCEUS), a government-affiliated body.

The report is based on government data for the period between 1993-94 and 2004-05. A staggering 394.9 million workers, or 86 per cent of India's working population, work in the unorganised sector, which means they work without a social security cover. Nearly 80 per cent of these workers are among those who live on less than Rs 20 per day.

NCEUS chairman Dr Arjun Sengupta said: "These are the discriminated, disadvantaged and downtrodden. People who live on Rs 20 or less per day are the real poor and vulnerable." Sengupta told HT that Rs 20, which signifies consumption pattern, is an indicator of the person's income and saving. "If people do not earn, how will they spend or save?" Agriculture, the report found, was a fertile ground for poverty, especially for small and marginal farmers, 84 per cent of whom spent more than they earned and were often caught in debt traps.

Laws & Justice for ALL in India

Wednesday, August 01, 2007

NRI neurosurgeon donates $20 million to native village

Tuesday July 31 2007 13:06 IST


NEW YORK: An Indian American who made millions as a neurosurgeon and lived a lavish life, once owning a Rolls-Royce, five Mercedes-Benzes and an airplane has donated $20 million to his native village in Kerala.

Kumar Bahuleyan, 81, who was born to a Dalit family in India, decided to donate his personal fortune as a gratitude to his village, to establish a neurosurgery hospital, a health clinic and a spa resort in Chemmanakary, in Kottayam district of Kerala.

"I was born with nothing; I was educated by the people of that village, and this is what I owe to them," Bahuleyan said in Buffalo where he has lived since 1973.

"I'm in a state of nirvana, eternal nirvana," he said. "I have nothing else to achieve in life. This was my goal, to help my people. I can die any time, as a happy man."

The urge to do something for his village arose some 20 to 25 years ago, when Bahuleyan returned to Chemmanakary and was struck by how little it had changed.

"The village remained absolutely the same - not a road, no school, no water supply, no sanitary facilities," he said. "I looked in the (people's) faces and saw the same people living in the same miserable conditions I had grown up with."

Bahuleyan has come full circle: from dire poverty in India, to the lifestyles of the rich in America and back to his native village, where he's traded his Mercedes for a bicycle, The Buffalo News reported.

The Indian American doctor lost two younger brothers and a sister to water-borne disease in 1930s. "I was the oldest, feeling very helpless, listening to the screams of these dying children, one by one," he told the paper. "Their cries stuck in my psyche. Even now it haunts me."

As a former 'untouchable', belonging to the lowest strata of Hindu society, Bahuleyan had to take a roundabout route to school because he wasn't allowed to pass within a few hundred yards of the Hindu temple.

A star student, he went to high school, then a premedical school run by Christian missionaries before attending medical college in Madras, now called Chennai.

Later he went to the United Kingdom for neurosurgical training at a college in Edinburgh, Scotland, where he spent six years before returning home. But he couldn't land a job in his specialty.

"They (government) didn't know what to do with me," he said. "There was no position available for a neurosurgeon. Many people didn't know what neurosurgery was."

So Bahuleyan went to Kingston and then Albany Medical College, before coming to Buffalo in 1973 to work with neurosurgeon Dr John Zoll.

Bahuleyan never saw ice cream until he was in medical college in his early 20s. And he remembers buying his first pair of shoes as a young adult; he put the right shoe on his left foot and realised it didn't fit.

During his 26-year career, Bahuleyan served as a clinical associate professor in neurosurgery at the University at Buffalo before retiring in 1999. And he made millions.

"I didn't ask for the money," he told The Buffalo News. "The money came to me. My secretary said to me, 'Dr Bahuleyan, you're making too much money.' I had never had any money. So I went berserk with money."

In 1989, he set up the Bahuleyan Charitable Foundation, which built a small clinic in India for young children and pregnant women in 1993 in south India. Bahuleyan's foundation built the Indo-American Hospital Brain and Spine Centre in 1996, starting with 80 beds.

None of the facilities carries his name. In 2004, the foundation opened the Kalathil Health Resorts, offering luxury rooms, health spas and exercise rooms.

Bahuleyan's latest idea, East India Seven Seas Sailing company, plans to invite applications from Americans willing to spend a few weeks in India, to volunteer in Bahuleyan's hospital and to teach sailing.

Bahuleyan, who lives with his wife, pathologist Indira Kartha, spends half the year in the US, the other half in India where he oversees his foundation's work, gets around on a bicycle and still does almost daily surgery.