Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Social Enterprise in Human Development

           In "The Gospel of Joy," Pope Francis complains that "the current (economic or financial) model, with its emphasis on success and self-reliance, does not appear to favor an investment in efforts to help the slow, the weak or the less talented to find opportunities in life."  From the beginning of Christianity, the Church has promoted myriad of initiatives of charitable works, especially carried out by religious orders and congregations, attending to the needs of the most vulnerable individuals of society:  the homeless, the orphans, the addicted, the refugees, indigenous people, the elderly, the migrants, etc.  These corporal and spiritual works of mercy, however, have been outside of the market system of supply and demand.  They have been supported by the donations of money and human work by millions of generous individuals.  The Philippines is famous for having numerous NGOs and philanthropic organizations sponsored by civil society or by religious organizations geared towards addressing the needs of the most vulnerable in society.

          Can the economic system based on markets be reshaped so that it can also help "the slow, the weak or the less talented to find opportunities in life"? Fortunately, there are increasing evidences that the answer is Yes.  Although still a very small minority in the business world, there are now "social enterprises" whose founders are using the structure of a business organization in order to meet the needs of the vulnerable and to achieve other societal goals.  These are for-profit organizations that focus on certain social objectives such as poverty alleviation, the cleaning up of the physical environment, the combatting of drug addiction, the improvement of the quality of basic education, or the strengthening of moral and spiritual values especially within the family.  Although very conscious of generating enough revenues to more than cover operating expenses, these business outfits use their profits, not to enrich the founders and managers but, to continue expanding their social services to a greater number of the target audiences.  These social enterprises are especially equipped to go beyond the economic needs of individuals by addressing the other dimensions of integral human development, whether political, social, cultural, moral or spiritual.

          In the Philippines, there are already social enterprises that help workers to organize themselves into cooperatives that offer their services to agribusiness plantations, retail stores and other labor-intensive industries.  Traditional cooperatives in the granting of credit, marketing, rural electrification, and the raising of agricultural crops can all be considered social enterprises because they also make use of the profit-and-loss approach of business, not only to produce goods or services for sale to consumers, but also to address the human need for cooperation, which requires great effort to help the average Filipino to overcome his deeply-rooted individualistic and clannish style of behavior.  We can say that cooperatives are also addressing the social, cultural, and even spiritual needs of the human being, in addition to providing goods and services to their consumers.

          In the social enterprise scene in the Philippines, we can already find business organizations marketing solar lamps to the poor rural households.  Others sell inexpensive potable water also to rural dwellers.  There are innovative real estate companies that provide socialized housing units to both rural and urban families.  Technical schools certified by TESDA are slowly evolving from donor-dependent NGOs to social enterprises that already generate enough revenues from employers who make use of their graduates in a host of manufacturing and service-oriented operations.     There are also business enterprises that go out of their way to employ the physically handicapped, the jobless youth, rehabilitated drug addicts, and single mothers.  These business organizations go beyond providing economic relief to the disadvantaged but also address their whole-person development by giving them opportunities to be integrated into the human community.  Social enterprises can really be effective in promoting integral human development.

          An international example of a social enterprise is D-Rev, as reported by McKinsey consultants.  As described by its CEO, Krista Donaldson, D-Rev is short for Design Revolution.  It designs products that serve customers who live on less than $4 a day, just $2.5 more than absolute poverty income.  One of its products is phototherapy, a blue light that treats severely jaundiced babies.  A typical device would cost $3,500 in the US.  D-Rev was able to design one that performs on par with or better for only $400.  It then licensed the product with the brand Brilliance to the biggest maker of neonatal equipment in India.  It looked for a distributor in the Philippines and sold the device for about $500.  Unfortunately, its distributor in the Philippines jacked up the price to $2,300 or more.  It convinced D-Rev to "dig in and help with distributor selection."  This demonstrates that there still business people of the wrong kind in our country.  A local distributor can become a social enterprise if it searches far and wide for products like Brilliance from all over the world and then sell them to the low-income groups at much lower prices that would be charged by local entrepreneurs whose only goal is the maximization of profit.  For comments, my email address is bernardo.villegas@uap.asia.