Looking forward to a promising future

Social enterprises as a sector or a system have received criticism, sometimes for their operational focus on making profits, and in other cases, for being ineffective in being able to deliver on their social potential. Yet globally, the movement for social enterprise development remains strong. The rationale for development of social enterprise in Africa holds to a lesser or greater degree for the UK, as it does for Bangladesh.
Most social enterprises in Bangladesh focus on providing welfare services to specific groups of people within a geographically-defined community. The geographical focus ensures a participatory approach with which the operations of such social enterprises are conducted. For such enterprises, community engagement is at the heart of their activities, be it with regard to engaging stakeholders in the design and delivery of services, contribution of non-monetary resources, identification of gaps in service provision and/or pioneering new services.
Cumulatively, a unique benefit rendered, among other tangible benefits, is that of service delivery enhancement. Moreover, activities of such social enterprises engender social inclusion. Certain social enterprises are able to take it further - especially those that focus on inclusion more directly, e.g., enterprises serving, catering to, or employing marginalised people such as women, children, ethnic minorities, religious minorities and disabled peoples.
While social inclusion and service delivery remain the dominant rationale for building an enabling regulatory and policy environment for social enterprises, the latter also has the indirect yet desirable effect of increasing civil society engagement in design and delivery of social services. Over the last decades, despite its critics, the space of social enterprise in Bangladesh has experienced a visible uptick in its ability to attract resources, both financial and non-monetary, from different quarters including those among civil society, the educated middle-classes, the elite and even the Bangladeshi diaspora that has been hitherto unavailable. Civil society members have demonstrated increasing social consciousness and civil responsibilities. Thus, promotion of the space of social enterprise can effectively lead to a promotion of active citizenship and social innovation.
At the British Council Social Enterprise Policy Forum organised this year, experts, academics, policy-makers and social entrepreneurs from Bangladesh and overseas concluded that Bangladesh's growing social enterprise sector requires government-backing and supportive policies to be further able to solve the country's most significant social and environmental issues.  The two-day forum was intended to increase awareness of Bangladesh's social enterprises so that the public, media and politicians can support them more effectively.
Mark Clayton, erstwhile deputy high commissioner at the British High Commission, said, "Brac and Grameen Bank are household names not only in Bangladesh but across the world…Bangladesh has a really big social enterprise base on which it can build." Meanwhile, Chandra Putul, founder of Prochesta Mobile Veterinary Clinic, said, "There are both legislative and funding barriers. We did not get any seed funding so we cannot expand our service. More should be done to raise awareness about social enterprise. People think that we are working as an arm of the government and don't pay for our services."
Dan Gregory, head of policy at Social Enterprise UK (SEUK), shared lessons learnt from the UK policy perspective on social enterprise. He said that although a legislated definition of social enterprise was still pending, the UK government introduced a number of policies to support the sector, including Social Value Act and Social Investment Tax Relief (SITR) and through initiatives such as Big Society Capital. He also added, "We had social enterprise ambassadors -- SEUK's CEO Peter Holbrook and celebrity chef Jamie Oliver being two of them -- and this helped explain social enterprise to people. Thirty social entrepreneurs were chosen as ambassadors in 2006."
While these are worthwhile lessons with regard to developing the social enterprise sector in Bangladesh, given the considerable attention and activities generated by the non-governmental organisation (NGO) and small and medium enterprise (SME) sectors in the country, a legislated definition of social enterprise is required in the context of the country. This requirement must materialise sooner rather than later. The Global Entrepreneurship Monitor (GEM) offers several guidelines for policy makers, entrepreneurs, and academics to help them build entrepreneurial eco-systems that enable entrepreneurship to flourish in every economy. Other than developing policies to promote women entrepreneurs, young entrepreneurs, entrepreneurship education and monitoring of the quality of entrepreneurial entities, the GEM also stresses the importance of developing legal frameworks in which entrepreneurship can thrive. To this end, it is necessary to legislate a framework, if not a definition, for understanding what constitutes a social enterprise.
DEFINING SOCIAL ENTERPRISES: Defined in general terms, a social enterprise organisation attempts to combine     both social and business objectives and/or practices, often with an intention to blend social, environmental and economic values. From a cross-country perspective, it is possible to identify a set of key economic and social elements that help define social enterprises across national differences.
ECONOMIC ELEMENTS:    Unlike traditional development sector agencies that have predominantly advisory or grant-giving functions, social enterprises are directly engaged in the production and sale of goods and services. Such social enterprises are voluntarily developed and managed by citizens and citizen groups. Consequently, even though they may receive grants from donors, social enterprises enjoy a high degree of autonomy and shareholders have the right to participate or exit an organisation.
The financial viability of social enterprises correlates to the efforts of their members responsible for ensuring adequate financial resources, unlike public institutions. Such enterprises therefore involve a significant level of economic risk. They usually employ a minimum number of paid workers, and frequently combine voluntary and paid workers.
SOCIAL ELEMENTS: Social enterprises are the outcome of citizen initiatives involving people belonging to a community or to a group that have a specific need or gap in skills or resources. It is essential that such enterprises maintain this dimension. Their stakeholders have decision-making rights, generally through the principle of "one member, one vote." Even though investors of capital in such enterprises play an important role, decision-making power ought not to be based on capital ownership solely. These enterprises are participatory in nature to the extent that the beneficiaries of their activities are represented and can participate in the management of activities. Here, social enterprises include organisations that either entirely prohibit distribution of profits, or curtail organisations that distribute their profit to a limited degree. Therefore, social enterprises avoid profit maximising behaviour, as they involve a limited distribution of profit. Explicitly, social enterprises pursue an aim to render benefit to a community or a specific group of people. Thus, they directly and indirectly promote a sense of social responsibility at the local level.
These economic and social elements constitute economic and social values or overarching principles that can guide social entrepreneurship. While these are important principles for social entrepreneurship from the perspective of entrepreneurs or donors, in the context of Bangladesh, a framework that is close to a legislated definition of social enterprise, is necessary.
To that end, partially informed by the aforementioned guiding principles as well as by our research, we propose the following filtering criteria for social enterprises (as organisations that):
l Are led by an economic, social, cultural or environmental mission consistent with a public or community benefit;
l Trade to fulfil their mission (where trade is defined as the organised exchange of goods and services);
l Derive a substantial portion of their income from trade (operationalised as 50 per cent or more for ventures that are more than five years from start-up, 25 per cent or more for ventures that are three to five years from start-up, and demonstrable intention to trade for ventures that are less than two years from start-up); and
l Reinvest the majority of their profit/surplus in the fulfilment of their mission (never pay more than 50 per cent of profits to owners/shareholders).
Such definitions are important for delimiting social enterprises and distinguishing them from traditional third sector organisations, public sector organisations and corporations. Different definitions of social enterprises will result in widely differing estimations of the social enterprise activities in Bangladesh. If a rigorous definition can be determined, those that support social entrepreneurship can focus their resources on building and strengthening a clear and identifiable sector. Barring that, cynics can point to an amorphous sector and its motivations, discounting social innovation and the social entrepreneurship impulse. Lastly, definitions are also integral to determining policy changes, funding requirements, the emergence of new organisational forms, and the requirements of research.
The write-up, based on the findings of a study by Centre for Enterprise and Society (CES) of the University of Liberal Arts, Bangladesh (ULAB), has been prepared by Sajid Amit, Director of CES, a university-based research organisation in the country which is meant for conducting studies and research on entrepreneurship and business with a view to promoting the goals of ethical, environmental and social sustainability.
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