Social enterprises are increasingly being mentioned in articles discussing innovative business models. But what exactly are they? How do they work? And what is their purpose/usefulness for Singapore?
There doesn’t seem to be one unique definition out there, but basically they’re a somewhat modern type of business: they straddle the fence between the conventional private and public sectors.
Simply put, they use market-based strategies to make a profit, but instead of using that revenue to make more profits, they use it to stimulate local economic activity and to address specific social or environmental needs.
So instead of being driven by the need to maximise profit for shareholders and owners, social enterprises have the community at heart.
According to Social Enterprise UK, social enterprises should:
- Have a clear social and/or environmental mission set out in their governing documents
- Generate the majority of their income through trade
- Reinvest the majority of their profits
- Be autonomous
- Be mainly guided by the interests of their social mission
- Be accountable and transparent
This list of criteria also prevents other companies and businesses from trying to jump on the bandwagon and getting a good reputation without being truly socially responsible (no greenwashing or fake CSR initiatives here!).
In Singapore, social enterprises are thriving; whether they contribute to the growth and prosperity of local producers and suppliers, build the skills of our domestic workforce, or help underprivileged communities, there are many areas in which they’re active!
Most social enterprises in Singapore adopt one of these 4 models:
- Work Integration model: to provide skills training and employment opportunities to marginalised groups (including the elderly, mentally or physically-challenged, ex-offenders, single mums, youths at risk, etc.) to achieve self-reliance and societal reintegration.
- Profit Plough Back model: to generate profit to fund the social programmes of their affiliated or parent charities (E.g. Voluntary Welfare Organisations and charities).
- Subsidised Services model: to provide subsidised services to needy and/or disadvantaged clients while charging commercial rates to mainstream customers.
- Social Needs model: to predominantly serve a social need or address certain social issues.
For instance, NCSS has a list of small social enterprises that work together to help disadvantaged Singaporeans achieve self-reliance through employment and meaningful engagement. They help market the merchandise made by their beneficiaries here.
NTUC also owns 14 social enterprises which serve over 1.5 million customers weekly, including the best-known FairPrice—which was founded in 1973 with a social mission to moderate the cost of living in Singapore and keep necessary goods affordable for everyone.
It’s still early in the process to tell whether social enterprises are significantly changing the economic landscape, but it seems like they do have the potential to do a lot of good.
They are positioned to receive funding from philanthropic foundations and government-backed bodies such as SE Hub and Comcare, and many of them enjoy tax exemptions so that substantial savings can actually be passed on to their customers. It’s just that a great deal of integrity must govern such an as-of-yet unregulated sector.
For now, though, it’s encouraging to see that anyone with a viable business idea and passion for social change can consider starting their own social enterprise. It’s well within reach and entirely possible, and the intangible rewards you will reap from benefitting other people’s lives are simply priceless!
The Ministry of Social and Family Development provides very helpful resources to get people started and SEDC has published a comprehensive Essential Toolkit that should answer most, if not all, questions on the topic (legal business structure, strategic financing, grants, tax rebates, etc.)
So get to it! :)
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