Difference between social enterprise and firms which exist purely for profits

PUBLISHED : Monday, 31 October, 2011, 12:00am
UPDATED : Monday, 31 October, 2011, 12:00am


I refer to Jake van der Kamp's column ('Social enterprise doesn't deserve to get a mention', October 20) where he talks about 'a small group of people who think they have a special understanding of what constitutes social good and believe the public purse owes them money for it'; and 'normal commercial enterprises provide what the public wants, without the moral snobbery'. As the founder of a philanthropy advisory firm I believe both points are misguided.

First, it has nothing to do with a group of people having the moral authority to determine what is or is not social. It has to do with individuals who have decided to do something positive socially in their local communities where commercial reasons are not sufficient to be acted upon.

Second, it is true that all businesses create social impact, whether positively or negatively. However, what distinguishes a social from commercial enterprise is its intention to address a social need and its complementary role to commercial enterprises that would otherwise not be created.

A grocer seeking to maximise profit margins is not a social enterprise. However, a restaurant with social intent to hire the elderly to provide them with a livelihood and dignity over maximising profits is at its core a social enterprise.

Hong Kong will benefit from experiences in other countries such as Britain with its community interest companies and can see what applies within the local context. It is not about getting government funds into social enterprises. It is about providing appropriate regulations for organisations filling social needs that commercial enterprises and the government may not be willing or able to effectively address on their own.

This framework is currently under review in charity law reform public consultation. But this focuses on non-profits, while remaining ambiguous on cause-funding social enterprises that have also been serving Hong Kong. This is myopic because in terms of social intentionality, a non-profit is similar to a social enterprise. Unlike a non-profit, a social enterprise does not take public grants and instead strives to generate earned income while keeping its social mission.

Social enterprises could have organised as non-profits and relied on government funding. Instead, they chose to demonstrate they can do well while doing good. Providing clear regulations to include social enterprises is a necessary step.

Philo Alto, Asia Value Advisors