Social enterprises not limited to non-profit charitable projects
Chief Executive Leung Chun-ying has suggested allocating HK$500 million from the Lotteries Fund to form a social enterprises development fund. Who will be eligible for this fund?
Social enterprise has philanthropic roots in the US and co-operative origins in Britain. Social enterprises are therefore often narrowly seen as organisations seeking to solve the problems of the bottom of the pyramid or issues of developing economies.
According to Wikipedia, a social enterprise is an organisation that applies commercial strategies to maximise improvements in human and environmental well-being, rather than maximising profits for external shareholders.
Social and environmental challenges are not confined to the have-nots. Developed economies also have their challenges - pollution, waste, obesity, stress, an ageing population and education are but a few examples.
The second fallacy is that social enterprises must be non-profit. A non-profit organisation does not distribute its surplus funds to its owners or shareholders; whereas a for-profit organisation does. It is also important to differentiate between "profit maximisation" and "for profit".
While the former is to be condemned, there is nothing wrong with an organisation providing incentives to its investors through distribution of dividends. Indeed, if we want more private investors to support the development of businesses that deliver social good, there is every justification for a social enterprise being for-profit.
The social and environmental challenges we face today are enormous, and in order to solve these problems, a social enterprise has to be innovative. The innovation can be in the technology, product, service, delivery process, customer experience or in how the enterprise and its supply chain are managed.
Unfortunately in Hong Kong, social enterprises have almost become a synonym of small-scale set-ups with limited or no innovation, and their sole purpose is to generate employment opportunities for the disadvantaged. We hope the C.Y. Leung administration will not adopt such a narrow interpretation.
