Introduction to Social Entrepreneurship: Bridging Social Issues to Sustainable Solutions

​How to quote this article: Radyati, M. R. N., & Sulistio, C. A. (2022). Introduction to Social Entrepreneurship: Bridging Social Issues to Sustainable Solutions. Institute for Sustainability and Agility. https://www.sustainability.co.id/Blog/51

In a bid to save Southeast Sulaswesi’s forests from illegal logging, a group of activists under the name of Telapak were desperate to find a solution to stop the activities. They first sabotaged the equipment for illegal logging which ended up slowing down their operations, but without success in completely culling the activities. A similar story happened in Central Kalimantan, and the farmers remained poor as they worked for illegal loggers. The activists from Telapak then had to brainstorm an idea in order to stop the issue at its core. They found out that demands for certified wood under FSC’s (Forest Stewardship Council) certification were high from Europe and USA. This led to a change of plans, and a formation of a Cooperative that educates farmers to build a system and conduct community based sustainable forest management. After certification from FSC, they then managed to help increase the price of the farmer’s wood by 10 times. Farmers then slowly trickled from illegal logging activities to joining the cooperative which Telapak has formed. 

Above is an example of a social enterprise, or to be more precise, a community enterprise as it is owned by more than one person. Social/community enterprises are vital to our society as they may contribute to decrease the  burden of poverty, promote inclusivity, advance institutional change, empower women, support environmental protection, and other advantages that benefit the globe and its societies (Winer, 2021).

Definition of a social/community enterprise

A social/ community enterprise, which is established by the social entrepreneur, has a common purpose to “make a change for the betterment of, a marginalised group or, an ecosystem, and whose main objective is to fill the social gap and where its operation is sustained by means of business activities”. Meanwhile, a social gap is identified when both government or company’s corporate social responsibility program (CSR) does not focus on solving a particular problem. (Radyati & Simmonds, 2016). A social/community enterprise consist of characteristics which are: 

1. It is established by one or more social entrepreneurs who have a high level of social concern
   
2. Its main objective is to fill a social gap
3. The change may be delivered through business activities
4. To ensure the sustainability of the change, the organisation conducts income generating activities

What is the difference between a social/community enterprise with a business enterprise?

With the definitions above, it is easy to see what sets apart a typical business enterprise from a social/community enterprise. A business enterprise is focused more on the individual gains and income, essentially in order to maximise profit with the product or service it provides. Meanwhile, a social entrepreneurship encompasses more to the collective actions that can serve the society, and essentially makes sure to give the biggest impact to improve the society through their products or services (HARAPPA, 2021). 

On what legal framework is a social/community enterprise based on?

Social/Community enterprises in Indonesia are usually established by one of the following legal entities (enterprises) to achieve their objectives (Radyati & Simmonds, 2016): 

1. A Foundation

   A foundation is a non-membership organisation with the primary goals of tackling social, religious, and human concerns. It may have one or multiple founders. Surpluses cannot be given to a foundation's board of directors.

2. An association

   A membership-based organisation is an association. It can be formed by one or more persons, with a clear objective that takes into account the interests of its members. The membership cost is decided upon by the members themselves.

3. A cooperative

   A membership-based organisation is a cooperative. It may be established with as little as 10 individuals. The money is raised through member donations and commercial ventures that are typically connected to the sale of goods and/or services produced by the members.

4.  A Private Limited Company

   One or more individuals can form a Private Limited Company with a minimum capital base of $5,000 and a division of assets. Shareholder contributions and commercial endeavours often connected with the sale of goods and/or services are two ways that capital is raised.

5. A Commanditaire Vennootschap (CV)

   A social enterprise of the CV type is started by one or more people without any asset division. One cannot open a bank account in their own name as a CV. A CV must pay taxes since it is an incorporated organisation even though it is not regarded as a legal entity. A CV is not permitted to participate in a tender offer worth more than $1 million.

What aspects does a social/community enterprise cover?

Meanwhile, a social/ community enterprise may cover many aspects. These include (but are not limited to): 

1. Social Issues
   

   Examples from real life include the clinic "Klinik Asuransi Sampah" in Malang, East Java, which allows members to bring non-organic garbage to exchange it for savings that can be used to pay for medical services in order to reduce the cost of health care for the underprivileged. Another example is the Yayasan Cinta Anak Bagsa (YCAB), which uses education and the adoption of a healthy lifestyle to promote primary prevention of dangerous behaviour such as drug misuse and HIV/AIDS.

2. Environmental Issues
   

   An example include Waste4Change, a waste management company in Indonesia. Feeling the urgency from the amount of pollution and waste Indonesia produces, Waste4Change aims to reduce waste in the landfill and recycle trash, implementing circular economy technology in order to do so. Another example is Duitin, which compensates users to give their waste in exchange for money. Both examples then not only help reduce waste in Indonesia, but also provide a living for informal scavengers and help their economical status.

3. Economic Issues

   An example include a charity helping farmers’ economic development, Yayasan Bina Swadaya. Bina Swadaya specialises in microfinance services and agribusiness development and management for farmers. Another example is a corporation called Tanggung Renteng which gives women more financial freedom through savings and loans, and the arisan (rotating savings and credit association) system. 

Conclusion

“What business entrepreneurs are to the economy, social entrepreneurs are to social change. They are the driven, creative individuals who question the status quo, exploit new opportunities, refuse to give up, and remake the world for the better.”

• David Bornstein, Author of How to Change the World: Social Entrepreneurs and the Power of New Idea

        In summary, social/community enterprises are vital to constantly innovate and find solutions for today’s issues. Social/community entrepreneurs are impact-minded, and socially driven to help the society through products or services which benefit them. Social/community enterprises cover many areas, which includes social, environmental and economical issues. With the help of social/community entrepreneurs who constantly innovate on solutions for urgent issues in our society, the world may see a brighter future ahead. 

References

HARAPPA (2017).  Social Entrepreneurship: Definition, Types and Examples. Accessed on 17 July 2022. https://harappa.education/harappa-diaries/social-entrepreneurship/

Radyati, M. & Simmonds, T. (2016). Social Enterprises in Indonesia. FABmove Research, p. 4-11. 

Winer, R. (2021). The Relevance and Scope of Social Entrepreneurship in 2021 : A Brief Overview. University of the People. Accessed on 17 July 2022. https://www.uopeople.edu/blog/the-scope-of-social-entrepreneurship-in-2021/