Meeting the Masters: Charity or Social Enterprise? The Definition Matters

Dialogue has been condensed and edited for clarity. 

Are social enterprises thriving in Singapore? The short answer is no, and boils down to a disagreement over its definition. 

I discovered this in a packed room a couple of Saturdays ago at a Meet the Masters panel held at SCAPE Singapore.  

Four social entrepreneurs tackling various societal issues came together to discuss motivations behind their current ventures, comparisons between SEs and charities, and obstacles within the space.

There was insightful introspection and plenty of good will to go around during the panel, but as conversation shifted towards innovation and impact measurement, answers became ambiguous and in need of further inspection.    

A large portion of the hour and a half was centered around definition. The argument against? If we’re creating some sort of social good, we shouldn’t be confined by a string of words. 

Fair, but without limits and boundaries, governments and support organizations cannot regulate nor differentiate between SEs and companies masked as SEs (no, CSR doesn’t count).

The universal definition provides key identifiers that social enterprises should tick off:

“A social enterprise is a commercial organization that has specific social objectives that serve its primary purpose. Social enterprises seek to maximize profits while maximizing benefits to society and the environment. Their profits are principally used to fund social programs.” – Investopedia

Based on the answers shared by each speaker regarding their respective ventures, it can be argued that none are social enterprises. One glaringly obvious reason? Their sole source of revenue is donations through fundraising.  

“If someone is willing to pay for the service, but not the customers, what’s wrong with it? We don’t know what to call ourselves, but usually if someone asks, we call ourselves a non-profit,” – Yoke Pean Thye. 

The term ‘NGO’ is neither a dirty word nor used to discount the objectives of its attached organization, but the oversimplified equation [founder] + [social cause] = [social enterprise] is both diminishing to the concept and its role in healthy economic and societal returns.

The vital piece missing from the formula is ‘business’ – one in which majority of funds do not come from donors and kind-hearted individuals, but from strong revenue streams and P&L management, like any other for-profit venture.

Without a definition, there are different incentives and consequently, different repercussions. 

SEs can raise funds to kickstart growth, but a social enterprise with funding needs to have a clear vision about its purpose in society as well as its financial goals. 

Crossing the t’s and dotting the i’s 

Financial goals can include anything from the number of dollars spent versus percentage of community lifted from poverty to even absolute number of plastic bags saved from landfills versus cost of a single community event. 

But the most alarming takeaway from the panel was the lack of data driven decision making – no entrepreneur had a realistic method of measuring its organization’s impact. 

While aligning on a definition caused stir, all parties – founder, social enterprise, business, charity, donor, customer, etc. – can agree that wasting money is bad and maximizing funds for greatest social impact is good. 

“We should take a step back to understand what else the money would be used for. The question is if you’re using the donation, are you using it for a more impactful cause or wasting it? We’re currently using it to get started, not yet to make an impact – it’s important to ask ourselves this question. You can introduce a hybrid or throw out any model entirely, the end goal is to make an impact and if there are people who want to support it, that’s what matters,” – Edward Yee.

‘Who is defining the impact? Whose life are you trying to change, this is where we decide when we’re making an impact,’ – Yoke Pean Thye. 

‘Ask yourself, are you a starfish model? If you save one starfish and believe you’ve made an impact, I suggest you become a social worker. If you want to be a social entrepreneur, then you need to optimize the funds you receive,’ – Carrie Tan. 

How do you know your business is utilizing funds to the best of its ability without measurement of impact? You could be changing the lives of five families, when in actuality, the money properly invested could impact the lives of five thousand.

A response written by a former employee of an NGO in Africa to the Guardian on the aid business touches on the key issues he witnessed:  

In the eyes of senior management, a successful humanitarian operation is based on two key indicators: how much money you raise with the donors and how many beneficiaries you have reached with the aid money you have been given. However, in my experience, what is not measured is how well you have managed projects in addressing the real needs of the intended recipients, how accountable you have been to them, and how quickly you have been able to address their urgent needs in humanitarian emergencies.

The importance of innovation within SE

Technology has proven time and time again to help businesses scale and increase reach. Innovation doesn’t have to be as complicated as AI or AR implementation, but acknowledging its importance is a key component of any relevant company of the future – social enterprises are no exception. 

Where does innovation play into each of the panelist’s businesses? 

“When you’re on the ground and in the land, you don’t need this fancy technology. Too much innovation is done just to do it, but there are good root causes to the problem without the need for innovation. We always start with talking to the communities first, go house to house and find out what challenges they are facing. What priorities do they have, then we do a needs assessment, we recommend solutions and they decide on the solutions they want to implement and we come with the funds,” – Yoke Pean Thye.  

“Innovation is just about doing something differently. Someone came along and said, let me rent an apartment to house single mothers. Recently, in countries like HKG, AUS, JPN, there are social housing organizations that get private property owners with empty units to rent it to the homeless out of the goodness of their hearts,” – Carrie Tan. 

Innovation is meant to help businesses adapt to ever-changing environments, and act as a catalyst for growth. It doesn’t always mean a small business must open become a franchise, as Carrie said, it means doing something differently.

Now imagine if the ‘housing for the homeless’ organization implemented a simple digital platforms to connect more than a ‘handful’ of property owners to thousands of people in need – how many more lives could be changed?

Parallels can be drawn from the previous pitfalls of the private retail sector when ecommerce steam rolled brick and mortar businesses. To attract the brightest talent to come up with the best solutions to maximize the returns on investment, social ventures must embrace innovation – small or large. 

Final words of advice to budding social entrepreneurs

“If you’re doing it because you hate your corporate job, you have to expect more pain. If there’s a burning issue that keeps you up at night, then you’re probably in the right space,’ – Carrie Tan.

‘If it’s not personal enough, then you will probably give up within four months,” – Terence Chia. 

“Being able to survive, and be sustainable is easier outside of Singapore. The issue is how to scale and create impact while balancing goals. Surviving in Singapore as a SE is the tough part, and there aren’t enough SE in Singapore to know whether or not scale is possible,” – Edward Yee. 

“Don’t.” – Yoke Pean Thye. 

I would also add one more piece of advice shared with me by Alfie Othman, CEO of raiSE, Singapore’s largest organization of social enterprises.  

“Until founders get over the notion that profit is evil, only then will they be able to create real impact.”

Alfie Othman, CEO raiSE

I applaud and thank these entrepreneurs for sharing their insights with an ambitious and hungry crowd. No one ever said it would be easy, but the rewards are oh, so worth it. 

Wise-wash
Daughters of Tomorrow
Givfunds
Lien Centre for Social Innovation

Stay tuned on caose for the next piece – a spotlight on one of the world’s most successful social enterprises.