CSR or Social Enterprise?

 

 

 

Philanthropy has become an umbrella term for just about any type of benevolent activity. But what about corporate social responsibility (CSR) and social enterprise? Is there a difference? Welfare capitalism, corporate philanthropy, ethical investing, charity and yes, CSR, are all terms used to signify ‘doing well’ financially with ‘doing good’ socially.

 

If the primary purpose is to bring about social, political or economic change, then some would date social enterprise (under different names) as early as 1780 in the United States.

 

But Google searches on social enterprise still returns 'social media' or 'social relations'. I attended a fundraiser where the host told us they had started as a social enterprise, but now they’re a nonprofit because ‘it’s just better that way’. While there are legal issues in Vietnam, social enterprise shouldn’t be equated with ‘bad’ and nonprofit as ‘good’. (You can be a nonprofit social enterprise, by the way. The organization I work for is one.) Manichean thinking is easy to slip into—businesses working towards a social cause shouldn’t be making money out of disadvantaged communities.

 

Exclusion, Equilibrium and Funding

 

So then isn’t social enterprise just the rich helping the poor? No. Many NGOs and nonprofits here are scrambling to adjust to the downturn in donor funding. Government (and donor) funding is slow and comes with an agenda. Creating your own revenue stream is one more step towards sustainability. Even CSR funding must adjust in oscillating economic times. Team days, cleaning up beaches or supporting a charity with an annual cheque are examples of CSR activities. These activities are important for staff morale, but CSR still tends to be a side project, rather than having social objectives as the raison d’être of the entity. If you hire disadvantaged people, run a foundation on the side or open a business in the ‘developing world’ you are not running a social enterprise.

 

Why? Let’s take Stanford University’s (yes, picky) definition. Social entrepreneurship is:

 

1) identifying a stable but inherently unjust equilibrium that causes the exclusion, marginalization, or suffering of a segment of humanity that lacks the financial means or political clout to achieve any transformative benefit on its own

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2) identifying an opportunity...developing a social value proposition, and bringing to bear…direct action…thereby challenging the…hegemony; and

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3) forging a new, stable equilibrium that releases trapped potential or alleviates the suffering of the targeted group, and through imitation…around the new equilibrium ensuring a better future for the targeted group and even society at large.

 

Unjust equilibrium is transformed into a new ecosystem by either scale or outright imitation. That makes microfinance pioneer Grameen Bank a social enterprise. Opening an orphanage or a free clinic is not because there’s no new equilibrium or scale created. It might be social work, social activism or even altruism (ack!), but it’s not game changing. But I prefer middle ground. Why not hybrids that merge small businesses and social purpose enterprises?

 

Perhaps the difference between the two is the social impact they deliver. Let that be our yardstick. Many believe the world’s intractable problems will be solved through market rather than political solutions. I am one of them. Social enterprises don’t want to be big businesses—they want to be small giants.

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This article originally appeared in Word Vietnam magazine and has been adapted. To view the magazine’s online version click here.