Marrying Money and Mission

 

 

I had another column written for this month, but a recent government declaration regarding Article 10 in the Law on Enterprises made me jump for joy and write this instead.

Vietnam has announced its legal recognition of social enterprises (PDF) effective July 2015, and this is a positive step in furthering socioeconomic development in Vietnam. Many women and men have long been advocating for this recognition. While the business-charity hybrid is not a new idea, the exciting part is the acknowledgement of social enterprise’s ability to address social and environmental issues through market-oriented solutions.

 

Microfinance in Vietnam was an early form of social finance when the Women’s Union started the Tinh Thuong Microfinance Institution (TYM Fund) in 1992, to provide credit and savings as a poverty alleviation mechanism. Social enterprises can be for-profit or nonprofit and have different names, such as cooperatives, charities or benevolent societies. Some readers might not know that Goodwill Industries in North America has sold donated clothing for more than 100 years in order to fund job training programming.

 

Social entrepreneurialism is about marrying money and mission.

 

Maybe you haven’t heard of Craftlink, Safe Living Company or Huong Hoa Cassava Starch Factory in Vietnam, but you’ve likely heard of Grameen Bank, Teach For America and Kiva. These are all lively and thriving social enterprises.

 

The Finer Points

 

Article 10’s finer points still need to be hammered out, such as a concise definition for Vietnam, but I think most would agree that social enterprise utilizes business tools to forge social good. Currently the government says a social enterprise is one that

 

“uses at least 51 percent of the annual profits of the business to reinvest in order to achieve the [social mission].”

 

This may come as a bit of a shock for, say, cafés employing the disabled or those returning 10 percent of gross to their mission. There is a big difference between socially responsible businesses and social enterprise. As I’ve said, these are still nascent days for Vietnam.

 

Yet, there are those who still call this hybrid model doubtful—or worse, a ‘sham’, especially if impact investing is involved. “At the end of the day it’s still only about profit,” a woman recently informed me. But this person, working in the nonprofit sphere, needn’t be alarmed.

 

Impact investing is not a scheme by venture capital wolves dressed up in humanitarian clothing. I’d argue it creates opportunities for community organizations to access new sources of much-needed funds. For example, the global INGO Oxfam utilizes social entrepreneurialism through its microfinance start-up projects. 

 

Article 10 further states that the government is committed to

“[adopting] policies to encourage, support and promote the development of social enterprise”, which signals Vietnam’s willingness to become a leader in social entrepreneurialism by fostering the right environment to do so.

Social enterprise is not a panacea to cure the world’s ills, but its very hybridity is another useful tool in an increasingly ramped-up toolbox to bring about durable, transformative change to solving those so-called intractable problems.

 

This recognition is also cause for celebration about those daunting Sisyphean challenges: you can push a rock up a mountain and not lose the rock.

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Photo: Janko Ferlic / unsplash.com

 

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