26 03 social enterprise_irene bengo

Social enterprises and its role in achieving energy
access for all

Prof. Irene Bengo, Ph.D.
Department of Management, Economics and Industrial Engineering
Politecnico di Milano
President of Engineering Without Borders - Milan

Context 2

1. WELFARE SYSTEM CRISIS
Unsatisfied social needs
2. DEVELOPMENT ASSISTANCE CRISIS
Local and foreign policies, organizations and multilateral
institutions have failed to provide a real response to the need of:
access to basic services
creation of real systems that involve the active participation of stakeholders
ability to form stable employment and enable the integration of
disadvantaged people.

3. ECONOMIC CRISIS

This situation has highlighted the need of alternative economic,
entrepreneurial and social development structures both in
"developing countries" than in "developed countries"

SOCIAL ENTERPRISE
I. Bengo, Engineering Without Borders - Milan

Context 3


The Social Enterprises: some numbers 4

Growth in social entrepreneurship globally over the last decade has been impressive
social entrepreneurship is a “good thing”

European Commission 2012: there are more than 11 million jobs in the social
economy across Europe, but membershipof social economy enterprises is much wider: 160
million.

Social economy enterprises represent 2 million enterprises (i.e. 10% of all European
businesses) and employ over 11 million paid employees (the equivalent of 6% of the
working population of the EU).

 Italian case, the report on SE (Iris Network): there are over 15 thousand SEs, 350
thousand employees including social cooperatives, foundations and other organizations


Increasing interest in social enterprises
worldwide: “entrepreneurial spirit with social aims”
aims

“whenever I wanted to deal with a social or economic problem,
I tried to solve the problem by creating a business around it”
(M. Yunus 2010,17)


6
Idea of Social Enterprises 1/2

The Social Enterprise (SE):
private, autonomous, entrepreneurial organizations
providing goods or services with the goals of provide
benefit to the community.

The SEs aim at:
• transforming the maximization of profit and wealth creation in a mean by
which the “social entrepreneur” satisfies unmet social needs.
• transforming the social benefit into a real “business idea”

SEs
• Have relevant expected impact in term of social value creation
• Is a potential response to critical problems in the North/South of the world


Idea of Social Enterprises 2/2

“Social enterprises created by social entrepreneurs through social
entrepreneurship processes”

Social entrepreneurship
• emphasizes the social innovation processes undertaken by social
entrepreneurs;
• refers to a wide spectrum of initiatives, from voluntary activism to corporate
social responsibility (CSR);
• characterized by “blended value creation” (profits alongside social value) and
“blurred boundaries” as for institutional and legal forms.

Social enterprise
• appeared in Italy in 1990 (“impresa sociale”) and gradually spread all over
Europe;
• positioned at the croassroads of market, public policies and civil society;
• innovation models arising from ‘hybridization of resources’ and ‘inter-
institutional cooperation’.

Social entrepreneur
• emphasized by American foundations since the mid 1990s;
• refers to individuals launching new activities dedicated to a social mission while
behaving as true entrepreneurs in terms of dynamism, personal involvement and
innovative practices.

Who’s this?

The social entrepreneur should be an
enthusiastic innovator and, above all, a
an excellent manager in order to
guarantee – in a competitive market- the
difficult trade-off between the generated
social impact and the economic
sustainability of the entrepreneurial
activity

“The reasonable man adapts himself to the world; the unreasonable one
persists in trying to adapt the world to himself. Therefore all progress depends
on the unreasonable man”

George Bernard Shaw


Who’s this?


Andreas Heinecke: Dialogue in the Dark

Andreas Heinecke founded Dialogue in
the Dark with a twofold aim: to
bring ordinary people closer to the
world of the blind and sight impaired
people and to offer them a job so
they can better fit into society.

The success of these shows was huge
that Dialogue in the Dark is now a
global phenomenon, with
exhibitions all over the world.

It has not just represented a true “eye-
opener” for over 6 million visitors,
but also offered a job about to about
6000 blind and sight impaired people.


Jean-Marc Borello: Groupe SOS

Jean-Marc Borello, he founded a real
social business giant.
In 15 years the group SOS has developed
a wide range of health and social services
designed mainly to the recovery of people
with serious drug and alcohol
dependencies.

With a turnover of € 150 million, 170
health facilities and 2700 employees, SOS
provides every day thousands of health
care services.


Paul Newman: Newman’s Own

In 1982, Paul Newman founded
Newman's Own, a company founded
to commercialize his own special
recipe for salad dressing that had long
been a hit among his friends.

After the success of the first product
on the market, Newman's Own began
to market a wider range of sauces,
condiments and drinks that have
become famous and distributed all
over the world.

The peculiarity of Newman's Own is
that all profits are donated to
various non-profit organizations
(hospitals, camps for sick
children ....). From 1982 to 2008
about 280 million dollars have been
donated to these charities.


Reed Paget: Belu Water

Reed Paget is the founder of Belu
Water, the first eco-friendly
bottled water company.

In fact, Belu water is extracted from
natural springs and is bottled in a
local English-biodegradable
bottles (with plastic derived from
corn).

Belu Water sells in England
(especially London) 500,000 units
per month.


Jamie Oliver: Fifteen Restaurant

Jamie Oliver is a renowned chef in
London who starred in several television
series and is author of many cookbooks.
At the height of his fame and success Jamie
has decided to give something back to
society.
His idea was to use his talent and name
to give to marginalized boys and girls
(for alcohol and drugs) a second
chance. Thus he founded Fifteen
Restaurant.
The restaurant offers two years of training
as a chef to help marginalized children.
After this learning experience, with a Master
Chef like Jamie, some guys are now working
at Fifteen Restaurant, while others found
work in other London restaurants.


Muhammad Yunus : Grameen Group

Muhammad Yunus is perhaps the most
famous member of the social business
world. After the 1974 famine in Bangladesh,
Yunus, a professor in economics, created a
system of loans to very poor based
solely on trust.

This is how the Grameen Bank microcredit
has (founded by Yunus) its most
representative institutions (with $ 7.6 billion
provided from its origins to 2008).

For the positive impact that microcredit has
had in reducing world poverty, Yunus and
Grameen Bank were awarded the Nobel
Prize for Peace in 2006.

Yunus founded in the same year with the
French multinational Danone, a
manufacturer of highly nutritious yogurt at
low prices to combat malnutrition in
Bangladesh (Grameen Danone Foods).


21
Development of SE

Different reasons of Social entrepreneurship
development during last 20 year

 Privatization of the public responsibility for public welfare:

• government’s participation decline regarding the services offered to the community
• the experimentation with "new forms of solidarity and collectivity" by civil society and
social movements as they enter high politics

The development of a culture better oriented to the responsibility and personal
involvement towards social problems:

• introduction a social purpose to a business company, corporation or even government

Increase of the entrepreneurial spirit of no profit sector (association, NGOs,
Cooperatives)
• changes occurred into the no-profit sector for increase the opportunities of funding

the third sector’s will to increase its entrepreneurship and the social enterprise’s
interest to unify its values with the standard profit sector business’s principles


22
SE as a middle way between two extremes

SE represents a hybrid form, located somewhere in between the traditional non-
profit and for-profit organizations

Compared to not for profit Ses achieve social goals that
entities, SEs have the meld socio-political,
purpose to achieve social environmental, and financial
benefit, but their vision, objectives: give them a major
organization and processes importance compared to profit
are quite different when organizations (social purpose
compared to non-profits is central to the Se operation)

 SEs pursue a broad social goal, they try to promote a new model of economic
development, fostering a more democratic decision-making process

 From an economic standpoint, SEs need to assure their economic sustainability: market
oriented activities and fundrising are strictly “at the service” of the social goal


23
Hybrid Model of Social Entrepreneurship:
Alter (2004): "Hybrid Spectrum of sustainability" to underline the Ses position respect the
other organizations.

As a hybrid, the social enterprise is driven by two strong forces


24
4° Sector: For -benefit
organizations

Figure 1 details the traditional
organizations  new kind of
firm:
for-benefit organizations.

These organizations are
driven by a social purpose,
they are economically self-
sustaining and seek to be
socially, ethically, and
environmentally responsible.

Social enterprises are
prime examples of for-
benefit organizations

Dennis A. Pitta and J. Howard Kucher,University of Baltimore, Baltimore, Maryland,
USA, Journal of Product & Brand ManagementVolume 18 · Number 2 · 2009 · 154–158


25
Different definitions

The academic and professional literature provides several definitions of SE

SOURCE DEFINITION
Businesses with primarily social objectives whose surpluses are
DTI, Department principally reinvested for that purpose in the business or in the
of Trade and community, rather than being driven by the need to maximise profit for
Industry; 2002 shareholders and owners
Enterprises with the specific purpose of addressing social issues, in
M. Bull, H. favor of the community or the environment and employ a business
Crompton; 2007 structure that allows it to remain sustainable

Social Enterprise Businesses trading for social and environmental purposes. Social
Coalition 2011 enterprises are distinctive because their social and/or environmental
purpose is absolutely central to what they do - their profits are
reinvested to sustain and further their mission for positive change..

“We have described and keep on describing organisations motivated by
Muhammad social objectives as non-profit organisations. We need to have another
Yunus description: ‘non-loss ’organisations, because we don’t want to lose
money and our objective is to address a particular problem. So we are
non-loss businesses with social objectives.”


Different definitions: EMES definition

"Social enterprises are not-for-profit private organizations providing goods or services directly
related to their explicit aim to benefit the community.

Social Criteria

Economic Criteria • An explicit aim to benefit the
community
• A continuous activity, producing
and selling goods and or services • An initiative launched by a group of
citizens
• A high degree of autonomy
• Decision-making power not based
• A significant level of economic risk on capital ownership

• A minimum amount of paid work • A participatory nature, which
involves the various parties affected
by the activity

• Limited profit distribution


27
Legal forms within the EU contest

Legal Form

In the last 20 years, the debate about social enterprise in Europe increasingly
focused on its specific aims and its role in the welfare systems the
emergence of a complex and diversified legislative framework.

At present, no specific legislation exists at the European Community level.
There are very different concepts of SE and different legislative framework
regulating its governance, activities, ownership…:


28
Table 3.1
Country Forms used Profit Governance Activities
distribution
Associations Direct and indirect Participatory Production or exchanges of services
Italy in the sectors of social and health
Foundations distribution of nature
assistance, education and training,
Law n. 118 of 13 Co-operatives profits prohibited
environmental protection, social tourism,
June 2005 For-profit
cultural services or work integration of
Enterprises disadvantaged persons independently
from the field of activity of the enterprise

Portugal Social Direct and indirect Participatory Work-integration of vulnerable
Co-operative code groups
Solidarity co- distribution of nature
(Law n° 51/96 of 7
operatives profits prohibited
September 1996) and
Legislative decree n°
7/98

France General-interest Redistribution of Participatory Production or provision of goods and
Law of 17 July 2001 co-operative profits is possible, nature services of collective interest

societies
but limited


29
Table 3.1
Country Forms used Profit Governance Activities
distribution

Limited company; Redistribution of Participatory Activities that are aimed at
Belgium Limited liability co- profits is possible, nature pursuing a social goal. What
Law of 13 April operative society; but limited constitutes a social goal results
1995 private limited liability from constitutive elements
society foreseen by the legislation.

United Enterprises regulated by Partial Participatory Wide range of activities that
Kingdom Companies Act 1985 distribution of nature correspond to the needs of
Community profits allowed communities. Social definition
Interest assessed by the Regulator
Company
regulations 2005

Finland All enterprises Distribution of Participatory Social enterprises have to employ
Law n. regardless of their legal profits allowed governance at least 30% of people with
1351/2003 form and ownership with no not envisaged disabilities and long-term
structure constraints unemployed


30
SE specificities

Different definitions and different legal framework across European and non
European countries exists

1. SEs are multi – objective organizations

SOCIAL

Su o d
Su o d
m
m
s t el
s t el
ai
ai
na
na
bi
bi
lit
lit
SE

y
y
ENVIRONMENTAL ECONOMIC

2. SEs have a multi-stakeholder governance
external players more relevant respect the private sector:
• Groups of citizens regarded as agents of change
• Participation of stakeholders in the decision making processes
• This involvement is essential (i.e SE can’t do without) to
understand the real needs of the context


31
Different typology of the activities

Activity Yes/no Yes/no

Work integration Agriculture

Personal services Education
Economic Development University education
Environmental Non-formal training
Conservation
Arts and Cultural Tourism
Preservation
Social Welfare and Water management
Human Development
Health Production Energy
Recycling Catering and hospitality


32
Different typology of the activities

Activity Yes/no Yes/no

Work integration √ Agriculture √
Personal services √ Education √
Economic Development University education
√ √
Environmental Non-formal training
Conservation √ √
Arts and Cultural Tourism
Preservation √ √
Social Welfare and Water management
Human Development
√ √
Health √ Production Energy √
Recycling √ Catering and hospitality √


What's new about social enterprises?
Contributions to socio-economic development, empowerment and
environmental challenges
• providing access to basic services (social, educational, and health) to local
communities, including innovative schema for people who are unable to pay;

• contributing to a more balanced and sustainable use of local resources encouraged
by wide participation of local stakeholders;

• creating new employment as a result of the new services supplied and favouring labour
market integration of disadvantaged people (minority groups, single women, people with
disabilities, etc.) otherwise excluded from income-generating opportunities;

• breaking poverty traps by allowing financial inclusion for self-employment;

• contributing to take informal activities out of the underground economy for instance by
regularizing the situation of illegal workers on the black market; also contributing to a
fair integration of small economic actors into markets

• contributing to the promotion of inclusive governance models
that empower the local community in strategic decision-making;

• contributing to enhance social capital at local levels (based on
broad ownership and local participation), which is of crucial
importance.


Social Enterprises: Increased local participation
to expand the energy market

For these reasons these organization can play a fundamental role, in addition to
governments, to better understand the socio-cultural context, have a key role
in reaching low-income communities with efficient and sustainable energy
delivery systems.

Social enterprises are fundamental actors to ensure that energy access
initiatives can result in development benefits deriving from productive
activities but also from improved health, education and livelihoods.

Since these organization take into account the socio-cultural context needs, to
ensure that people are willing and able to pay for energy services as they
satisfy their needs and also ensure the adequate level of awareness about
technology options and utilization.


Social Enterprises: Increased local participation
35

to expand the energy market
How to understand local needs?

Promoting participation and
ownership

Participation and ownership are fundamental to
ensuring the correct choice of technology and
the success of a project

The sustainability of the projects and the local social enterprises depends on the way in
which they are integrated in the local cultural and social context, environmental
and economic conditions, institutions and available technologies.

The purpose of this type of engineering interventions is to make the community
autonomous, self-organized and independent.

Technology and Innovation alone are not sufficient to guarantee success; they
must be driven by human factors and coupled with the principle of participation
and direct community involvement


Social Enterprises: Increased local participation to
expand the energy market

Key principles of participatory approaches

• Involving people as subjects not objects
• Respect for local knowledge and skills
• Ensuring influence over development decisions, not simply involvement
• A learning process as much as an outcome
• An approach and attitude rather than a specific set of technical skills

The participatory approach is also a state of mind, an
attitude. It is about having a genuine concern and respect
for the values, skills and needs of others, particularly
those who are least advantaged.


Financial inclusion for self-employment
generation: the European microfinance landscape

"Microfinance's mission is to provide basic financial
services to poor people" • Founded in 1989 by Maria Nowak
• To be effective, the Right to Economic
Initiative requires access to capital and
EMN (European Microfinance Network) gathers
removal of administrative constraints for
organisations primarily involved in the European creating self-employment.
Union and mainly addresses issues related to • Adie finances the self-employed and
professional and personal microcredit in Europe, microenterprises through a variety of
other financial services being still underdeveloped. products based on clients’ needs:
- Loans at market rate up to 6000 €
- "Start-up grants" funded by the French
Microcredit is defined by the European
government or by local authorities
Commission, as a loan under € 25,000 to support
the development of self-employment and
microenterprises. It has a double impact:

• an economic impact as it allows the creation of
income generating activities

• a social impact as it contributes to the social
inclusion and therefore to the financial inclusion of
individuals.


Financial inclusion for self-employment
generation: the European microfinance landscape

Andreoni, A., Sassatelli, M. e Vichi, G. (2013) New Financial Needs: the microcredit response in Italy, Bologna: Il
Mulino.

39
Social enterprise delivering energy solutions

On this map you can see over 40 social enterprises delivering energy
solutions to underserved populations around the world.

Energy Plus Ltd. sells battery inverter backup systems and energy efficient lights to grid-
connected schools and businesses in Uganda, so that they no longer need a diesel generator
when the grid is out and pay less for electricity when the grid is working .
http://energymap-scu.org/social-enterprise/

40
Some examples of social businesses…

WE CARE Solar: provides solar electric kits for medical lighting and
communication that are reliable, robust, and low-cost, enabling timely and
appropriate emergency care in maternal health facilities and settings without
reliable electricity. Impact Areas : Sub-Saharan Africa, Haiti, Southeast Asia

EnterpriseWorks/VITA: a division of Relief International (EWV-RI), sells improved
cooking stoves that are manufactured in Ghana and sold through local retailers.
Income is generated for manufacturers and distributors; the improved cookstoves
allow households to be more efficient in the cooking process, household earning are
better utilized, indoor and outdoor pollution is reduced and charcoal consumption is
significantly reduce

Smart Oil is creating thousands of jobs in rural West Africa by producing a cheaper
substitute for diesel fuel derived from jatropha plantations.


41
Some examples of social businesses..

Energy in Common is a crowdfunding platform allowing online lenders to
provide project-specific financing for green energy through microfinance
institutions. Impact Areas Ghana, Nigeria, Tanzania

Trees, Water & People has designed a cookstove for the charcoal dependent
population of Haiti, that reduces fuel consumption by up to 40%. The design is
similar to a popular improved cookstove in the local market, but makes use of
insulation, properly-sized flue gaps and a smaller fuel bowl to deliver cooking heat
more effectively.

Solar Sister eradicates energy poverty by empowering women with
economic opportunity. combining the breakthrough potential of solar
technology with an Avon-style direct sales network, Solar Sister brings light,
hope, and opportunity to even the most remote communities of rural Africa.


42
EFrem (Energy Freedom)

Sector Renewable energy, training

Forms used Non-profit association

Social Mission Increasing culture on renewable energy in LDC
N. employees 15
N. members 30
Year Founded 2007
Geographic Area Impact Burundi, Kenya, Ivory Coast,Ghana, RDC, Rwanda

Activities Training of trainers

In addition to training activities, EFrem develops some projects:
"GRID"(General Recharging to Implement Development) that
offers to implement one system of solar power unit for charging
batteries to create permanent jobs in poor areas with no electric power
available.

 HOASIS Plan (Holistic Approach Significant to Implement
Self-Reliance).
Hoasis is an evolution of GRID project. The plan provides, as a central
engine, a unit of production of alternative energy (generally
photovoltaic, the easiest to develop, the most modular and the easiest
to manage).


Social enterprise: Italian Movement

 Make a Change is a movement that operates through an operative organization to achieve
the following goals:
 Support the development of new social entrepreneurs in Italy
 promote social entrepreneurship as a new asset class for responsible
investments
 Promote among young people values of balance and social responsibility as an
alternative to the pursuit of money and power at all costs.

 the first Italian answer to the global movement of social business.
 Our founders come both from the profit and not-for-profit worlds: 3 companies and
12 individual professionals
 promoting new business models : businesses that aim to reach economical sustainability
while maximizing social welfare.
 The mission: to change the system within the system.


Training for migrants: a support to development
Target:
 Migrants and their association in Milan area
Objective:
 To promote the development of activity income
generation, like social enterprises, in Italy and their
origin countries
 To promote culturally community exchange and
networking
Course program:
 Tools and methodologies for project cycle
management
 Profitability assessment: market analysis and social
enterprise business plan
 Case study: product and technologies available in
developing country.
Countries: Togo, Burkina Faso, Ghana, Camerun, Perù,

Possible barriers to development

Source: Social Enterprise UK Report 2011


Thank You for your attention


26 03 social enterprise_irene bengo

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