Auke Idzenga 27 Apr 2017 Blog

Social Enterprising

The term Social Enterprising (SE) in the Philippines is rather ‘new’.  In the past people and organizations engaged in development work implemented projects with as objective socio-economic improvements for the poor people involved.  I remember from the time 1980’s that I worked in the socio-economic section of the National Federation of Sugar Workers (NFSW) that we very much focused on the Return of Investments (ROI).  Impact in whatever form besides direct financial benefit was not measured or even considered in this ROI thinking.

When we (me and three other staff from NFSW) organized AIDFI in 1991 we had lots of combined experiences in observing poverty, absences of basic services and attempts to create alternatives.  One of our main learnings was that money was not the key to solving problems but just one of the instruments.  We had observed the mushrooming of NGO’s and Foundations in the province because of the influx of foreign aid.  How many are still there today? What happened with all their hastily implemented projects or white elephants?

What we wanted and what I think is important for the success of SE is that the initiative is according to a prioritized need and appropriate to (or in harmony with) the people and place. That sounds logic but so many initiatives in the past were rather donor driven.  You saw organizations shifting with the trends of the funding agencies and not looking at its own core strengths and expertise’s and the identified priorities of the communities. 

I’m a strong believer in developing first good ideas and when fully believing in it, the money will be found in one way or another. It is therefore secondary.

AIDFI as organization registered itself as a Non-Government Organization (NGO) but labels itself rather as a social enterprise.  The regular staff and management with a few affiliates who have certain expertise’s own the organization through the General Assembly (hold every two years). From the General Assembly, a Board of directors is chosen which consist of 9 people: 6 from the staff and 3 affiliates.  We have chosen this combination because staff know very well what is going on the ground and what is needed while affiliates can bring in other views, ideas and networks.  The members of the General Assembly feel the ownership over and are proud of the products and services.  

The character of AIDFI is that of having social objectives, being democratic, financially independent and with care for the environment.  As a note: being financially independent from government or private capital doesn’t mean that AIDFI is not open to receiving financial or other kind of supports.

AIDFI sees SE as an economic strategy to greatly reduce and hopefully eradicate poverty.  The work area of AIDFI for social enterprising are mostly the remote and far flung areas not being properly or served at all by the government for different reasons.  SE is more serious than doing some ‘simple’ projects. SE, since it has the poorest in mind as the beneficiaries, is complimenting development to that already brought about by private business and government, whose economic growth didn’t really benefit the poor.  We have limitations since a lot of what we as SE are doing is pioneering and innovating and we are still discovering the best ways of scaling up the successes. 

In contradiction to regular business and government interventions the activities employed by social enterprises are not only transactional but transformative as well.  The beneficiaries are not just seen as consumers or suppliers but as the once having ownership over the intervention.

AIDFI follows the so-called bottom lines for social enterprising: social, economic, environmental and innovation (people, profit, planet and progress).  Its interventions should lead to increased self-reliance.  A basic principle is also that the intervention can’t come at the expense of others.  It is more the principle of more equitable distribution of ‘wealth’.

We have two programs with different levels of social activities:

Technologies

Since our focus is most on the Hydraulic Ram Pump for drinking and irrigation water supply to upland villages and farms, I limit myself to the ram pump activities.

The ‘mission’ is to have communities and farms have easy access to drinking and irrigation water.  The ram pump is technically developed in such a way that once it is installed in a community, the beneficiaries should be able to operate, maintain and repair it.  The spare parts are easily and locally available.  But sustainability is not controlled by the technology, it equally involves management and ownership aspects.  For this Community Development Facilitators initiate activities with the purpose to create sense of ownership.  Water associations are being set up and registered and made to work democratically.  Then trainings in leadership and simple bookkeeping are organized.  In the construction as much as possible local labor, coming from the beneficiaries, are hired and two local technicians trained in the operation, maintenance and repair.  The ram pump systems provide many benefits and opportunities since the amount of water available per household has been made tenfold or more.  Besides the improvements (in health and economics), the biggest wish and hope of AIDFI is that the ram pump system installed triggers further development in and by the empowered community.  The ram pump program is mainly a relative short intervention with AIDFI moving on to the next community.

The idea of AIDFI is not only to provide water with benefits but also to create employment in the manufacturing and installation.  Scaling up is done through the training of interested teams which are operating independently from AIDFI but whom we can also provide projects.  We consider the teams or organizations with several teams again social enterprises.

For replication, we offer technology transfer to other countries.  See our section on Technology Transfer for more details about this.

Essential Oils Distillery

The other program is a continued intervention of AIDFI in a limited number of upland partner communities.  The intervention is not just a social problem but a long term sustainable intervention with the partner association operating itself as a social enterprise.  It’s about the growing (in natural way) of Lemongrass and the distillation of it into essential oil.  It all started with a problem(s) and an idea and then after rallying the target beneficiaries behind the idea and making them the center, we just started without the absence of a complete budget.  That is typical for AIDFI: ideas and quick action.

The problem in the first Lemongrass community was that the upland farmers were relying on rainfall for production of corn.

Most of them being mere tenants farmed without any erosion control measures resulting in decreasing production.  Besides that there were many months in which they could either not plant at all or had still to wait for the harvest, resulting in them borrowing money against usurious interest.  The lemongrass planted can at the maximum stay for five years and once grown up to a matured plant, harvested every two months.  The harvesting is done in batches so that income is spread.  

The economic benefit is spread income without the immediate need to borrow money.  Cost of transportation of lemongrass is saved since the plant/factory is in the heart of the production area.  In the same time work is created for the boiling/distillation.  The production of lemongrass is done with proper farming techniques.  The beneficiaries feel proud of the uniqueness of their project: production and processing of lemongrass.  They are now empowered members of the essential oil association.  Their status as lemongrass farmer has been raised and empowered by the association which is the social benefit.  In the same time men and women are equal in the association.  Another bottom line is the care for the environment: erosion control, natural production and processing of the lemongrass and the incorporation of Renewable Energy in the factory (solar heating, electricity generation through solar and wind) with as bottom-line progress (innovation).

Essential oil factory

This project was followed by two other lemongrass production projects in rather sugarcane areas.  The situation economically is even more difficult since the crop cycle of sugarcane is one year and transportation bulky and very costly with the areas difficult to reach. AIDFI consolidates and markets the oil with the biggest benefits going to the farmer producers.

AIDFI dares to go where any (only) economic thinking business person would never invest.  We don’t mind if there is no water, access road or electricity.  It should not be a hindrance, and more than that, these areas need SE the most. Innovation and empowerment can result in the missing things to come in……….

It was mentioned that there are some 30,000 social enterprises in the Philippines.  Many are cooperatives of which also many fail.  Failure because money invested was not theirs and the initiators are not being held accountable. SE is serious business.

SE is difficult with many dangers around the corner.  One of the challenges is too many assets and too much capital build up.  With AIDFI we took away possible temptations and struggles by AIDFI owning the lot and the plant/factory with equipment’s.  Income derived from the distillation should as much as possible go to the beneficiaries with a certain percentage to the association for other activities.  Any problems in the association should not lead to non-compliance to quality and quantity of delivery of oil to the buyers.  Relations which are difficult to build up.

As said earlier AIDFI considers SE as a serious economic strategy and would like to see it being mainstreamed.  This is possible if the more and more critical thinking consumers are preferring products and services which follow the bottom lines: people, profit, planet and progress.

Since AIDFI’s mission is to enable people to enjoy basic needs and live with dignity without depriving others the same, social enterprising is the perfect tool. Since AIDFI is limited in its actions and scope, therefore it tries to help in the advocacy for social enterprising in the hope that others will follow.  To make SE a serious strategy, it needs the support of as many stakeholders as possible: NGO’s, Cooperatives, associations, unions, government units and agencies, financing institutions, academic institutions, media and corporations.

Social Enterprising Bill

In the Philippines AIDFI supports the Social Enterprising Bill (commonly called PRESENT) which was filed with the Congress and Senate and which seeks to:

• Prioritize support and incentives

• Provision of loans

• Provision of insurances

• Provide Tax exemptions

• Availability of resources for capacity development

• Stimulate Research and Development

• Develop markets (fair trade)

• Get Social Enterprising mainstreamed in the educational system

• Provide preferential treatment in government procurement

• Provide cash incentives to at least 2%% for employment of persons with disability

Social Enterprise Bill

Social Enterprise Bill