Social enterprise: A new answer to poverty

01 Sep 2008


July 2008 saw the launch of the publication titled Social Enterprise: A new model for poverty reduction and employment generation.

New Horizons - Prepared by UNDP and the EMES European Research Network, this marks an important step toward raising the regional profile of social enterprise as a tool for community-based development. UNDP’s regional advisor on poverty reduction and civil society, Geoff Prewitt, explains what it’s all about.

What, briefly, is a social enterprise?  How does it differ from an NGO?

There are various definitions applied to Social Enterprises.  In short, however, they may be defined as private, autonomous, entrepreneurial organizations providing goods or services with an explicit aim to benefit the community.  They are often owned by members of the communities in which they operate.

Social Enterprises are – indeed – often registered legally as non-governmental organizations (NGOs).  But, while NGOs is a catch-all for a range of organizations, Social Enterprises have a narrow focus that includes engagement in economic activities (although on a non-profit distributing status), employment generation and work integration, and delivery of services. Social Enterprises spend much less time in traditional areas of significance to NGO activity such as advocacy and watch-dog functions.  Equally, SEs in many ways resemble private sector organizations aligned with corporate social responsibility practices.

What is the need for such organizations in the countries of CEE/CIS?

While the majority of countries are benefiting from economic growth, this growth has not transformed into progress for all groups of society.  Problems specific to this region include: countries facing strong core-periphery disparities; ‘working poor’ and ‘jobless growth’ phenomena; unreformed or weak social services and protection schemes; and problems of old industrialized regions (depressed urban areas) or single-factory towns.  This has led to the emergence of visible of ‘losers’ of transition (‘vulnerable groups’) and an increase in inequality.

Social Enterprises can provide employment opportunities and specific services to these vulnerable groups.  However, they need the appropriate legal framework and other regulatory benefits as well as support from Government for them to thrive.  This means that in recognition of their role in meeting social goals, they benefit from an advantage in their commercial activities (for example, through a lighter tax burden).

How does SE relate to the traditional model whereby governments are responsible for providing such services?

Social Enterprises and Government agencies should complement each other.  Governments of the region went through a difficult period of transition following the break-up of the Former Soviet Union. Even in so-called high income countries and well-functioning democracies, the State can not provide services to all, particularly specialized services.  For example, while the State may be responsible for providing universal primary education, some populations of society have specialized needs or speak different languages or live in very rural places.  Social Enterprises can help fill these gaps, particularly if subsidized by the Government.  Regarding the role of the state, SEs work best where there is a supportive legal framework, such as in Belgium and Italy.

What are the main ways in which UNDP contributes to developing SE?

Currently we are focused on building awareness on the contributions that SEs can make to employment generation, supporting vulnerable groups, and contributing to service delivery.  A few countries, however, such as Poland and Serbia are quite advanced and UNDP is exploring the establishment of Government funds to support SEs (in Poland) and helping to reform the legal environment (in Serbia).

The report was launched on 9 July 2008 in Barcelona at the international conference, “The Third Sector and Sustainable Social Change: New Frontiers of Research” organized by the International Society for Third Sector Research (ISTR) and EMES. The event gathered 600 academics, Ph.D. students, researchers, and practitioners from 58 countries during four days to discuss some of the most relevant themes pertaining to the third sector and civil society in general.

Please click here to read the report.

This article was taken from UNDP – Europe and CIS website.