The Work as Worship breakout conference for the BCBP men, a new forum at the BCBP’s 30th Anniversary Celebration, Davao, April 24, 2010, featured Bro Bobby Atendido, BCBP Chairman of the Board of Trustees, BCBP Alabang member, as one of its three speakers. He spoke on Social Entrepreneurship. We reprint his talk for your information and reference. Portal Editor

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Thank you for attending this Conference on WORK AS WORSHIP, a novel addition to our anniversary celebrations, an idea suggested during one workshop with the Senior Members and Leaders of our VIZMIN areas. As time is limited, allow me to jump in immediately into the topic, “Social Entrepreneurship”.

The past few years have seen the distortions created by the traditional capitalistic model of profit maximization. This driving force of greed for more and more money has overridden every consideration in doing business. The resulting havoc is deplorable, causing intense sufferings and hardships particularly on those least capable of managing the harsh effects of too much greed. The mindless pursuit of wealth by many entrepreneurs is a pursuit of an idol, a false religion, something that our Lord Jesus Christ has warned us against. Jesus said “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.”

If our work is to give glory to God, if it is to be our worship to our Lord, then our businesses should relate sensitively to the needs of people especially those who have less to begin with and should ultimately create the kind of Christian change in the marketplace. Our work and businesses must be the instruments of our Lord to bring about the realization of the Kingdom of God right in the center of the business milieu. When the fruits of business are spread out to all, it will bring a smile to our Lord Jesus Christ and he will then say, “Well done my good and faithful Steward”.

The purpose of this talk is to present the concept of “Social Entrepreneurship” in order to challenge and inspire all of us in the BCBP community, because social entrepreneurship is a real Christian response that aims to create businesses that address the plight of the poor, environmental problems, and other social issues that our present system has so far miserably failed to address.

The concept of social entrepreneurship has been around since the 60’s where an entrepreneur uses entrepreneurial principles to organize, create, and manage business ventures that address social problems in order to create social change. Social entrepreneurs are people who harness their skills and experience in business – to make things work – so that products and/or services are delivered efficiently, up to market standards and provided on a sustainable basis. There are no shortcuts, no getting around quality standards, no excessive price points, but an honest to goodness use of business sense with a fundamental difference – an intent to serve the common good and spread around the fruits of capital.

Whereas a typical capitalist entrepreneur measures his success by generating the highest profit and return on investment, a social entrepreneur however focuses on measuring return on investment as a “social return” on capital. Thus, the main aim of social entrepreneurship is to further advance social and environmental goals even as it makes money to sustain and expand operations.

The concept of a social business has taken on an acute sense of urgency given the excesses seen in the last few years as well as the continuing wide-spread poverty all over the world. Its main voice is Prof. Muhammad Yunus, the visionary founder of Grameen Bank and a Nobel Peace Awardee for his life-long work in microfinance that has helped millions of poor families out of poverty. Even Bill Gates of Microsoft has jumped into the fray. In a speech he delivered at the World Economic Forum on January 24, 2008, he said that the great advances in the world have often aggravated the inequities in the world. The least needy see the most improvement while the most needy see the least – in particular the billion people who live on less than a dollar a day. In what he termed “Creative Capitalism”, he said that the aspects of capitalism that serve wealthier people must serve poorer people as well. While controversial, his idea and message remain true – there has to be a system that “draws in innovators and businesses in a far better way than is done today, a system with a twin mission – making profits and also improving the lives of those who don’t fully benefit from market forces.” The reality today is that half of the world’s population owns less than one percent of its assets. In the Philippines, the stark reality is approximately 25% of Filipino families do not earn enough to satisfy their most basic food and non-food requirements.

What is Social Entrepreneurship?

In its purest form, Prof. Yunus defines social entrepreneurship as creating ‘for-profit’ businesses capitalized by shareholders whose goal is to preserve their investment but not to earn financial dividends or profits in the traditional sense. Rather, they seek a return in terms of a social profit in the form of positive, measurable impacts on societal problems such as poverty, ill health, illiteracy and environmental degradation. Profits are expected to be earned in order to sustain the business but these profits are plowed back into the business to do more good for society. The belief is that social businesses are sustainable structures that can address societal issues, a view borne out of the collective failure of the State, of business and NGO’s to alleviate the plight of the poor.

Prof. Yunus is single-minded in his belief that if allowed to compete in the marketplace with the right institutional supports and removal of obstacles that prevent them from doing so, the poor can very well handle themselves and compete effectively. He yearns for a more humanistic but no less competitive, economic system. His alternative view of the capitalist world sees that instead of one motivating factor – greed – that spins the wheels of the market, there is another force that can drive businesses – social consciousness.

The question is whether a social business as defined by Prof. Yunus in its purest form feasible and practicable. Are there investors willing to invest money as a social investment that only earns a social return? Can one really take out greed as a motivating factor and still see a company operate competitively? Are social businesses only “feel good” corporate ventures? Are they sustainable? Will social businesses have enough scale as to have an impact and cause meaningful change in society?

I think the reality is that social businesses will most probably lie in a spectrum between the pure capitalistic model where greed is the driving force and a social entrepreneurial model as defined by Prof. Yunus. I think there are enough socially-conscious people and companies who are prepared to invest in social businesses where the fruits of the enterprise are shared among stakeholders and not just the shareholders. There are well-known strategies that can be employed in order to create momentum and achieve large scale impacts on society. However, it is not my purpose to discuss them today.

What I want to present today are two living examples of a social business whose owners I have interviewed for this presentation. It is an inspiring story of entrepreneurs and socially conscious people who decided to do something for the poor and the environment.

Gandang Kalikasan Inc.

Gandang Kalikasan, Inc. is the brainchild of Gawad Kalinga volunteers – a British national by the name of Dylan Wilk, his wife Anna Meloto-Wilk and Camille Meloto. Their early GK exposure to poverty inspired them to do something for the country through a social business, Gandang Kalikasan, Inc. which they established in November 2008 with a starting capital of only P 500,000. GKI produces and markets a whole range of natural beauty products that do not use any harmful chemicals under the brand name of Human Heart Nature. An interesting information I gathered is that by December 2008, barely two months of operation they have already sold P 1.0 million worth of products.

What makes GKI a social business?

According to Anna Meloto-Wilk who is the President of GKI, their three core philosophies are as follows: Pro-Philippines; Pro-Environment and Pro-Poor.

1. Pro-Philippines means all their products are 100 % manufactured in the Philippines. They source as much as possible all raw materials locally even if from time to time they may be more expensive. They believe that the Philippines can produce world class products if given the right institutional support.
2. Pro-Poor means their goal is to work with community-based suppliers and cooperatives and pay them just prices rather than to squeeze them to the barest margins. GKI believes in helping farmer cooperatives come up with world class raw materials by providing technical services.
3. Pro-Environment means they are committed to protecting the environment by using only eco-friendly ingredients and materials.

What I admire most in the short time that I spoke to Ms. Anna Meloto-Wilk are their socially responsible business practices as follows:

1. They pay their laborers P 500/day which is significantly above the minimum wage. Anna explains that a minimum wage only takes care of the basic daily needs of a family and so nothing is left for other requirements such as health, education and other necessities. The higher pay is meant to cover the other needs of the family.
2. They sell their products thru a network of 5,000 dealers rather than thru traditional distribution outlets like SM. While it is easier to retail their products thru the big retailers, they believe that employing dealers casts a wider net to make more people become entrepreneurs themselves. This means that if each dealer employs say only 2 people, 10,000 people are actually benefited.
3. They source their raw materials from two cooperatives – one based in Bicol and the other in Negros. They convinced the farmers in Bicol to switch from their traditional crop to citronella and in Negros to lemon grass, and paid them 20% higher for their produce. As a result, farmer income increased from P 40,000 per ha./year to P 200,000 per ha./yr.
4. To address the issue of technical know-how, GKI hired field consultants to teach the farmers modern methods and best practices in order to assure raw material quality.
5. GKI has also started to provide interest free loans so that the farmers can begin to own their land. As a result, the farmers in Bicol are aiming to expand from the current 7 has. to hopefully 70 has.
6. GKI recently engaged a social consultant to assess the impact of higher income on the lives of the farmers to find out if the higher income was used productively or did it lead them to vices and bad habits (gambling, sabong, etc.). Of real concern to GKI is that the higher income should have a positive effect of their lives.
7. They provide value formation workshops to the people they work with.
8. They aspire to be a world class Filipino business. At present, they are already exporting their products to the US and have established many dealers I believe in at least 10 states. That is also the reason why they hire the best people and pay them market-based compensation. For example, their marketing director used to be the marketing director for Avon.

Salon de Ayala Service & Credit Cooperative (SASCC)

SASCC is an interesting example of how a simple beauty salon and barbershop can be transformed into a social business. Alabang Country Club used to contract out to a concessionaire its beauty parlor and barbershop. When the contract of the concessionaire expired, a group of socially conscious members led by Sen. Jun Magsaysay, Cesar Sarino, ex-GM of GSIS and several members decided in 2003 to reorganize the employees of the salon and barbershop into a cooperative, SASCC. To jumpstart the operation, they donated the initial seed capital of P 260,000. SASCC then entered into a contract with the Club to provide the said services. The Club agreed to try out the new arrangement.

What has been their experience?

This is what Ms. Chit Cadayona, Vice Chairman of SASCC has to say:

1. Under the cooperative set-up, their total compensation has increased. Their current basic salary is P 400/day a rate higher than when they were employees.
2. In addition, they receive the full commission of 62% of the service fee unlike before when the commission is further divided between the employees and the owner.
3. Since 2003, SASCC has accumulated a cash surplus of P 2.6 million which is after distribution of regular annual dividends.
4. From one parlor in Alabang, the cooperative now has two additional branches. They now have 33 members.
5. The group of Sen. Magsaysay continues to help them with technical training, value formation workshops as well as general management advice. They helped the SASCC management learn financial controls and cash management.
6. SASCC is quite profitable with revenues consistently exceeding expenses.
7. The members of the cooperative are very happy with the set-up, having been transformed from being employees to now owners of the business.

Time does not permit me to cite other examples of social businesses that I have come to know about as a result of this paper. For example, I found out that a classmate of mine organized some coastal families and fishermen in Negros and taught them how to grow “Tahong”. He arranged microfinancing for the fishermen and also accessed technical help from SEAFDEC. The last he heard was the fishermen have expanded their operations to more than 50 has. I also found out about a cooperative in Payatas (garbage dump) that went into the water business and now sells clean water to 1,500 squatters at more reasonable, socially-based prices. My reasonable guess is that there are many of such businesses all over the Philippines that we still do not hear about.

These examples illustrate that it is possible to create social businesses that go beyond the traditional model. I will not be surprised to see in a few years GKI as a large enterprise with its brand Human Heart Nature becoming a well established brand not only here but abroad as well.

Social Entrepreneurship of course faces numerous challenges. Critics say that social businesses will never achieve a large enough scale as to cause meaningful wide-spread change in society. Financial resources will remain limited for social businesses. Banks and capital markets are inaccessible. And so many other obstacles.

That said, I believe that Christian Businessmen should not be deterred by the difficult hurdles that a social business has to overcome. There is no better time than now for people, investors, institutions whose hearts are in the right place to respond to societal problems. The two cases I described illustrate how people with the right heart and passion coming together can achieve something good in spite of so-called obstacles. It was not greed that motivated them. Rather, their keen social consciousness convinced them to cast their net for the common good. I think that is the spirit that underpins a social business – the drive to be socially relevant, the motivation to improve the state of those less privileged, the passion to help out others.

Let me close by calling to arms all of you brothers, you who are businessmen and professionals, to come together action group by action group, unit by unit, chapter by chapter, region by region, area by area, to organize and create innovative social businesses that will uplift those who are less privileged than us, those who are poor and struggling, those who are being dispossessed by environmental concerns. Only one’s creativity and grit are the limits to what the BCBP community can do by way of social enterprises.

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