Continued from yesterday

A charity project Sri Lanka.

Social entrepreneurs establish their businesses by obtaining seed capital from donors and social venture capital funds such as Echoing Green, Ashoka: Innovators for the Public. For this purpose they have to undertake a daunting task of convincing those investors that there is a high social return on investment and they also can generate a surplus from the operations of the social enterprise to sustain its activities. Hence, social entrepreneurs address the issue of cost recovery from the inception and minimise the expenditure to generate a surplus. The surplus will be used either to expand the business or to pay off the venture capital funds taken by SEs.

Echoing Green is a venture capital fund established in USA to identify, invest and support the world’s most exceptional emerging social entrepreneurs and the social enterprises they launch. It has to-date invested nearly US$ 25Mn in seed and start-up grants, provided financial and technical assistance to 400 social entrepreneurs and have launched social enterprises in 30 countries.

Ashoka was founded by Bill Drayton the world renowned social entrepreneur in 1981 with the mission to shape a global, entrepreneurial, competitive citizen sector. It also identifies and supports leading social entrepreneurs through a social venture capital approach with the goal of elevating the citizen sector to a competitive level to the business sector. It operates over 60 countries investing in the work of over 1700 social entrepreneurs in 60 countries.

The UK government has established Phoenix Fund, Futurebuilders Fund and the Adventure Capital Fund to provide finance to SEs. The Phoenix Fund supports the creation and growth of community development finance institutions (CDFIs) to increase finance to SEs in deprived communities. The other two funds offer longer-term finance arrangements and development support to SEs.

Having raised their initial financial requirements through those development funds SEs in developed countries advanced their operations through recycling of their surplus funds and some upgrade their operations and become CDFIs to generate seed capital for new SEs. Thus SEs in developed countries finance their operations through Venture Capital Funds, CDFIs, Bank Loans, Trading Income and Retained Profits(=Surpluses).

Advocating sustainable development is another unique feature of SEs and they do so by providing goods and services that are economically viable, socially equitable, environmentally bearable and culturally permissible. Thus the hall mark of SEs is sustainable development.

It is also observed that those SEs that enrich their managerial, generic and technical competencies have become Multi-national SEs. High integrity of manager is a prerequisite for mobilising funds for SEs. Cultural sensitivity and environmental friendliness are core values inculcated in the mindset of managers of SEs for the social recognition. On the other hand managers of SEs have to make a commitment for professionalism to sustain operations of SEs and to demonstrate persistence in finding innovative solutions for social problems.

The staff of SEs regardless of their functions has to gain generic competencies in community relationships, communications, linguistic capabilities and proficiency in project management With a view to improve productivity of SEs, specific technical competencies have to be developed by the staff of SEs. Hence management development and skill development are essential for SEs to conduct their operations in a sustainable way. The best practices of globally renowned SEs in developed countries in developing and maintaining those core competencies have to be adopted by new SEs in developing countries like Sri Lanka to build up sustainable SEs

Although the roles of private enterprises (PEs), public enterprises (PuEs), co-operative enterprises (CEs) and SEs are equally important for a balanced economy, Sri Lanka has not given adequate attention for development of SEs. There is no national policy on SEs as evident in UK.

The currently operating Trusts, Companies Limited by Guarantee, Registered Associations, Foundations and NGOs the institutional entities mentioned earlier have the development potential of SEs. These prospective SEs can be promoted as SEs by prescribing qualifying criteria inclusive of comprehensive business plans for sustainable operations by the Government through its national policy on SEs.

Already the importance of formulating a national policy on NGOs and introducing monitoring and regulatory mechanisms has been highlighted in public discussions. Jonathan Thamber Deputy Chairman of the Center for Advancement of Resource Mobilisation (CARM) underscored this point thus: "The main problem is, we don’t have a broad based system to cover all NGOs in the country. There is no national policy. A national policy sets out the Government-NGOs relationship and sets guidelines. Some countries like the Philippines and Kenya have tripartite bodies overlooking NGOs. Then it is not as bureaucratic as in the case of only the government monitoring. The tripartite committees set codes of conduct and code of ethics for NGOs to operate." However the national policy on SEs should not confine to the registered NGOs and other entities mentioned earlier also have to be promoted as SEs through the national policy.

It is also observed that many NGOs through poverty alleviation programs engaged in a wide range of development projects in developing countries pertaining to health, education, agriculture and industrial development, rural development, community-based income generating activities, etc. Dr. Michael Williams observing this trend has stated that "NGOs today form part of the development machines; a vast institutional and disciplinary nexus of official agencies, practitioners, consultants, and scholars and other miscellaneous experts producing and consuming knowledge about the developing world".

Hence by promoting NGOs as SEs we can build up a new development engine to accelerate the development process of the country.

Besides formulating a national policy on SEs, an appropriate institutional framework has also to be introduced to create an enabling environment for the growth of SEs. As in developed countries funds have to be established to facilitate access to finance by SEs. Without creating a new development fund, the National Trust fund can be re-engineered to provide finance to SEs in Sri Lanka.

Social Entrepreneurship Development programs can be introduced through certificate and diploma courses by the National Institute of Social Development and the International Centre for the Training of Rural Leaders established at Embilipitiya. The Rural Development Training & Research Institute and the business schools like Post graduate Institute of Management (PIM) can undertake research programs on social entrepreneurship. National Entrepreneurship Development Authority (NEDA) may establish a special window for the promotion of SEs as national enterprises.

The concept of social entrepreneurship is not new to Sri Lanka. Most of the Sri Lankans are aware of the life story of the Boddhisatha Maga Manawaka. According to Buddhist literature a youth called Maga Manawaka who undertook a road development project to clear the way for a visiting Buddha realizing that he could not complete the project on time lay down with his fellow social workers on the unfinished part of the road and requested the Buddha to walk over their bodies and visit the assembly hall. Thus Maga Manawaka is not only a social entrepreneur who mobilised human resources for community development work, an unique project leader personally and jointly undertook the responsibility of completing rural development project as per the schedule. Maga Manawak is a role model for budding social entrepreneurs in Sri Lanka.

Nevertheless, rural development programs launched by the Samurdhi Development Authority (SDA) and the Gam Diriya Foundation (GDF) nowadays hardly promote social entrepreneurs and entrust development function to managers and facilitators who have been trained to develop and evaluate development projects and disburse development funds to the identified projects according to the laid down procedures. Unlike social entrepreneurs they will not introduce innovative solutions to social problems through their own initiatives and mobilise funds to introduce the solution through social marketing. .

It is also observed that initial attempts made by Rural Development Societies (RDSs) -the home grown NGOs had a similar approach during the period of 1940-1970. According to R.B.Talagune, the Rural Development Officers (RDOs) appointed by the Government steered the activities of RDSs as typical government bureaucrats and made use of RDSs to implement projects passed down to them by higher authorities. Though the project development is more advanced and interface with rural communities is high in the rural development activities undertaken by SDA and GDF, officials of these institutions like RDOs frustrate the social entrepreneurs who identify the social needs of the rural community and develop innovative solutions as they may not be eligible to become members of self-help organisations established under those programs to develop and manage development projects..

Hence, there is a felt need to harness the skills of social entrepreneurs to develop innovative solutions for rural development problems through SEs. Also by adopting the development strategy of resource supplementation for funding SEs and promoting sustainable SEs public funds allocated for development purposes can be effectively and efficiently utilised.

On the other hand establishment of a regulatory mechanism for SEs is also equally important for the development of sustainable and socially desirable SEs. It is observed that the prospective SEs in Sri Lanka are subject to the legislative and administrative control of a number of Govt. Departments namely .the Department of Public Trustee, Department of Business Registration, NGO Secretariat etcs. The entities registered under these departments may be approved as SEs to regulate their operations after evaluating their sustainable development potential. The approved SEs may be entitled for fiscal and financial incentives offered by the government.

It is suggested to establish a Social Enterprise Development Bureau (SEDB) to undertake the approval and other regulatory functions of SEs. SEDB has to be an independent, professional and transparent regulatory agency. It can be set up under NEDA which undertakes enterprise development activities in the country.

Thus there is no necessity to create new institutional framework for development of SEs. The existing institutional framework for development of enterprises has to be reorganised for this purpose. However, catering to the needs of the emerging social enterprise sector a national policy on SEs has to be introduced by the government as a priority task to facilitate the reorganisation of the existing institutional framework and to create a congenial environment for the growth of SEs that will function as new development engine and pave the way for a balanced economy through accelerated socio-economic development as done in developed countries..