In the past few years, a lot of emphasis have been placed on social entrepreneurship. Like the euphoria of business plan competitions, the Singaporean business community has jumped on the bandwagon to create an awareness in this new buzzword “social entrepreneurship”. Unfortunately, the notion of social enterprise has been marred by the NKF incident. In this article, I argue that a chasm exists for Singaporeans to adapt to this new concept and propose education as a solution to bridge the gap.
Introduction to Social Entrepreneurship
Social entrepreneurship is defined as an enterprise where the entrepreneur recognizes a social problem and uses traditional entrepreneurial principles to organize, create, and manage a venture to make social change. Before it becomes a fashionable topic and rebranded as sustainable development in the United States, the concept originated from the UK. Significantly, most successful examples of social enterprise emerge from Europe, because the concept belong to the philosphical left. For example, Florence Nightingale, the founder of the first nursing school and developer of modern nursing practices, is one of the first few social entrepreneurs in the world.
There are many theories on social entrepreneurship (or sustainable development, which I will use both terms synonymously in this essay). One early school of thought came from John Elkington, known as the triple bottom line, which is made up of 3Ps (People, Planet and Profit) that measures corporate social responsibility of organizations such as UN and charity foundations. The model is to apply proper corporate finance and economic indicators to measure the efficiency of social organizations. The same model becomes the basis for Cambridge University Entrepreneurs [1] to modify the MIT-$50K business plan competition into the 3P (People, Planet and Productivity) [2] first business plan competition that has a special twist to social enterprise. We refer the reader to the references on social entrepreneurship in [3].
The modern perspective of social entrepreneurship is slightly altered in US. If you notice how famous charity foundations like the William and Melinda Gates Foundation operate, you notice that social entrepreneurship has redefined how their money is spent towards helping poor people. Philosophically, it switches from the left to the right. We apply a simple example to distinguish between charity model and social entrepreneurship. If Bill Gates adopts the charity model, his money will go to the African governments and these institutions will decide how to spend their money. Part of the problem is that most African governments wasted a lot of charity money in building weapons rather than infrastructure. So, Bill Gates applied the social entrepreneurship model in how to spend that sum of money and help the poor in Africa at the same time. Instead of giving the money to the government, he tasked his foundation to create a programme that every child in Africa to receive injections from smallpox and other malicious diseases. The argument is that if we have healthy people, they can start to fend and work for themselves and remove the traditional activists’ approach in begging for more money to dump into a bottomless pit where war and famine reign.
Singaporeans’ attitude towards social entrepreneurship
As a traditional and conservative society, most Singaporeans follow the charity model rather than the social entrepreneurship model. Specificially, most people believe that social work is an act of altruism, and the person who performs that altruism should not be rewarded with a pay that is similar to his counterpart in the private sector. Secondly, their concept is that most of the money donated to the charity has to be spent directly on the people who benefitted, leaving very little to help the organization. In contrast, most charity organizations are always difficult to maintain in Singapore.
The concept of social enterprise runs contrary to the central tenets of charity model in two aspects and I illustrate with the NKF scandal which is a good case study now to demonstrate how the first tenet contradicts the second:
- The pay of every working member of the organization is pegged to the commercial sector: In US, the big foundations, for example the Gates Foundation, are run by a proper management team. Most Singaporeans assume that if you are running a charity foundation, your pay should not be sky rocketed like the ex-CEO of NKF. They seemed to have associated the notion of morality and social responsibility on the person running the charity. Most of the executive directors have previous private sector experience (former investment bankers or management consultants) and has an MBA degree. Their pay are pegged to the private sector.
There are a couple of big charity groups in US and UK, where the CEOs are paid far better than the ex-CEO of NKF. There is a profit motive associated in this model. If their interests are aligned, it’s a win-win situation for both the charity organization and the fund raisers. If I tell a typical Singaporean that the CEO of Gates Foundation is flying on business class and his pay is at least US$1M, they will find it hard to accept. This assumption runs contrary to the Asian way of viewing social workers. These social workers are not supposed to be paid a high salary.
- The management is subjected to auditing procedures similar to those in business corporations: Since the social enterprise peg running costs and salaries close to a business enterprise, they are subjected to audits from accounting firms and advisory boards. These organizations cannot invoke a privilege that traditional charity has.
Does it want to follow charity organizations in the West where they are scruitinized by the auditors but all allowed to give high pay to the executives running it or follow the traditional charity organizations where they can choose not to disclose their accounts? In the case of NKF, they wanted the best of both worlds and it backfired on them.
That comes to my next point.
Is Singapore ready for social entrepreneurship?
Personally, to answer that question, I don’t think so. Here are the two general areas which social entrepreneurship encompasses:
- Foundations running social projects: If the NKF is run properly, it belongs to this group. There exist interesting examples in the West which adopts this model. For example, the Big Issue, a magazine sold by the homeless in UK, uses the revenue generating model of printing the magazine at a low cost and relies on advertising to create a means for the homeless to sell it and get money to survive their daily problems.
- Organizations to provide solutions for existing social problems: For example, there are a few groups in Singapore that uses modern business models and new technologies to solve problems like global warming, animal testing and conservation of rural areas. A good example is Jeremy Leggett, a social entrepreneur who has a company known as solarcentury. The company builds solar panels into buildings to help save energy for buildings. In this model, he has a profitable business and solve the global warming problem. Most social entrepreneurs in India also falls into this category, for example, the Aravind Eye Care System (based in Madurai, India) adopts this model.
The notion of social entrepreneurship is not very well understood in the context of Singapore. It seemed to incorporate a strong sense of morals and social responsibility but does not include the notion of sustainability and corporatization to maximize its full potential for solving the social problem at hand. My belief is that more work needs to be done in educating the public as well as the government in understanding how to run and assess a proper social enterprise.
References and Notes:
[1] The author is involved with the first and second year in organizing the competition and several initiatives involving social enterpreneurship in UK.
[2] Note that we change the word “profit” to “productivity” to appease the left from exploiting social entrepreneurship as a corporate buzzword.
[3] Social Entrepreneurship, Wikipedia.