Is social enterprise an ultimate solution to poverty?

The term ‘social enterprise’ has been coined by politicians and government officials as an ultimate solution brining hope to those underprivileged, a panacea to closing the gap between rich and poor. Unfortunately, they have not explained to the public what social enterprise is and how it differs from traditional business organizations and NGOs.

In fact, social enterprise has hundred years of history in the West. The purpose of setting up social enterprise is to achieve certain social objectives in a self sustainable way. Unlike profit driven enterprise, performance of social enterprise is gauged by two indicators, one is on social aspect and the other one is on financial aspect. A successful social enterprise can generate sufficient revenue to sustain the business and at the same time fulfill the social aim.

Setting up social enterprise is never a problem free task to the government. How much should the government contribute? If the government is heavily involved, if will be blamed for infringing the ‘small government, big market’ principle. Without generous support from the government, there is slim likelihood of securing success.

A survey conducted by the West shows that most social enterprise closes down in three years. Facing intense competition, social enterprise is out run by business organizations. Owing to the lack of marketing sense and management knowledge, the management team of social enterprise, usually constituted by social workers, finds it difficult to keep the business sustainable.

Greater involvement of business sector in social enterprise can secure better chance of success. According to the Committee of Poverty Alleviation, business sector can promote social enterprise at three levels. They include (1) ‘Mentor scheme’ which helps the training of management professionals; (2) setting up ‘Philanthropy banks’ which offer low interest loans to finance the social enterprise; and (3) enacting laws favoring business organizations to finance and manage their own social enterprise.

The lack of publicity and social network facing most NGOs is the stumbling block to reaching helping hands from business sectors. The role of the government as a mediator is critically important in promoting social enterprise to business sectors.

Social enterprise may not be a quick-fit solution to poverty but if successfully run, it will make Hong Kong a more harmonious place to live.