Fiinovation webinar on social enterprises through affirmative action

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Social Enterprises through Affirmative Action
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Mentor of the Webinar

• Mr. Soumitro Chakraborty
• CEO, fiinovation

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About Fiinovation

• A CSR based research consultancy working in areas
  of education, livelihood, environment and health
  since last seven years
• Assists businesses to support requirements of
  communities by designing and implementation of
  sustainable projects
• Through practices such as CSR-CSO Partnership,
  Initiative Design, Initiative Management,
  Monitoring and Evaluation, Impact Assessment,
  Sustainability Reporting Fiinovation facilitates
  corporations for promotion of social enterprises

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Agenda of the Webinar

• Better understanding on Social Enterprise models
  (Indian Global)
• Social Enterprise laws in India
• Understanding of Affirmative Action in India
• Promotion of Social Enterprise models among
  marginalised communities
• India Inc and Social Enterprise movement
• Top examples of Social Enterprise Models in India
• Conclusion
• Way forward

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What is a Social Enterprise?

• A social enterprise (SEs) is an organization that
  applies commercial strategies to maximize
  improvements in human and environmental
  well-being. This may include maximizing social imp
  act rather than profits for external
  shareholders.
• SEs have a mixed and contested heritage due to
  philanthropic roots in the United States, and
  cooperative roots in the United Kingdom, European
  Union and Asia.

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Social Enterprise, the concept

• A SE could be engaged in any business activity
  fulfilling any need (Maslows need hierarchy)
• E.g. Entertainment, Nutrition, Sanitation,
  Communication, Livelihoods, Transportation,
  Education, Training, Financial Inclusion
• Asian Development Bank defines SEs as
  organizations that have triple bottom line
  returns namely, addressing social and
  environmental needs such as affordable health
  services and energy, and have a financially
  sustainable revenue model (or plan to become
  sustainable in the near future).

Social Needs
Basic Needs
Maslows need hierarchy
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Social Enterprise Global Context

• 'Social Entrepreneurship' can be traced to
  Beechwood College near Leeds, England (from 1978)
  where Freer Spreckley used the term 'social
  enterprise' to describe worker and community
  co-operatives that used the 'social accounting
  and audit' system developed at Beechwood
• Ashoka Innovators for the Public a US
  foundation established by Bill Drayton was a
  program to support the development of social
  entrepreneurship
• In the US, the term is associated with 'doing
  charity by doing trade', rather than 'doing
  charity while doing trade'. In other countries,
  there is a much stronger emphasis on community
  organising and democratic control of capital and
  mutual principles, rather than philanthropy

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Social Entrepreneurship Development Initiatives

• Public Services (Social Value) Act, 2012 (United
  Kingdom)
• NYU Fellowships in Entrepreneurship, Social
  Entrepreneurship, and Innovation
• Social Enterprise Summer Fellowship, Harvard
  Business School
• Amazing Grace, Rangoon, Myanmar
• Global Social Entrepreneurship Network, UK
• Schwab Foundation for Social Entrepreneurship
• Global Social Enterprise Initiative
• Yunus Social Business
• Rubicon Programs, California, USA

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Social Enterprise India Context

• Definition is not limited by legal structure. SEs
  may be registered as
• Private limited companies
• Cooperatives
• Not-for-profits, trusts or any other legal
  entities
• In India, a non-profit can be registered as
• A Society, under the Registrar of Societies
• or as a Trust, by making a Trust deed
• or as a Section 8 Company under the Companies
  Act, 2013
• Under Section 8 of the Companies Act, 2013, a
  limited company
• (a) has in its objects the promotion of commerce,
  art, science, sports, education, research, social
  welfare, religion, charity, protection of
  environment or any such other object
• (b) intends to apply its profits, if any, or
  other income in promoting its objects and
• (c) intends to prohibit the payment of any
  dividend to its members
• Impact investing in India has roots extending
  back to 1982, when the Ashoka Foundation provided
  grants to Indian social entrepreneurs.

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Challenges Social Enterprises

• Social enterprises are not just scaling up, they
  are scaling out
• Governments and international institutions have a
  huge role to play
• The bigger the enterprise, the greater the need
  for democratic accountability
• Potential to transform the socio-economics of
  poorer nations, but individuals require support
  such as capital, infrastructure, market access
  etc.
• Entry of big businesses to the market
• Social enterprise leaders do not often come from
  traditional business backgrounds, hence lack
  expertise
• Genuine need and desire for collaboration across
  sectors and geographies
• Need of donor support
• Progress on large social impact investments had
  been slow due to multiple hurdles
• Need for better infrastructures to support the
  sector

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Few Social Enterprises
India
Global
Global

• Anand Milk Federation Union Limited (Gujarat
  Co-operative Milk Marketing Federation Ltd)
• Godavari Women Weavers Services Producer Company
• Nyayika, Leaps Bounds
• Sukhibhava
• Frontier Markets
• m.Paani
• Innovative Financial Advisors
• Samhita Social Ventures
• Make A Difference

• Samasource
• Community Shop
• Textbooks for Change
• ArtZoco 
• eBatuta
• Water Health International
• Kiva
• Edgar and Joes
• Bio Lite

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Understanding Affirmative Action

• Known as
• Employment Equity in Canada
• Requires employers to engage in
  proactive employment practices to increase the
  representation of four designated groups women,
  people with disabilities, Aboriginal peoples, and
  visible minorities
• Affirmative Action in USA
• Focus on issues such as education and employment,
  specifically granting special consideration to
  racial minorities and women who have been
  historically excluded groups
• Positive Action in UK
• Promotion of people based on belonging to
  non majority identity groups in the workplace,
  educational institutions and positions in society

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Contd

• Affirmative Action in India
• Known locally as reservation policy it is an
  elaborate quota system for public jobs, places in
  publicly funded colleges and in most elected
  assemblies
• An action favouring those who tend to suffer from
  discrimination positive discrimination
• AA reverses longstanding discriminatory
  tendencies in the society
• For people of a certain caste, gender, sexual
  orientation, race, or ethnic background
• AA provides supposedly fairer conditions and
  corrects past injustices

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Different Approaches to AA
Affirmative action Through CSR
Affirmative Action

• Implementing CSR Activities as per Schedule VII
  of The Companies Act, 2013
• Targeting SC/ST communities

• Recruiting employees or providing opportunities
  in the recruitment process for SC/ST communities
• Procuring from SC/ST Vendors
• Offering solutions to address the needs and
  challenges of the SC/ST communities

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Poverty Among SCs and STs

• As per the erstwhile Planning Commission, ST
  population below poverty line came down from
  47.4 in 2009-10 to 45.3 in 2011-12 in rural
  areas.
• In urban areas, it declined from 30.4 in 2009-10
  to 24.1 in 2011-12.
• Census 2011 revealed that the situation of
  non-workers among total ST population (i.e.
  42.0) was not dismal as compared to SC (i.e.
  52.2) and all other social groups (53.3).

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Contd

• Percentage of ST non- workers declined from 50.9
  in 2001 (Census 2001) to 42 in 2011 (Census
  2011) at all India level. 
• According to SECC, 133.5 mn households (74.5 of
  the total 84 for SC and 87 for ST households)
  have a monthly income where the highest earning
  household member earns less than Rs 5,000,
  whereas households with any one of the seven
  deprivations is only 86.9 million.
• As per NSS, 34 of SCs and 46 of STs households
  were in self-employment in 2004-05 in rural areas
  as compared to urban proportions with 29 and 26
  respectively.

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Contd

• There are 46, 844 villages in the country having
  greater than 50 per cent SC population
• The SECC covered 24.39 crore households across
  the country 17.91 crore are rural households
• 21.53 per cent of rural households belong to the
  Scheduled Caste/Scheduled Tribes

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Unemployment Rate ()
Year ST SC OBC Others Others Total
Rural Male Rural Male Rural Male Rural Male Rural Male Rural Male Rural Male
2011-12 1.3 2.0 1.7 1.8 1.8 1.7
2009-10 1.7 1.7 1.4 2.0 2.0 1.6
2004-05 1.1 1.7 1.5 2.0 2.0 1.6
Rural Female Rural Female Rural Female Rural Female Rural Female Rural Female Rural Female
2011-12 1.1 1.4 1.7 2.4 2.4 1.7
2009-10 0.9 1.5 1.4 2.5 2.5 1.6
2004-05 0.4 1.4 1.9 2.9 2.9 1.8
Urban Male Urban Male Urban Male Urban Male Urban Male Urban Male Urban Male
2011-12 3.4 3.2 2.5 3.4 3.0 3.0
2009-10 4.4 3.1 2.8 2.7 2.8 2.8
2004-05 2.9 5.5 3.3 3.7 3.8 3.8
Urban Female Urban Female Urban Female Urban Female Urban Female Urban Female Urban Female
2011-12 4.8 4.5 4.7 6.3 5.2 5.2
2009-10 4.3 4.2 6.2 6.2 5.7 5.7
2004-05 3.4 4.6 6.7 8.5 6.9 6.9

• Maharashtra government on the issue of suicides
  among cotton farmers in the state suggests that
  suicide incidences are slightly higher among SCs
  and STs across caste groups and for marginal and
  small farmers across size-class of land.

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Social Entrepreneurship Affirmative Action

• Allocation of Rs 200 crore in the Budget
  Estimates 2014-15 for setting up Venture Capital
  Fund for SCs
• Earmarking of Plan Outlay under Tribal Sub-Plan
  at 24.71 under Indira Awas Yojna 20.59 for
  NRLM/ Aajeevika
• Specific provisions made in the guidelines of
  programmes such as MGNREGA, PMGSY and NSAP for
  the benefit of SCs/STs
• MUDRA Bank will be financing 6 crore small
  vendors and businesses, 61 per cent of whom are
  SCs, STs, OBCs and minorities
• India Development Marketplace, a World Bank
  initiative, to fund support social enterprises,
  announced grants worth 2 million to 20 social
  entrepreneurs in Jharkhand, Madhya Pradesh and
  Chhattisgarh

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India Inc and Social Enterprise

• Tribal Farmers Producer Company Srikakulam,
  Andhra Pradesh (ALC NABARD)
• NTFP (Gatherers' Self-Help Cooperative),
  Mayurbhanj, Odisha (ALC SPARDA)
• Tata Social Enterprise Challenge (Tata Group,
  Acumen, Ankur Capital, Yunus Social Business and
  Ennovent)
• On 21st May, 2012, SEBI notified the word Social
  Venture Fund
• Aavishkar, a venture capital firm, has been
  investing in social ventures for over a decade,
  catalyzing innovation at the bottom of the pyramid

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CII Social Enterprises

• CII-ITC Centre of Excellence for Sustainable
  Development mentors, advises, and
• provides a platform to social entrepreneurs and
  enterprises
• Mentorship and advice is on business models,
  strategies, and partnerships
• Annual event 'Sustainable Inclusive Solutions,
  a platform for social entrepreneurs and
• enterprises
• Social Enterprises that CII have worked with are
  in energy access, rural distribution and
• agricultural services
• Association with Selco Incubation Centre for
  creating conditions to deliver energy
• services to low income families
• CII's sponsored Code of Conduct for affirmative
  action Signed by 690 companies for
• collecting data on SC/ST employees in 2010

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Affirmative Action India Inc.

• As per MSME Report 2014-15,
• 7.83 of the enterprises were owned by Scheduled
  Caste entrepreneurs
• 5.76 by Scheduled Tribe entrepreneurs
• 41.94 by entrepreneurs of Other Backward Classes

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Contd

• All India Confederation of SC/ST Organization was
  created in 1997 under the flagship of Dr. Udit
  Raj, who is the National Chairman of
  confederation that works for government
  reservations, ban on contract system, promotion
  among other things
• All India SC ST Railway Employees Association
• Tribal Cooperative Marketing Development
  Federation of India Limited (TRIFED)
• The Narendra Modi government's 'Farm to Fork'
  programme over 2,000 farmer organisations
  in Chhattisgarh, Jharkhand, Madhya
  Pradesh, Andhra Pradesh and Telangana will be
  incubated to grow into a cooperative society,
  trust and ultimately, a company, as part of the
  plan being implemented by the National Bank for
  Agriculture and Rural Development, the country's
  largest development lender.

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Conclusion

• Need to promote Social Enterprises through social
  venture funds
• Establish platforms to highlight social
  innovators
• Create larger market space by addressing social
  issues through social businesses
• Government should adopt policies to reduce
  red-tapism and encourage individual
• social entrepreneurs
• Encouragement of co-operative movement as a
  social enterprise model
• Corporations can invest their CSR funds to
  establish social enterprises addressing
• social issues also generating income for a
  particular community

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Way forward India Inc, Social Enterprises
Affirmative Action
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Tripartite Model Social Enterprise, Affirmative
Action CSR
Illustration Illustration
Corporation Xs total CSR expenditure Rs 200 cr
Product Handicrafts / Food Processing
Registration The Companies Act, 2013
Organization Structure
Operations Sourcing from community members, processing of finished products, marketing
Sharing of Revenues Yearly dividends, remuneration of community members, salaries to staff, operational expenditure, expansion costs
Utilization of funds as initial capital for a
Social Enterprise
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Benefits of Tripartite Model

• Provide an opportunity to gain financial
  sustainability independence for the SC/ST
• communities
• CSR grant will allow corporations to spend money
  on social environmental issues,
• and services not otherwise funded
• Assets of SEs belong to the community and cannot
  be sold off for private financial gain
• People, who are local stakeholders in the area of
  benefit, play a leading role in the
• enterprise ensuring inclusive development
• Local community are the shareholders who ensure
  accountability of the enterprise to
• the community
• The SEs will be able to generate profits or a
  surplus that can be re-invested or
• distributed for community benefits

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The Way Forward
Contributors to the PPT
Soumitro Chakraborty CEO, Fiinovation
Jaya Sinha Dy. Director Media Communication,
Fiinovation
Rohit Srivastava Graphics Designer, Fiinovation
Rahul Choudhury Dy. Manager, Fiinovation