Social entrepreneurs offer innovative solutions

The idea of social enterprises and corporate social responsibility has attracted a lot of attention in Hong Kong over the past few years. Social entrepreneurs equipped with businesslike ideas are seeking solutions to some of society's intractable problems by tapping private or public funding.

Social enterprises differ from for-profit firms mainly in the way that they seek innovative solutions by accessing business professionals and creative business models to tackle social problems - for example, a business plan aimed at helping reduce the recommittal rate of former prisoners.

Unlike conventional charity workers, social entrepreneurs look like venture capitalists, who fund and help develop start-up firms. To be successful, social enterprises need to meet several key criteria: 1) a committed management team; 2) a feasible business model and market potential; and 3) product or service differentiation. Sustaining product differentiation to create a social impact is the key to a social enterprise's business model. Envisaging new trends is also vital in this sector.

There are a growing number of successful social enterprises worldwide. Grameen Bank, a microfinance bank founded by Muhammad Yunus, winner of the Nobel Peace Prize in 2006, provides small personal loans to the rural poor in Bangladash. Another well known example is Ventures in Development, founded by Harvard University graduates Carol Chyau and Marie So in 2005. Their project helped Tibetan communities in Yunnan province to apply Western cheese-making technology so they could produce cheese with yak milk.

A number of social enterprises have also made their mark in Hong Kong. For instance, Dialogue in the Dark provides ideas that offer more working opportunities for visually-impaired people. The workshops organized by the company test participants' communication abilities by letting them tackle problems as a team in total darkness, under the guide of visually-impaired persons. While the writer is a wine fan, it appears that wine-tasting in the dark is likely to offer a different experience!

Founded in Germany in 1988, Dialogue in the Dark has organized workshops for over 6 million people worldwide and generated more than 6,000 meaningful job opportunities to visually-impaired people.

There is a growing demand for private funding and professional skills in developing social enterprises. Financial innovation plays a key role in raising funds for social enterprises. UK-based Social Finance, the social investment bank, offers a first-of-its-kind financial instrument called a "social impact bond" in that country. The return of the social impact bond is linked to the performance or social impact created by the social enterprise to tackle a particular social problem.


Social Finance offered its first social impact bond with the UK Ministry of Justice in March, 2010. The bond will provide capital for social enterprises to help reduce the recommittal rate of former male prisoners after having served short sentences at Peterborough Prison. It is believed that a decrease in the recommittal rate will help former prisoners rejoin the community and save taxpayers' money. The social impact bond may pay a yield of 7.5 percent to 13 percent, depending on the reduction of the recommittal rate. The return of the bond may be zero if the improvement targets are not met.

Social entrepreneurship has also been growing fast in Hong Kong over the past few years. In the latest relevant development, the University of Hong Kong School of Professional and Continuing Education (SPACE) launched a new web-based platform, the Social Enterprise e-Society, to share business ideas on social enterprises in November.

There are lots of new ideas in social enterprise development. In practice it is not easy to get the balance right between feasible business models and their social impact. Perhaps the success of social enterprise is built on dreams, but not just the kind seen in the film Inception.

Ringo Chan is program director at University of Hong Kong SPACE. The views expressed here are entirely his own.

Source: Xinhua