Business Ethics

Social Enterprise
- business model with the objective of solving social issues while providing goods and services
- driven by cause/purpose; need to address an issue or problem
- profit is not first priority
Examples:
• D. Light Design (Sam Goldman & Ned Tuzon)
• Hapinoy (Bam Aquino & Mark Ruiz; sari sari stores)
• Rags2Riches (reached 21 communities; women of Payatas)
• Villar Sipag (Cynthia Villar; Las Pinas)
• Microfinance institutions
• Banking services
• Educational programs in poor communities
7 PRINCIPLES OF SOCIAL ENTERPRISE
- guide in achieving objectives
- broaden impact on beneficiaries

1. Motivated by a cause- does not aim to maximize profit; solve/overcome certain issues
2. Financial & economic sustainability in the long term- ensure financial stability in the long run to
sustain worthwhile projects
3. No dividend for investors- investors expect return only on actual amount they have put in
4. Profits generated remain- profits generated remain for expansion/improvement of operations
5. Sensitive to gender & environmental issues- social enterprise operates ethically; no gender
discrimination & provides eco-friendly products and services
6. Employees are treated fairly- workforce well-taken care of thru fair wages, benefits, and better
working conditions
7. Joy in every task- striving to work for a cause brings pleasure

9 SOCIAL BUSINESS MODELS (Kim Alter)

- framework that social enterprises follow to fulfill its mission and maintain financial stability

1. Entrepreneur Support Model- provides support services to entrepreneurs like consulting,

training, and other technical services; microfinance
2. Market Intermediary Model- guides those struggling to gain markets to sell their products;
mark- up; assistance provided to small farmers
3. Employment Model- help clients look for jobs & provide them with training for these jobs;
transitional housing services (given to those who need safe and supportive environment)
4. Fee-for-Service Model- most common; charge clients with certain fee for services; hospitals,
schools, and museums
5. Low-income Client Model- charge fees but concentrate on low-income; business has to keep
operating costs low
6. Cooperative Model- very popular; charges membership fee & provides number of services to
members; members combine resources
7. Market Linkage Model- connects clients to markets; social enterprise acts as broker;
facilitates producer- customer relationship
8. Service Subsidization Model- sells products and services & use proceeds to subsidize social
services; law firm
9. Organizational Support Model- sells products and services; revenue generated is used to fund
organization

7 METHODS OF INCOME GENERATION

Bulk of earnings of social enterprise = activities that support its social goals
• Profitability geared towards social, economic, and environmental causes
• Main goal of social entrepreneur- implement widespread improvements in society
1. Fee-for-service
2. Products
3. Services
4. Membership dues
5. Tangible assets- renting/leasing idle offices or vehicles
6. Intangible assets- i.e. well-known university
7. Investment- interest on savings deposits, bonds, etc.

9 TYPES OF SOCIAL ENTERPRISES

- categorized accdng. to mission/purpose, ownership, accountability, and management setup

1. Community Enterprises- serve particular communities

2. Social Firms- help people renew support networks & assist them in finding jobs
3. Cooperatives- formed, organized, and controlled by members themselves
4. Credit Unions- financial institutions assist by providing savings & loan facilities
5. Community Development Finance Institution- provide loans & other investment facilities
6. Development Trusts- seek to build community thru management of property
7. Public sector spin-outs- deliver basic services previously provided by public sector
8. Trading arms of charities- formed to assist parent org. in social services
9. Fair Trade Organizations- small producers get fair price for produce