By Pia Chatterjee
The recent global economic crisis that had the world run in the opposite direction with its tail between its legs had severe consequences for both businesses and organizations with a social purpose. With drastic cuts in public spending and the extreme fall in consumption on the part of people like you and I, problems related to poverty, health and housing loom just as large as before (or larger, still) and people are hesitant, to say the least, to invest in budding enterprises.
With the change this triggered in the European landscape, social enterprise has emerged an attractive and viable alternative to address some of the issues plaguing Europe. Here are 10 reasons social enterprise is exactly what the region needs right now:
- Replacing charities. Most charitable organizations that function off of grants and donations have experienced the crisis firsthand with the lack of public resource to go around. Many of them are experimenting with social enterprise to build their own sustainability and continue their mission without having to depend on handouts. The social enterprise model allows the same services to be delivered at a fraction of the cost.
- They’re addressing important challenges like poverty, health, education and housing. The existence of these issues preceded the crisis, and these have only been aggravated since. Social enterprise gives you a new opportunity to tackle these given that they are “adaptable”, so to speak, to this business model. More generally speaking, emerging problems like climate change that require collective participation and engagement have the potential to be addressed by this form without relying on the state either.
- Community involvement. With the collapse of publicly sustained services, people are inclined to opt for self-determination to tackle their difficulties. In the age of social innovation, high-speed technology and neglected social concerns, many youths have found themselves wanting to be entrepreneurial but also work for the common good and public benefit. Social enterprise provides just the platform and amalgam of the two fields to satisfy this pressing need.
- Jobs. As the social economy and enterprise sectors grow by the year, so does the number of people to whom they provide employment. Needless to say, this becomes vital in the period following a crisis like the one the world was subject to a few years ago. What’s more, many of these jobs are awarded to people who need it the most or who are usually disadvantaged in the labour market, be it the mentally challenged, homeless or ex-convicts.
- Stimulate demand and motivate employees. Working for the common good or a greater cause tends to provide the required additional incentive to invest in something. Most enterprises of this kind stimulate demand and push consumers to buy products they would otherwise be less inclined to purchase simply because they feel themselves contributing to a larger social or environmental cause. Similarly, it also motivates employees to work for less since they feel their work produces something bigger than themselves that doesn’t necessarily demand the remuneration they would ask for in any other situation. It is precisely for this reason that social enterprises often recruit volunteers, more so than other businesses. Such work environments also tend to report higher levels of job satisfaction.
- Cut costs. Companies in this sector do not require investments in areas like marketing to the extent that traditional businesses do. Advertizing costs and other costs are significantly cut down simply because the social and public benefit purposes served create the publicity and demand you would normally need.
- Collective participation. Social enterprise encourages the participation of regular people and puts them in charge of the services they receive. This kind of bottom-up approach allows these organizations to appropriately respond to the emerging needs of society without the public sector. Since the stakeholders concerned are not only investors but directly involved in the workings of the company, much work gets done fast, efficiently, accurately and with very strong incentives.
- Resilience. – Cooperatives and other types of business models based in the social economy tend to be more resilient in the face of hardship or hostile economic environments. Most people and studies attribute this to the fact that such organizations are strongly-rooted in the community and treat obstacles that are consistent and often exacerbated by crises. Their focus on sustainability makes them resistant to hurdles from the start and offers them a natural armour to shield them from the consequences of recession on the market. These businesses are also very directly steered towards finding solutions to problems rather than towards technical definitions and production, making them likely to have a reason to persevere.
- Cards are stacked in their favour. With the present circumstances demanding an overhaul of the European economic system, there has been much talk of creating a new, sustainable, socially-oriented system that moves away from capitalism. The social economy provides just the potential substitute to respect these conditions: it is a model that can answer to the difficulties faced by Europe and survive in the long term.
- Transparency. The primary consequence of the economic crisis was a loss of trust. People are reluctant to leave their lives in the hands of others as they did before, and social enterprise proposes an alternative by clearly laying its cards out on the table. People know where their money is going and what it’s being used for, and what’s more, they appreciate the fact that it’s being used to help them and those around them.
The global economic crisis starved Europe of much-needed public services at a time where its citizens needed them most. It caused its leaders to realize the continent was in dire need of an economic rejuvenation to finally approach the many social questions that remained unaddressed. In a region that relies substantially on the welfare state, social enterprise does well to swoop in on its white horse to help bring the economy back on its feet.