By Mal Warwick
In a study of 430 ventures in India financed by the Rockefeller Foundation and the International Finance Corporation (an arm of the World Bank), Intellecap defined a social enterprise using the following criteria:
1. For-profit: They operate as independent businesses with the goal of generating a profit.
2. Committed to social impact: They have a clear and explicit mission to create a positive social impact.
3. Base of the Pyramid (BOP) focus: Business operations directly improve the lives and livelihoods of those residing at the BOP by:
• Increasing access to critical goods and services for BoP consumers; or
• Improving the productivity, output quality or market linkages for BoP producers.
4. Critical-needs sector: They operate in one of the following sectors that has a direct impact on the quality of life for individuals at the BoP: agriculture, education, energy, healthcare, livelihood development and water/sanitation.
This is the most restrictive definition of the term social enterprise I’ve ever seen. Other actors in the market — Ashoka, for example — would surely disagree, as do I. (I wrote about my own approach a few years ago in this article.) It’s far more common to accept as a social enterprise any venture that meets only criterion #2. However, I wonder whether the approach taken in this 2012 study in India doesn’t make more sense in a region where two-thirds of the population lives on $2 a day or less and thus qualifies for inclusion in the BOP.
What do you think?