Friday, November 30, 2007
Aravind Eye Hospital, founded by Dr Govindappa Venkataswamy and Thulasiraj D. Ravilla in 1976, has treated over 2.3 million outpatients and performed over 2.7 lakh surgeries in 2006-07, almost two-thirds of them for free.
Bunker Roy?s Barefoot College, which began in 1972, has turned thousands of school dropouts in rural areas into “barefoot” doctors, teachers, engineers, architects, designers and communicators.
The 1972-born Self-Employed Women?s Association, a brainchild of Ela Bhatt, is India?s largest union that offers its members ? poor, self-employed women ? an astonishing array of financial, health, childcare, insurance, legal, vocational and education services.
Social entrepreneurs are to social change what business entrepreneurs are to the economy. They are the driven, creative individuals who question the status quo, harness new ? often overlooked ? opportunities, refuse to give up and remake the world for the better; and increasingly, they are filling the void left by the failures of governments and bureaucracies. “Social entrepreneurship has quietly become a movement in India,” says Don Mohanlal, Presi dent and CEO, Nand and Jeet Khemka Foundation (NJKF), which offers support by building innovative collaborations and development infrastructure. “We now see social entrepreneurs level the playing field and address large sections of society left behind by India?s economic growth. They understand ?profit? as large-scale and inclusive systemic transformation and take the poorest citizens along the country?s growth curve.”
“In the last five years, many social entrepreneurs have focused on connecting markets to the places where corporations and governments haven?t quite reached,” says Parag Gupta, Head, Eastern Europe and South Asia, Schwab Foundation for Social Entrepreneurship. “In many rural places, we see social entrepreneurs figuring out the last mile in the supply chain to have consumer goods reach the base of the pyramid and offer services ? even basic ones like water, sanitation, electricity ? that many people in India take for granted.”
Rewarding the Samaritans
Schwab Foundation, active in over 20 countries worldwide, had joined hands a couple of years ago with NJKF, the Confederation of Indian Industry, and the United Nations Development Programme to bring the ?Social Entrepreneur of the Year? award to India. While the finalists are invited to the India Economic Summit, the winner gets to attend the World Economic Forum regional event and be considered for the Global Social Entrepreneur status.
“This year, we have received over 100 applications and the quality of these applications is outstanding, making the selection process extremely difficult,” reveals Gupta. “We find that these entrepreneurs are more focused on connecting markets in rural areas and are putting out a host of innovative services and products, ranging from ways of financing livelihoods to products necessary to bring lighting or electricity.”
Mohan explains that social entrepreneurs, similar to business entrepreneurs, build strong and sustainable organisations. “They seek to be financially self-sustainable,” he says, “but the primary goal is the social return.” Gupta concurs, “They can surely make profits, but they choose social innovation and impact first.”
Whatever be the model, a substantial market for social innovation still remains untapped. “Nearly 800 million poor people do not have access to financial services, quality health interventions and political participation,” reminds Mohan.
Investing in social intent
“Companies are increasingly seeing social entrepreneurs and their organisations as ideal partners to reach new client groups.” That explains the growing academic interest in the subject: While the Indian School of Business has signed an MoU with Cornell University to set up a Bottom of the Pyramid Lab, the Tata Institute of Social Sciences is incorporating social entrepreneurship in the curriculum.
The concept is gradually finding favour with venture capitalists, private equity players and investors as well. A case in point is the multimillion-dollar investment by Sequoia Capital in Vikram Akula?s SKS Microfinance, one of the world?s fastest growing micro-finance organisations. Recently, start-up financiers Nadathur Holdings and Aavishkaar India Micro Venture Capital Fund committed $3 million to MAYA (Movement for Alternatives and Youth Awareness), a network of micro-level entrepreneurs specialising in wooden furniture, toys and apparel from villages around Bangalore. Volkart Investments, the commercial lending arm of Swiss agency Volkart Foundation, has also pitched in with funds.
However, Gupta feels that such models are few and far between and not representative of the entire field. “There is definitive demand for other terms of financing beyond grants, but that still requires the investor to realise that patient capital is what is needed to push forth the sector in a scalable model.”
And, do social entrepreneurs find the going a bit easier these days compared to earlier? Both Gupta and Mohan reply in the affirmative. “International as well as Indian businesses are now looking more and more towards how they reach a social goal in addition to their financial bottom-line: These two now go hand-in-hand. The model of corporate social responsibility has turned into one of corporate social opportunity,” says Gupta. Adds Mohan, “At advanced levels, social entrepreneurs need a variety of financial and structural supports ? new laws, less fragmented and more rational capital markets and stronger bridges with governments, business and academia. The support system in India is beginning to change, giving space to social entrepreneurship.”
Amitabha Sadangi is the CEO of International Development Enterprises India, which has developed and marketed affordable micro-irrigation technologies ? their small-plot irrigation technologies cost less than $2 ? to 4 million marginal and small farmers in India. “A social entrepreneur needs an enabling environment to test, develop, import and adapt innovate products or services,” avers Sadangi. “In today?s environment, there are multiple organisations that are willing to support such ideas through a combination of grants and investments. It is today easier.”
Yet, problems persist. The major blockages, according to Mohan, stem from the “lack of rationally allocated growth funding that would allow people to build world-class institutions”. He says social entrepreneurs usually have to raise funds from foundations which usually comes in small, short-term instalments. “They spend much of their time fundraising. Recruiting and retaining highly talented people is also difficult.”
How much of a stumbling block is the government?
Gupta agrees that the battle is still uphill on the government side. However, he adds that there are officials who agree that the social entrepreneur?s approach of “building models from grassroots up and making sure the incentives are right for everyone involved in the ecosystem” would work best, especially in rural areas.
He cites the example of Joe Madiath of Gram Vikas. “Working in rural Orissa, Joe has empowered the people in pockets untouched by government services to form their own social capital as organisations. So when he comes up with an idea of water and sanitation, he gets everyone to build the corpus fund for their village by putting in some money.
In effect, they also form an effective governance that can lead them to education, health centres and several other essential services without necessarily relying on the government.”
Will this render the government redundant at some point?
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