Weekly Roundup: A 1,030-Enterprise Survey, a Cuba/U.S. Collaboration, and a ‘Big Bet’ Primer
1,030 Social Entrepreneurs Say …
An expansive survey of social enterprises in mainly developed countries finds that most are growing through actual product or service revenue (and not grants), and most can truly be called “enterprises” (as opposed to small businesses).
In 2015, researchers surveyed 1,030 social enterprises in China, Russia, Germany, Hungary, Portugal, Romania, Spain, Sweden and the United Kingdom as part of the The Social Entrepreneurship as a Force for More Inclusive and Innovative Societies (SEFORÏS) consortium. In an article published by the Stanford Social Innovation Review, the researchers find:
“For 70 percent of the social enterprises we surveyed, selling products and services constitutes their primary operational model. In all nine countries, revenue generation through sales was the most important source of liquidity. The social enterprises financed on average 57 percent of their activities this way.”
The researchers bill the study as “one of the most comprehensive ever conducted of social enterprises.” And from what we can tell, they just may be right. We applaud their work and hope similar assessments can be done in emerging markets.
Fire Up a Stogie for Global Health
It was cause for celebration – and not just by cigar lovers – when key trade restrictions between the U.S. and Cuba were officially lifted Monday.
Cuba, despite overall poverty resulting from a combination of communism and the U.S. embargo, has a thriving biotech sector. In fact, efforts are already under way to start clinical trials in the U.S. on a Cuban-made lung cancer vaccine, CimaVax, which is said to be effective, inexpensive and easy to administer. You can believe Big Pharma is paying close attention to those trials. All of which adds up to these magic words: “Possible global health solution.”
U.S. and Cuban researchers are planning to work together to find solutions to not just lung cancer, but Zika, chikungunya, dengue and who knows what else, and it will be interesting to see how these collaborations help build new markets and impact health care around the world.
Where are All the ‘Big Bets’?
If you’re fabulously wealthy, what’s the best way to make a lasting difference with your money? One intriguing option is the “big bet” – which Bridgespan, a consulting firm for nonprofits and philanthropists, defines as a gift of over $10 million to fuel significant social change. But though it’s a favorite of the Gates Foundation and has the potential to make a major impact on targeted social issues, this approach is fairly rare. As Bridgespan reported in the Stanford Social Innovation Review, just 20 percent of philanthropic big bets went to social change causes between 2000 and 2012.
Why? As Bridgespan explains, barriers include the difficulty of finding and structuring big bets, identifying “shovel-ready” opportunities, nurturing long-term relationships between donors and nonprofit leaders, and measuring success over lengthy time horizons. The firm explores ways to overcome these challenges in a new “big bet primer” based on its audit of the work of Atlantic Philanthropies, for whom 60 percent of its grants could be big bets, with 30 percent targeting social change. The lessons learned could help other philanthropists in their own big bet efforts, perhaps accelerating the trend toward this form of giving.
DRC’s ‘Dangerous’ Coffee Trade
Late last week, The Wall Street Journal published an in-depth look at the manifold efforts to build the specialty coffee industry in the Democratic Republic of Congo. The Most Dangerous Cup of Coffee in the World (subscription) details how coffee multinationals like Starbucks, farmers and NGOs are navigating a country still very much in the grip of civil war and widespread corruption. Still, the $175 billion global market for specialty coffee is big, growing and looking for untapped countries to supply it. As the article points out, the National Coffee Association trade group estimates 31 percent of Americans drink specialty coffee – double that of 10 years ago. According to the WSJ story:
“Although the Congolese government has no official figures on specialty-coffee output, interviews with farmers suggest some incomes are rising. Foreign-based roasters are spending millions of dollars to pool farmers together, teach them best practices and finance next season’s crop. ‘When anyone is sick, I can pay for the hospital,’ said Mingingo Rwaboga, 45 years old, who has a wife and 12 children. He started planting coffee trees in 2008 after his banana trees began to die from disease.”
‘Bring These Innovations Home’
Discussions of health care around the world often center on what rich nations can teach poorer nations. But an article in Harvard Magazine flips the script.
The story focuses on what practitioners specifically in the U.S. can learn from economic models elsewhere. “American health care has transitioned from patient-centered, to doctor-centered, to payment-centered. Global health returns to patient-centered care,” according to the authors, Dr. Howard Hiatt, Charles Kenney and Dr. Mark Rosenberg. It boils down to old-fashioned, one-on-one communication. Dr. Donald Berwick said, “We have to change the mentality of what excellence looks like. Excellence is not the gleaming new machine; it is someone who knows you and can help you access the resources and care you need from people you know.” (Here’s an excellent example of a community health worker practicing exactly what Berwick’s preaching.)
The article points out how situations of scarcity around the developing world have led to innovation, and these innovations can help the U.S. system absorb 20 million people newly insured through the Affordable Care Act. As the authors say, “It is time to bring these improvements home.”
The For-Profit Ed Debate
Shannon May, co-founder of Bridge International Academies, spoke at length with BBC World about the for-profit education model in Liberia. Bridge operates preschools and primary schools in Uganda, Kenya and several other countries in Africa. The company, which has been a celebrated social enterprise, this summer came under fire for accusations by the Ugandan Ministry of Education for poorly maintained schools. That issue doesn’t come up in the BBC story, but the question of how well for-profit, but affordable, schools perform the job of teaching children versus public schools certainly did.
“I would challenge anyone to defend the status quo, the status quo where there are thousands of ghost teachers who don’t show up, where two out of every three girls leave primary school still unable to read, that’s not a status quo anyone should be defending,” May told the BBC.
Financial Inclusion Data from Around the World
A number of financial inclusion reports came out this week, both promising and discouraging. The latest Economic Insight report from the Institute of Chartered Accountants in England and Wales found that “while many of sub-Saharan Africa’s population has access to a formal banking system, in low income communities the degree to which individuals can access financial services is limited, especially when considering the limited availability of private credit.”
The news was more positive in the U.S., where the Federal Deposit Insurance Corporation’s National Survey of Unbanked and Underbanked Households found that just 7 percent of U.S. households were unbanked last year, “the lowest share in the survey’s history and a decrease from 7.7 percent in 2013 and 8.2 percent in 2011.” The report also had good news for traditionally underserved groups: Unbanked rates among black and Hispanic households fell about 10 percent, and households making under $15,000 per year, or headed by people without any college education, also saw significant drops in unbanked rates. Tempering that good news: Unbanked rates for Asian households increased from 2.2 percent to 4 percent, and 27 percent of U.S. households remained unbanked or underbanked last year.
Meanwhile, in “Tackling the Challenge of Financial Inclusion: Social Intrapreneurs Step Up,” the Aspen Institute Business and Society Program explored how businesspeople “are creating pathways in their own companies to bring more people into the financial system and thus create greater well-being for all.”
Indian Banks Embrace the BoP
Intriguing reporting out of India: According to the Economic Times, major banks are increasingly focusing on small lenders serving low-income customers, buying out or investing in the country’s many microfinance providers. Why? “A near total collapse of big corporates after their binge during good times has led to evaporation of banks’ appetite for lending big. Nor do the conglomerates have any stomach to borrow more,” the article explains. “Simultaneously, smaller towns and independent businesses, or services like beauty parlours, or roadside eateries are booming, making those attractive.” As the article puts it, “At last, the big banks in India are beginning to act on management guru CK Prahalad’s ‘Bottom of the Pyramid’ story.”