Fiinovation webinar on social enterprises through affirmative action

1. Social Enterprises through Affirmative Action

2. Mentor of the Webinar Mr. SoumitroChakraborty CEO, fiinovation

3. About Fiinovation • A CSR based research consultancy working in areas of education, livelihood, environment and health since last seven years • Assists businesses to support requirements of communities by designing and implementation of sustainable projects • Through practices such as CSR-CSO Partnership, Initiative Design, Initiative Management, Monitoring and Evaluation, Impact Assessment, Sustainability Reporting; Fiinovation facilitates corporations for promotion of social enterprises

4. Agenda of the Webinar • Better understanding on Social Enterprise models (Indian & Global) • Social Enterprise laws in India • Understanding of Affirmative Action in India • Promotion of Social Enterprise models among marginalised communities • India Inc and Social Enterprise movement • Top examples of Social Enterprise Models in India • Conclusion • Way forward

5. What is a Social Enterprise? • A social enterprise (SEs) is an organization that applies commercial strategies to maximize improvements in human and environmental well-being. This may include maximizing social impact rather than profits for external shareholders. • SEs have a mixed and contested heritage due to philanthropic roots in the United States, and cooperative roots in the United Kingdom, European Union and Asia.

6. Social Enterprise, the concept • A SE could be engaged in any business activity fulfilling any need (Maslow’s need hierarchy) • E.g. Entertainment, Nutrition, Sanitation, Communication, Livelihoods, Transportation, Education, Training, Financial Inclusion • Asian Development Bank defines SEs as organizations that have triple bottom line returns namely, addressing social and environmental needs such as affordable health services and energy, and have a financially sustainable revenue model (or plan to become sustainable in the near future). Social Needs Basic Needs Maslow’s need hierarchy

7. Social Enterprise – Global Context • 'Social Entrepreneurship' can be traced to Beechwood College near Leeds, England (from 1978) where Freer Spreckley used the term 'social enterprise' to describe worker and community co-operatives that used the 'social accounting and audit' system developed at Beechwood • Ashoka: Innovators for the Public – a US foundation established by Bill Drayton was a program to support the development of social entrepreneurship • In the US, the term is associated with 'doing charity by doing trade', rather than 'doing charity while doing trade'. In other countries, there is a much stronger emphasis on community organising and democratic control of capital and mutual principles, rather than philanthropy

8. Social Entrepreneurship Development Initiatives • Public Services (Social Value) Act, 2012 (United Kingdom) • NYU Fellowships in Entrepreneurship, Social Entrepreneurship, and Innovation • Social Enterprise Summer Fellowship, Harvard Business School • Amazing Grace, Rangoon, Myanmar • Global Social Entrepreneurship Network, UK • Schwab Foundation for Social Entrepreneurship • Global Social Enterprise Initiative • Yunus Social Business • Rubicon Programs, California, USA

9. Social Enterprise – India Context • Definition is not limited by legal structure. SEs may be registered as: • Private limited companies • Cooperatives • Not-for-profits, trusts or any other legal entities • In India, a non-profit can be registered as: • A Society, under the Registrar of Societies • or as a Trust, by making a Trust deed • or as a Section 8 Company under the Companies Act, 2013 • Under Section 8 of the Companies Act, 2013, a limited company • (a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; • (b) intends to apply its profits, if any, or other income in promoting its objects; and • (c) intends to prohibit the payment of any dividend to its members • Impact investing in India has roots extending back to 1982, when the Ashoka Foundation provided grants to Indian social entrepreneurs.

10. Challenges – Social Enterprises • Social enterprises are not just scaling up, they are scaling out • Governments and international institutions have a huge role to play • The bigger the enterprise, the greater the need for democratic accountability • Potential to transform the socio-economics of poorer nations, but individuals require support such as capital, infrastructure, market access etc. • Entry of big businesses to the market • Social enterprise leaders do not often come from traditional business backgrounds, hence lack expertise • Genuine need and desire for collaboration across sectors and geographies • Need of donor support • Progress on large social impact investments had been slow due to multiple hurdles • Need for better infrastructures to support the sector

11. Few Social Enterprises Global India Global • Anand Milk Federation Union Limited (Gujarat Co-operative Milk Marketing Federation Ltd) • Godavari Women Weaver’s Services Producer Company • Nyayika, Leaps & Bounds • Sukhibhava • Frontier Markets • m.Paani • Innovative Financial Advisors • Samhita Social Ventures • Make A Difference • Samasource • Community Shop • Textbooks for Change • ArtZoco • eBatuta • Water Health International • Kiva • Edgar and Joe’s • Bio Lite

12. Understanding Affirmative Action Known as: • Employment Equity in Canada • Requires employers to engage in proactive employment practices to increase the representation of four designated groups: women, people with disabilities, Aboriginal peoples, and visible minorities • Affirmative Action in USA • Focus on issues such as education and employment, specifically granting special consideration to racial minorities and women who have been historically excluded groups • Positive Action in UK • Promotion of people based on belonging to non majority identity groups in the workplace, educational institutions and positions in society

13. Contd… • Affirmative Action in India • Known locally as “reservation” policy it is an elaborate quota system for public jobs, places in publicly funded colleges and in most elected assemblies • An action favouring those who tend to suffer from discrimination; positive discrimination • AA reverses longstanding discriminatory tendencies in the society • For people of a certain caste, gender, sexual orientation, race, or ethnic background • AA provides supposedly fairer conditions and corrects past injustices

14. Different Approaches to AA Affirmative action Through CSR Affirmative Action • Implementing CSR Activities as per Schedule VII of The Companies Act, 2013 • Targeting SC/ST communities • Recruiting employees or providing opportunities in the recruitment process for SC/ST communities • Procuring from SC/ST Vendors • Offering solutions to address the needs and challenges of the SC/ST communities

15. Poverty Among SCs and STs • As per the erstwhile Planning Commission, ST population below poverty line came down from 47.4% in 2009-10 to 45.3% in 2011-12 in rural areas. • In urban areas, it declined from 30.4% in 2009-10 to 24.1% in 2011-12. • Census 2011 revealed that the situation of non-workers among total ST population (i.e. 42.0%) was not dismal as compared to SC (i.e. 52.2%) and all other social groups (53.3%).

16. Contd… • Percentage of ST non- workers declined from 50.9% in 2001 (Census 2001) to 42% in 2011 (Census 2011) at all India level.  • According to SECC, 133.5 mn households (74.5% of the total; 84% for SC and 87% for ST households) have a monthly income where the highest earning household member earns less than Rs 5,000, whereas households with any one of the seven deprivations is only 86.9 million. • As per NSS, 34% of SCs and 46% of STs households were in self-employment in 2004-05 in rural areas as compared to urban proportions with 29% and 26% respectively.

17. Contd… • There are 46, 844 villages in the country having greater than 50 per cent SC population • The SECC covered 24.39 crore households across the country — 17.91 crore are rural households • 21.53 per cent of rural households belong to the Scheduled Caste/Scheduled Tribes

18. Unemployment Rate (%) Maharashtra government on the issue of suicides among cotton farmers in the state suggests that “suicide incidences are slightly higher among SCs and STs across caste groups and for marginal and small farmers across size-class of land.”

19. Social Entrepreneurship & Affirmative Action • Allocation of Rs 200 crore in the Budget Estimates 2014-15 for setting up Venture Capital Fund for SCs • Earmarking of Plan Outlay under Tribal Sub-Plan at 24.71% under IndiraAwasYojna & 20.59% for NRLM/ Aajeevika • Specific provisions made in the guidelines of programmes such as MGNREGA, PMGSY and NSAP for the benefit of SCs/STs • MUDRA Bank will be financing 6 crore small vendors and businesses, 61 per cent of whom are SCs, STs, OBCs and minorities • India Development Marketplace, a World Bank initiative, to fund & support social enterprises, announced grants worth $2 million to 20 social entrepreneurs in Jharkhand, Madhya Pradesh and Chhattisgarh

20. India Inc and Social Enterprise • Tribal Farmers’ Producer Company Srikakulam, Andhra Pradesh (ALC & NABARD) • NTFP (Gatherers' Self-Help Cooperative), Mayurbhanj, Odisha (ALC & SPARDA) • Tata Social Enterprise Challenge (Tata Group, Acumen, Ankur Capital, Yunus Social Business and Ennovent) • On 21st May, 2012, SEBI notified the word ‘Social Venture Fund’ • Aavishkar, a venture capital firm, has been investing in social ventures for over a decade, catalyzing innovation at the bottom of the pyramid

21. CII & Social Enterprises • CII-ITC Centre of Excellence for Sustainable Development mentors, advises, and • provides a platform to social entrepreneurs and enterprises • Mentorship and advice is on business models, strategies, and partnerships • Annual event 'Sustainable & Inclusive Solutions‘, a platform for social entrepreneurs and • enterprises • Social Enterprises that CII have worked with are in energy access, rural distribution and • agricultural services • Association with Selco Incubation Centre for creating conditions to deliver energy • services to low income families • CII's sponsored Code of Conduct for affirmative action – Signed by 690 companies for • collecting data on SC/ST employees in 2010

22. Affirmative Action & India Inc. • As per MSME Report 2014-15, • 7.83% of the enterprises were owned by Scheduled Caste entrepreneurs • 5.76% by Scheduled Tribe entrepreneurs • 41.94% by entrepreneurs of Other Backward Classes

23. Contd… • All India Confederation of SC/ST Organization was created in 1997 under the flagship of Dr. Udit Raj, who is the National Chairman of confederation that works for government reservations, ban on contract system, promotion among other things • All India SC & ST Railway Employees Association • Tribal Cooperative Marketing Development Federation of India Limited (TRIFED) • The NarendraModi government's 'Farm to Fork' programme over 2,000 farmer organisations in Chhattisgarh, Jharkhand, Madhya Pradesh, Andhra Pradesh and Telangana will be incubated to grow into a cooperative society, trust and ultimately, a company, as part of the plan being implemented by the National Bank for Agriculture and Rural Development, the country's largest development lender.

24. Conclusion • Need to promote Social Enterprises through social venture funds • Establish platforms to highlight social innovators • Create larger market space by addressing social issues through social businesses • Government should adopt policies to reduce red-tapism and encourage individual • social entrepreneurs • Encouragement of co-operative movement as a social enterprise model • Corporations can invest their CSR funds to establish social enterprises addressing • social issues & also generating income for a particular community

25. Way forward… India Inc, Social Enterprises & Affirmative Action

26. Tripartite Model – Social Enterprise, Affirmative Action & CSR *Utilization of funds as initial capital for a Social Enterprise

27. Benefits of Tripartite Model • Provide an opportunity to gain financial sustainability & independence for the SC/ST • communities • CSR grant will allow corporations to spend money on social & environmental issues, • and services not otherwise funded • Assets of SEs belong to the community and cannot be sold off for private financial gain • People, who are local stakeholders in the area of benefit, play a leading role in the • enterprise ensuring inclusive development • Local community are the shareholders who ensure accountability of the enterprise to • the community • The SEs will be able to generate profits or a surplus that can be re-invested or • distributed for community benefits

28. The Way Forward Contributors to the PPT SoumitroChakraborty CEO, Fiinovation Jaya Sinha Dy. Director – Media & Communication, Fiinovation RahulChoudhury Dy. Manager, Fiinovation RohitSrivastava Graphics Designer, Fiinovation