by Lindsay Saperstone, International Communications Coordinator
Social entrepreneurship is a pretty hot buzzword these days, often referring to the intersection between business and charity, in which innovative market solutions are used to address global challenges such as poverty, hunger, and climate change. The field itself arose from an understanding that business and charity as usual are not always enough to address the world’s most challenging problems. Classic examples of social enterprise solutions include smart phone apps that allow farmers in rural Africa to check real market prices on their crops, urban gardens that provide low-cost healthy food to low-income residents and microfinance institutions that have brought financial services to millions of the worlds’ unbanked. A social enterprise innovation can be a physical product, such as a clean burning cookstove or a service innovation, such as the use of the “Avon ladies” door-to-door sales model to sell health products.
Central to the field of social entrepreneurship has been the emphasis on the Bottom of the Pyramid (BoP), or the four billion global citizens that live on less than two dollars and fifty cents a day. The argument made famous by C.K. Prahalad in his 2004 book, The Fortune at the Bottom of the Pyramid, is that companies should treat the BoP as a potential profitable customer base and not just as charity cases. Others in this field have focused less on the potential “fortune” in this population, but still the importance of treating beneficiaries of aid programs in the same way any retail or service businesses would treat their customers. This means taking the time to do the market research to figure out what people in developing countries want, what messaging or marketing will appeal to them and how much they are willing to spend on it. This attitude greatly enhances adoption rates and the overall sustainability of any program designed to make a difference.
There are indeed, unique challenges to conducting business at the bottom of the pyramid. Poor infrastructure, corruption, and unpredictable communications can make distribution and supply chain management tricky. Moreover, because customers might be extremely price sensitive, it’s imperative to find creative ways to make the products affordable.
Risks aside, social enterprises are rapidly growing and rapidly creating significant impact in the developing world. They are also notably growing in the non-profit world. According to a recent report conducted by Harvests, Inc. & Community Resource Center, of the 331 non-profits surveyed throughout the state of Colorado alone, more than 40 percent of respondents indicated their organizations currently operate one or more social enterprises and 27 percent of nonprofits without a social enterprise are considering a launch.
Trees Water & People has long believed that the likelihood of success of any development program is directly related to the degree of community buy-in and financial self-sufficiency. For example, our clean cookstove programs in Guatemala and El Salvador employ a cost-share model. TWP and their donors purchase the stoves’ specialty components such as the griddle, chimney and combustion chamber and the end user puts in the rest of the materials (all locally sourced items) and their time and labor, or “sweat equity.” Another example is TWP’s partnership with Lakota Solar Enterprise, a 100% Native American-owned and operated renewable energy company that manufactures solar air collectors and supplemental solar heating systems to provide affordable heating to low-income families on tribal lands.
The latest social entrepreneurial activity to come out of TWP is Luciérnaga (meaning firefly in Spanish), a for-profit subsidiary of our Solar Energy Program which distributes solar lighting and cell phone charging solutions to rural Honduras, Nicaragua, El Salvador and Guatemala. TWP’s goal is to make Luciérnaga a self-sufficient entity that covers the cost of business through its product sales. Look for updates in the coming weeks on the details of the Luciérnaga business model and how we are using this model to create a bigger impact in the areas where we work.