SOCIAL ENTERPRENEURSHIP AND VENTURE PHILANTHROPY
ALI SALMAN
Training Workshop at LEAD
2nd November 2007
OUTLINE
• SOCIAL ENTREPRENEURSHIP – CONCEPT– CHALLENGES – CASE STUDY
• VENTURE PHILANTHROPY – CONCEPT– CHALLENGES– CASE STUDY
SOCIAL ENTREPRENEURSHIP
• Entrepreneurship – Creation of Value AND Wealth
• With Social Entrepreneurship….• Product, becomes
– Pro Poor
• Market, becomes– Bottom of Pyramid (the 5 billion market)
• Bottom line, becomes: – Double (Access to Poor and Return to Shareholders)
More on Concept-SE
• Pro Poor is not a low-priced edition!
• Its about a new price-performance relationship!
• In most of BoP, shortage of talent exists, therefore work must be deskilled.
Source: C.K. Prahald, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits
Basic Economics
• Small Unit Packages (?)
• Low Margin per unit
• High Volume
• High Return on Capital Employed
Source: C.K. Prahald, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits
Marketing Strategy
• Don’t just sell a product; sell value!
• Invest heavily in education of customers.
PARADIGM SHIFT
• By its very nature, success in BoP market will break existing paradigms (Grameen).
TRENDS
• HOUSING FOR THE POOR
• THAR DEEP: WATERING IN A CONSERVATIVE WAY
• MICRO FINANCE
• RENEWABLE ENERGY
• INEXPENSIVE LAPTOPS AND ICTS
• CHECK OUT: www.nextbillion.org
Break
• Questions and Discussions
CASE STUDY: PANI GHAR
• Concept
• Pilot
• Challenges– Winning trust of a sizable customer base– Creating Local partnership – Delivering Service
Key Lessons and Risks
• Market Size: Buying Intent Estimation can go wrong as poor customers may mix up between need and demand.
• New Markets: Social Entrepreneurs find it hard to ‘sell’ those products, which have remained either free or under-priced.
• Buying Power: Purchase power estimates can go wrong, as persons with lower income have higher tendency to hide their income.
Key Lessons and Risks
• Unintended Beneficiaries: As Social Entrepreneurs, we might end up selling our products to non-poor. (P/G Experience)
• Regulatory Risks: Regulator does not understand the grey area between for-profit and non-profits. (P/G experience)
• Double Bottom Line: It implies additional accountability, which has costs.
Risks Mitigation
• GO UP, CLOSE AND PERSONAL: Most of the risks are based on poor information about customers and weak communication systems.
• TAX HOLIDAY/ TAX REBATE FOR SOCIAL ENTERPRISES: If corporate world can be offered monetary incentives for investment, then why not social enterprises?
Break
• For tea, this time!
VENTURE PHILANTHROPY
• Combination of Venture Capital Model with Philanthropy to create a viable and growing non-profit.
CONCEPTS
• Deep Investment Analysis• Leadership• Relationships• Power of Networks• Making the Greatest Impact• Funding What Others Do Not• Performance• Strategic Assistance
TRENDS
• QARSHI FOUNDATION– Health and Education
• CARE FOUNDATION (BAREEZE/SEFAM INDUSTRIES) – Education
• ALI FOUNDATION (PACKAGES)– Culture– Education
Break
• Any questions?
Venture Philanthropy
• Case Study
• Why I have chosen SKMT?
• SKMT has become a sustainable organization, and is a significant player in the cancer treatment.
VP: PRECONDITIONS
• Charisma • Alternative to Charisma? Deep and prolonged
personal commitment of the leader• Trust • Team • Initial Capital/Seed Money • Must adhere to a real problem and propose a
real solution– Can we define ‘real’ being in terms of money? – “A Real Problem is one for which a solution is
provided, people are ready to spend money.”
VP: Launching Pad
• International Quality Standards • Wide and diverse resource base (over a million donors in
mass contact in 1994-95 contributed 120 million rupees i.e. 120 per person!)– Revenue from treatments – Zakat– Donation – Other Income – Started with a base in Zakat and Donations; now Revenue is
almost equal, if not more, than Zakat and Donations combined.
• Public Attractions (Fund Raising Programmes) • Technology (SMS, E Banking)
Skaukat Khanum: Revenue Base
Total Revenue
-500
1,0001,5002,000
Rev
enu
e (R
s. M
illi
on
)
Financial Information of Shaukat Khanum Cancer Hospital & Research Center
-
100
200
300
400
500
600
700
800
Reven
ue (
Rs.
Mil
lio
n)
Revenue Zakat Donations Other Income
VP: Getting Results
• Institutional Capital – Long term vision– Very well paid (above market) staff
• Knowledge Platform – Which Cancer Patient should be given a
priority is a decision governed by the probability of cure and recovery.
• Sustained and High Quality Pro Poor Welfare System
SE AND VP COMPARED
NATURE
INVESTMENT
INCENTIVES
PRICING
PRODUCT
MARKETS RESULTS
SOCIAL ENTERPRISE
FOR PROFIT
OWN+ LOAN+ EQUITY
SALARY + SHARES
NOT FREE
TAILOR MADE
BOTTOM OF PYRAMID
*ACCESS TO BOP*PROFITS
VENTURE PHILANTHROPY
NOT FOR PROFIT
OWN+ CHARITY
SALARY + BONUS
VARIES
STANDARD
BOP PLUSRICH
*SUSTAINABILITY
AT CROSS ROADS
• Microfinance and Health Care: The Coming Convergence
• Socially Responsible Funds
• Managing NGOs with Venture Philanthropy Models.