2014年7月7日 SE sector still developingOpinion - China Daily Asia

http://www.chinadailyasia.com/opinion/2014-07/04/content_15146505.html 1/2

Monday, July 7, 2014

Friday, July 4, 2014, 09:45

SE sector still developingBy Anthony Wong

The Audit Commission has released its report criticizing the performance of social enterprises

(SEs) funded by the Social Welfare Department and Home Affairs Departments. It draws the

conclusion that a more refined definition and official list of SEs should be formulated to foster

more efficient use of government resources.

Such controversies surrounding social enterprises periodically rage. The manner in which they

are funded is a commonly expressed concern — particularly whether they should be funded

with government subsidies, public subscriptions or be entirely self-financing.

Other concerns surround the legal status and regulatory framework within which such

enterprises operate, such as the question of whether they should be legally defined and

regulated in such a way that prevents any advancement of private, rather than social interests.

The latest survey by the Hong Kong Council of Social Service (HKCSS) found there are 457

social enterprises in Hong Kong. An important finding is the extent of rapid diversification in the

sector — not only in terms of industry profile, but also in terms of ownership. At the time of the

first survey, about eight years ago, the ratio of non-governmental organization (NGO) founded

social enterprises to corporate/entrepreneur founded once was three to two. The latest survey

shows that the ratio has dropped to two to four. This indicates that social enterprises are no

longer so exclusively affiliated to NGOs.

The sector’s modus operandi has shifted significantly as more business entities and individual

entrepreneurs have become involved. Their strategy for pursuing a social objective is less

likely to be an indirect involvement via a major business in a traditional private sector industry.

Newcomers to the sector are no longer satisfied with establishing traditional businesses, fully or

partially staffed by disadvantaged groups. Many have innovated in such a way that they have

significantly integrated the “social” and the “enterprising” aspects in order that the social cause

has become their core business, while remaining financially viable.

Controversies surrounding social enterprises tend to arise from the nature of their business. In

general, the term social enterprise refers to a business entity which is formed primarily to attain

a social target via an enterprising mode of operation. Caught in a spectrum between two

traditional forms of entity, (namely a for-profit business entity or a non-profit entity) social

enterprises may be viewed differently by entities operating either exclusively in the business

sector or exclusively in the NGO sector.

Those in the business sector tend to view social enterprises as no different from mainstream

companies. They feel there is no need to give them preferential treatment, viewing them simply

like any other company — but with a social mission.

Those from the NGO sector involved in establishing social enterprises, however, are moving

towards more enterprising forms of business and away from their original charity or social

mission. They are aware of the importance of being more “enterprising”, but generally remain

cautious about it.

A variety of SEs are experimenting with the delicate balance between their dual roles, being

“social” and “enterprising”. Both types of social entrepreneurs are following their own learning

curve. It is unnecessary, and rather pointless, to compare them.

As with all other popular market and non-market activities, rent seeking behavior is

unavoidable. As social enterprises have become a more popular form of business in Hong

Kong, abuses have been observed. These tend to take two major forms: first, taking advantage

of kind-hearted people keen to make a contribution; second, abusing the existing reputation of

social enterprises which have gradually become well-respected by the public.

Debate therefore arises over whether there should be a separate legal definition for a social

enterprise. Then some form of regulation, such as licensing or certification, could be

introduced.

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2014年7月7日 SE sector still developingOpinion - China Daily Asia

http://www.chinadailyasia.com/opinion/2014-07/04/content_15146505.html 2/2

In principle, the need for a better form of public management of social enterprises cannot be

disputed. However, the social enterprise sector in Hong Kong is still in the process of

development. An even greater variety of social enterprises could probably be set up.

Regulation in the form of licensing or certification may not be the best solution for the

development of social enterprise. Regulation would inevitably require defining a criterion for a

social enterprise. A loose definition renders the task meaningless while a stringent one may be

premature. It may risk discouraging future innovation. This would be contradictory to the

original value of a social enterprise.

Critics might expect to use a legal or regulatory framework to bring abusive behavior under

control, but experience in the regulation of other traditional forms of entities such as NGOs and

companies has shown that regulation does not really stop abusive players. It may be unrealistic

to view regulation as the most effective measure for controlling abuse.

At this stage, establishing norms for good practice within the sector may be a more balanced

approach for the regulation of social enterprise. New social enterprises can explore various

opportunities to make a social impact in a sustainable manner. But they would also be subject

to a social control or benchmarking system within the social enterprise sector.

The author is the business director (policy research and advocacy) of the Hong Kong Council

of Social Service.

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SE sector still developing

Friday, July 4, 2014, 09:45

SE sector still developing By Anthony Wong The Audit Commission has released its

report criticizing the performance of social enterprises (SEs) funded by the Social

Welfare Department and Home Affairs Departments. It draws the conclusion that a

more refined definition and official list of SEs should be formulated to foster more

efficient use of government resources. Such controversies surrounding social

enterprises periodically rage. The manner in which they are funded is a commonly

expressed concern — particularly whether they should be funded with government

subsidies, public subscriptions or be entirely self-financing. Other concerns surround

the legal status and regulatory framework within which such enterprises operate,

such as the question of whether they should be legally defined and regulated in such

a way that prevents any advancement of private, rather than social interests. The

latest survey by the Hong Kong Council of Social Service (HKCSS) found there are 457

social enterprises in Hong Kong. An important finding is the extent of rapid

diversification in the sector — not only in terms of industry profile, but also in terms

of ownership. At the time of the first survey, about eight years ago, the ratio of

non-governmental organization (NGO) founded social enterprises to

corporate/entrepreneur founded once was three to two. The latest survey shows

that the ratio has dropped to two to four. This indicates that social enterprises are no

longer so exclusively affiliated to NGOs. The sector’s modus operandi has shifted

significantly as more business entities and individual entrepreneurs have become

involved. Their strategy for pursuing a social objective is less likely to be an indirect

involvement via a major business in a traditional private sector industry. Newcomers

to the sector are no longer satisfied with establishing traditional businesses, fully or

partially staffed by disadvantaged groups. Many have innovated in such a way that

they have significantly integrated the “social” and the “enterprising” aspects in order

that the social cause has become their core business, while remaining financially

viable. Controversies surrounding social enterprises tend to arise from the nature of

their business. In general, the term social enterprise refers to a business entity which

is formed primarily to attain a social target via an enterprising mode of operation.

Caught in a spectrum between two traditional forms of entity, (namely a for-profit

business entity or a non-profit entity) social enterprises may be viewed differently by

entities operating either exclusively in the business sector or exclusively in the NGO

sector. Those in the business sector tend to view social enterprises as no different

from mainstream companies. They feel there is no need to give them preferential

treatment, viewing them simply like any other company — but with a social mission.

Those from the NGO sector involved in establishing social enterprises, however, are

moving towards more enterprising forms of business and away from their original

charity or social mission. They are aware of the importance of being more

“enterprising”, but generally remain cautious about it. A variety of SEs are

experimenting with the delicate balance between their dual roles, being “social” and

“enterprising”. Both types of social entrepreneurs are following their own learning

curve. It is unnecessary, and rather pointless, to compare them. As with all other

popular market and non-market activities, rent seeking behavior is unavoidable. As

social enterprises have become a more popular form of business in Hong Kong,

abuses have been observed. These tend to take two major forms: first, taking

advantage of kind-hearted people keen to make a contribution; second, abusing the

existing reputation of social enterprises which have gradually become well-respected

by the public. Debate therefore arises over whether there should be a separate legal

definition for a social enterprise. Then some form of regulation, such as licensing or

certification, could be introduced.

In principle, the need for a better form of public management of social enterprises

cannot be disputed. However, the social enterprise sector in Hong Kong is still in the

process of development. An even greater variety of social enterprises could probably

be set up. Regulation in the form of licensing or certification may not be the best

solution for the development of social enterprise. Regulation would inevitably

require defining a criterion for a social enterprise. A loose definition renders the task

meaningless while a stringent one may be premature. It may risk discouraging future

innovation. This would be contradictory to the original value of a social enterprise.

Critics might expect to use a legal or regulatory framework to bring abusive behavior

under control, but experience in the regulation of other traditional forms of entities

such as NGOs and companies has shown that regulation does not really stop abusive

players. It may be unrealistic to view regulation as the most effective measure for

controlling abuse. At this stage, establishing norms for good practice within the

sector may be a more balanced approach for the regulation of social enterprise. New

social enterprises can explore various opportunities to make a social impact in a

sustainable manner. But they would also be subject to a social control or

benchmarking system within the social enterprise sector. The author is the business

director (policy research and advocacy) of the Hong Kong Council of Social Service