The technology-driven world in which we live today would bemuse even our most recent ancestors, were they to suddenly find themselves reincarnated in modern society. We are presented every day with newer and faster ways to inform the universe of what we ate for breakfast, conduct video conferences between international leaders, and consult with talented yet under-the-radar merchants who reside in the farthest corners of the earth.
Social enterprise—business that is driven not only by profits, but also by a social or environmental mission—has been taking advantage of these technological advances in many ways.
The many forms of globalization have made it easier than ever to reach developing regions. As Nicholas Kristof, columnist for the New York Times, remarks, “those nations that have managed to lift themselves out of poverty have done so mostly with trade, not aid—with giving people jobs and a ladder, not handouts and an elevator.” So in a number of creative ways, social entrepreneurs have been capitalizing on globalization to connect poor producers in developing areas with broader markets, giving them income opportunities that they could never have accessed before.
Many poor artisans and other producers in less-developed areas create high quality products, but there is limited demand in the markets that they have access to. If avenues are created for these producers to access better-developed markets, they can earn more revenue. The social enterprise facilitating the trade can cover costs or even turn a profit on the markup. This model relies on market forces rather than charity and can therefore be mutually beneficial and financially sustainable.
One example of a social enterprise using such a model is World Micro-Market (WMM). Established at the University of North Carolina and Yale, WMM works to “empower small-scale artisans in developing countries by serving not just as consumers or importers, but as collaborators—by providing them with a sustainable market that is structured around their needs and their benefit.” WMM works with partners in countries ranging from Tanzania to Vietnam to Mexico to bring a strategically selected array of skillfully crafted products to college campuses, and also to the wider general public online.
Through these sales, WMM strives to help artisans earn livable wages and fosters moral responsibility and global poverty activism among its consumer base. Impact, a student group for social enterprise at Wesleyan, opened a Wesleyan branch of WMM this semester to help spread this mission.
Like World Micro Market, social enterprises are often diverse in form and imbued with creativity. For example, Edna Ruth Byler, founder of the store Ten Thousand Villages, began a grassroots movement to eradicate poverty by connecting third world artisans with viable markets in North America. Subsequently, Byler ignited the fair trade movement, and today, the Ten Thousand Villages label is represented at more than 70 retail locations, in over 300 alliance stores, and also at occasional festival sales.
Another social enterprise, Unión MicroFinanza (UMF), identified the quality of the coffee produced by underpaid rural farmers in Honduras as top-notch.
UMF then built an open gateway between these coffee producers and the US market. As a result, the coffee farmers are paid fair wages and UMF uses the markup to subsidize microloans. Furthermore, while most microfinance institutions are forced to charge extremely high interest rates, (usually 30-70%), UMF is able to finance its loan portfolio with reasonable rates, while simultaneously opening up international markets.
By creating these connections between poor producers and developed markets, social enterprises can have a profound impact on abating poverty. Black Gold, an acclaimed documentary, compiled the following statistic:
“Over the last 20 years, Africa’s share of world trade has fallen to one percent…If Africa’s share of world trade increased by one percentage point, it would generate $70 billion a year—five times the amount the continent currently receives in aid.”
Social enterprise has the potential for enacting great social change beginning with just minimal input. If more entrepreneurs harbored a business structure based on implementing social change, we could see some incredible, lasting change in our world.
2 Comments
InVenture Fund
Agree that social enterprise has great potential! Check out what Wesleyan alumni — Shivani Siroya — is doing in this space! Shivani is the CEO/Founder of InVenture (http://inventure.org/) a social business with a mission to pulverize poverty through the next step in microfinance — micro-investments!