SOCIAL ENTERPRISES: WHY and HOW TO INVEST
WHY AND HOW TO INVEST
UNDERSTAND THE CONTEXT OF SOCIAL ENTERPRISES
Social enterprises offer a more sustainable approach to social and environmental development than traditional charitable giving. Profits are used to provide for societal needs with the aim of building a self-perpetuating cycle of benefit that improves social circumstances. This in turn, grows the enterprise’s profit, which is then used for further reinvestment in social upliftment. Social enterprises can generate financial returns that are acceptable to financial markets, giving them access to funding sources beyond charitable giving and increasing their growth prospects.
Limited research is available as to the number of social enterprises that exist in South Africa. However, conservative estimates based on available formal information suggest there are well over 140 000 in South Africa and more than two million across the continent.
These enterprises play an important role in filling the gaps left by ailing public sectors. Social enterprises create jobs, especially in underserved communities. They address environmental challenges, empower women, educate and upskill and help to digitise rural communities.
Potential models of intervention
Within social enterprises, revenue-generating activities coexist with non-profit activities that serve public interests. Companies investing in social enterprise development use different methods to support growing social enterprises, from start-up funding and development mentoring, to partnership, procurement and development finance support. This rapidly-evolving space offers a variety of innovative opportunities for intervention.