The COVID-19 pandemic has resulted in unprecedented health, economic, and social crisis affecting the most vulnerable sectors. Social enterprises will be critical to our COVID-19 response and recovery.
Social enterprises, like every other form of business, have been affected and are among the worst hit by the pandemic, and often with people who need the most support. But despite not having systemic government assistance, many social enterprises have survived and adopted measures to respond and pursue innovations to help local communities adapt and recover.
Social enterprises have proven to be effective models in creating employment and scalable local productivity, and building the capacities of poor communities in managing their resources. They not only try to fill gaps and serve needs, but also enable local communities to become agents of their own change.
With the COVID-19 crisis, social enterprises have had to grapple with recovery even as they continue to pursue their social mission. When the pandemic threw markets into disarray, social enterprises stepped in as partners to support communities and local governments and spearheaded efforts to mitigate the effects of the pandemic – from the delivery of essential services to providing humanitarian relief.
The disruption caused by the pandemic has highlighted the need to strengthen and support social enterprises and create an enabling environment for them to prosper. It is time to bring them from the sidelines to the front lines in terms of decision and policy-making and allocation of resources. Social enterprises will create jobs, come up with solutions to global challenges, and accelerate sustainable business practices.
Towards building back fairer, the PRESENT Coalition has embarked on various platforms to assist social enterprises recover in pursuit of food security, health and decent work for all, women’s economic empowerment and resilient and sustainable communities. Social enterprises need an enabling environment and support programs that the government can and should provide, as embodied in the Poverty Reduction through Social Entrepreneurship (PRESENT) Bill.
The PRESENT Bill primarily aims to acknowledge and support social enterprises for their role in poverty reduction. It includes incentives and a governing body that will create an enabling environment for them to thrive and lift more people out of poverty.
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I. What are Social Enterprises?
A social enterprise or SE refers to primarily a social mission-driven wealth-creating organization, however organized, including non-stock or non-profit non-government organizations (NGOs), people’s organizations (POs), foundations, associations, cooperatives, sole proprietorships, partnerships, and corporations, established to improve societal well-being as well as ecological sustainability. A social enterprise for purposes of the proposed PRESENT Act shall also mean a Social Enterprise with Marginalized Sectors as Primary Stakeholders (SEMPS).
II. Key Features of the PRESENT Bill
1. Recognition of Social Enterprises (SEMPS)
SEMPS are social enterprises that explicitly declare and pursue poverty reduction or improving the quality of life of specific segments of marginalized sectors as a principal objective. A SEMPS engages and invests in the poor to become effective workers, suppliers, clients, and/or owners, and ensures that a substantive part of the wealth created by the enterprise is distributed to them. In addition to reinvesting its surplus or profits back towards the fulfillment of its social mission in a sustainable way, a SEMPS also uses its surplus or profits and mobilizes other resources to assist the poor to become partners in SE or value chain management/ governance and to become partners in community, sectoral and societal transformation.
2. National PRESENT Program: strategic economic sub-sectors as units of planning
The planning framework of the PRESENT Program and its planning process shall ensure that the marginalized sectors are engaged as primary stakeholders. It shall add value and complement ecosystem-based, area-based, community-based and other tools and processes in local economic development by promoting and utilizing the economic subsector as a strategic unit of analysis and planning SE development interventions.
The PRESENT Program shall identify and develop key SEMPS and resource institutions as partners in strategic economic subsectors that have the potential for growth and where large numbers of the poor are concentrated. SEMPs shall be developed as vehicles to ensure that the marginalized sectors benefit the most from sustainable subsector development.
3. Qualification of SEMPS
To qualify for the benefits and incentives provided for in this Act, the SE shall:
- Provide or facilitate the provision of a combination of transactional and/or transformational services to improve the position and benefits derived by the poor from the SE and the value chain or economic subsector where the SE is located;
- Invest a substantive part of its surplus, profits or mobilize other resources to assist the poor to become partners in SE or value chain management/governance and/or to become partners in community, sectoral and societal transformation
- Make a proactive contribution to resolving social and environmental problems and generate profit or surplus with due regard to social and environmental costs
- Be engaged in economic activity within the sectors of agriculture and fisheries, industry and services which, for purposes of this Act, shall refer to an activity in any of the economic subsectors
- Ensure that a substantive part of the wealth created by the enterprise is distributed to the poor in the form of services, dividends and other forms of benefits, and payments and incentives for products or services rendered consistent with the principles of fair trade
- Be duly registered with the appropriate agencies as provided under the Corporation Code or the Cooperative Code of the Philippines, Magna Carta for Micro, Small and Medium Enterprises, Barangay Micro Business Enterprises Act, Microfinance NGOs’ Act, and other laws
4. SE Support Programs
- SE Capability Building and Sustainability Program
- Social Enterprise Recovery and Rehabilitation Fund for financing programs and projects supporting adaptation and resilience of social enterprises, including stimulus grants
5. Incentives for SEs and Social Investors
- Special Credit Windows with non-collateralized loans
- Grants to qualified social enterprises and resource institutions
- Strengthening of the Agriculture and Fisheries Credit Policy
- Exemption from payment of VAT, tariff, and duties for the importation of all types of product inputs, equipment, machinery, implements, and spare parts
6. Appropriate government structure
- The Department of Trade and Industry (DTI) to serve as the central planning, coordinating, implementing and monitoring body of the program
- Creation of a Social Enterprise Development Council (SEDC) attached to DTI to carry out the policy under the Act
- Establishment of a National Center for Social Enterprise Development (NCSED) under the SEDC which shall 1.) Provide SEMPs with capability-training and education through the Social Enterprise Capability Building and Sustainability Program; 2.) Develop and enhance a research and development system which shall equip every SE with innovative and sustainable approaches; 3.) Manage a Social Enterprise Marketing Assistance Program (SMAP); 4.) Implement Capability Building Projects as approved by the Council
7. A budget that supports the PRESENT Program and SE development through hybrid financing
Hybrid financing shall refer to the combination of grants with loans and other financial instruments to support the unique nature of SEs as wealth-creating organizations that pursue social missions to improve societal well-being – in ways that are ecologically and financially sustainable.
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