Our identity: humanitarian social enterprise
BushProof describes itself as a humanitarian business. This is sometimes seen as a contradiction in terms, especially by non-profit organisations. This explanation is meant to clarify the nature of our enterprise.
Definition of ‘humanitarian’
The Oxford dictionary defines the word ‘humanitarian’ as “concerned with promoting human welfare”. This describes our mission rather well. We focus on providing products and services that improve the human condition, notably in low-income countries, using appropriate technology and innovative project approaches. However, we consciously want to do so in a commercial manner, including the use of ‘base of the pyramid’ business strategies. The activities of BushProof can therefore also be described as ‘doing good, profitably’.
While other descriptions have been suggested, such as Social Development Business or Enterprise, Revolving Fund Business or Charitable Enterprise, BushProof feels that it is best identified by the term humanitarian business.
Background
BushProof was set up by several emergency aid professionals, whose driving motivation throughout their careers has been to reduce suffering and improve the health and well-being of people affected by poverty or disaster. Several of BushProof’s activities could have been implemented as a non-profit organisation. However, the inclusion of the profit-making element has been a conscious choice in the interest of sustainability and large-scale impact. By mobilising the resources of the poor themselves, this strategy reduces the need for continued injections of charitable funds. Rather than being exploitative, business conducted in an ethical manner can contribute towards strongly towards poverty reduction. Several factors have played a role formulating our identity and are outlined below.
Shifting interests
Until recently, many people saw a very clear difference between the commercial and non-profit sectors: a deep chasm was believed to divide the two. This division was characterised by mistrust, conflict and deep rooted mutual prejudices. Humanitarians suspected the private sector of being exploitative, focussed exclusively on generating profits while disregarding human welfare. Businesses on the other hand viewed charitable organisations as unfocussed, ineffective and not realistic in the light of market forces. As a result, there was little dialogue or cooperation.
This is now changing and we can see a move towards greater understanding. Many businesses now recognise the importance of social and environmental concerns. Concepts such as Corporate Social Responsibility are now increasingly heard.
Meanwhile, many NGOs are recognising the advantages of market forces. As a result, hybrid organisations of various shapes are emerging – and BushProof is one of them. In the non-profit / for-profit continuum, BushProof is best characterised as a social enterprise. We undertake profitable activities that have a strong humanitarian impact.
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Non-Profit – For-Profit Continuum
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Non-Profit / Charitable Organisation
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Cost Recovery & Revolving Funds
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Social Enterprise
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Socially Responsible Business
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Corporate Engagement
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For-Profit
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The contribution of the private sector towards development
BushProof believes that the private sector can contribute enormously to sustainable development. However, in many countries NGOs undertake activities that are better carried out by commercial operators. Often there are good reasons for this, for instance when the private sector lacks skills or capacity, and when markets are too small to sustain a minimum volume of business. An example is Madagascar, where many NGOs engage in the construction of rural water and sanitation infrastructure. While this creates important benefits, not many organisations are interested in developing the delivery capacity of the private sector.
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An example of (small-scale) private sector sustainability concerns an NGO project that promoted the bio-sand filter as an efficient method for household water treatment in Kenya. The NGO trained several staff, constructed the filters and created demand for the product among individual households using creative social marketing techniques. When the project funding ran out, the small local market proved large enough to sustain two local sand filter technicians, who set themselves up as a small business. In the course of several years, they sold for profit thousands of filters in their area, and their business continues to expand. If the project would not have focussed from day one on stimulating a local enterprise, few sand filters would have been made after the NGO left. Now, a sustainable business exists which provides a good income to several local people and whose product saves the lives and health of thousands of rural villagers.
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Businesses can contribute towards sustainable development by creating jobs and income, providing skills and training and transferring appropriate technologies. Companies can also play a catalytic role in the local economy and stimulate the development of the local private sector, particularly by using local suppliers and raw materials and by linking local economies to national and international markets. Finally, companies can help developing countries produce affordable products and services that meet the needs of the poor, by paying taxes to provide a source of state revenue and by providing resources (funds, expertise and contacts) to support NGOs and/or local communities.
The so called ‘Bottom of the Pyramid’ concept should also be mentioned here. Currently, most businesses disregards the poor – despite the massive market they represent. As a result, products are generally not tailored towards low-income groups – and they miss out on access to many essential products.
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Differences between aid and market-based approaches
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Charity / aid approach:
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Market-based approach:
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· Free gift or heavy subsidies for capital costs
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· Subsidies only for market creation or development;
· Full capital cost recovery from users (including healthy profit margins)
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· Standardisation of models
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· Availability of a range of affordable options
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· Decision-making by NGOs or external agencies
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· Users decide what and how to buy
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· Focus on infrastructure targets
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· Focus on behavioural targets
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· Focus on centralised service provision
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· Focus on local service provision
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Private sector and sustainability
Sustainability is of paramount importance to development programmes. While great levels of sustainability can be achieved based on voluntary commitment or community action, BushProof believes that the best chance for the continued provision of development results are those activities that make money. If a beneficial product or service can be sold for profit, then there is a great likelihood that it will continue to remain available. Two things are necessary: the availability of an acceptable product for a price that is affordable, and demand and willingness to pay amongst the target group.
Where demand for a certain socially beneficial product does not exist, NGOs can work in partnership with the private sector to develop a market. It is unlikely that companies will do that on their own, until a sufficiently large market has been established. In certain cases, this is already happening. Examples are hygiene promotion carried out by NGOs which creates demand for soap, or social marketing campaigns that advertise the advantages of safe drinking water, hand pumps or other products.
The idea that the growing global influence of (multi-national) business should be accompanied by global responsibility in regards to sustainable development. It recognises that tackling environmental and social issues globally can no longer be the sole responsibility of governments, NGOs or international organizations. CSR is not about charity, but relates to the operational mechanisms by which profits are made by the company. This means that companies should not only be judged by the products and profits they make, but also by how these are made.