Can't Survive Without Corporate Partnership?

With BoP market earmarked to offer attractive growth potential, it's without a doubt that we'll expect a lot more consumer corporations forming partnerships with the social sector to venture into BoP market. Latest partnership involves P&G and a for-profit social enterprise startup, Healthpoint Services to deliver rural healthcare services in India.

On the one hand, we laud cross-sector partnerships which we believe there's still a great deal of untapped potential in tackling poverty collaboratively. On the other hand, does the imperative of corporate partnership also imply for-profit social enterprises can't survive or scale without it?

The idea that it's possible to serve both bisness revenue and social mission is getting more grounded in reality, the result is often chaotic and far from ideal. The question of what's next for for-profit social enterprises beyond startup phase is important to answer. As of now, we have vague understanding on the potential of adapting this form of legal structure in tackling poverty at later stages, but the certainty is that it's harder to scale with the mission to deliver life-changing products at affordable costs.

I believe we have to understand more of this inherent limitation, we need better insight in the optimum scale that for-profit social enterprises can achieve on their own, and how corporate partnership, future merger & acquisition, IPO or access to social capital market can make greater difference. Such insight helps to establish clearer strategy in adapting for-profit approach in tackling poverty and also allocating resources more efficiently.

It's really not about trying to match the ambition of large corporations, but it's important to make the distinction that it's more about the scale of social impact rather than the size of the for-profit social enterprise even though they may be correlated. Understanding of their limitation will guide for-profit social enterprises to collaborate more and explore other avenues to achieve social impact.

Related article

• Procter & Gamble Partners With Indian Startup to Deliver Health Care to the Next Billion Consumers (fastcompany.com)

Microfinance and Mission Drift

Microfinance and mission drift? This probing question will linger for some time from now, especially when the media has captured our attention with the sensational drama since the IPO of SKS Microfinance right up to recent crackdown of alleged lending malpractice in Andhra Pradesh, India.

No doubt that microfinance field is getting more attractive to private investment and crowded with commercial oriented MFIs, but ongoing research shows contrary evidence that MFIs in the study have only been delivering negligible social impact to the poor. As of now, we only have a vague sense of where commercial MFIs stand in terms of addressing social goals like financial inclusion and poverty alleviation as long as there's no unambiguous clarity over their mission or rigorous evaluation in place.

Like in the words of co-founder from Compartamos, the stated social goal is “to provide access to financial services to as many people as possible in the least amount of time”. Such goal not only can be purely driven by shareholder pressure or profit incentives but also devoid of any objective to achieve social impact or to meet actual credit needs of the poor.

We also hear enough of why it's so hard to measure social impact of microfinance, the list is long but does it mean commercial MFIs can be lax about measuring their effectiveness and social impact in tackling poverty? It doesn't make sense to wait until consensus appears which is likely to be years away.

There are many convenient excuses to mask the lack of commitment from commercial MFIs to rigorously evaluate their social mission as diligently as they would publish their impressive financial data since the beginning. As long as effort to evaluate social impact lags commercialization, we'll never know for sure if commercial MFIs can really make lasting impact other than being profitable to investors.