Social Sector Malaysia: When Charities Take Market Approach

From what I read and conversations I had with charities, the larger ones usually provide welfare along with some skill, job or business training programs to help the socially underprivileged. This approach is generally thought to be more sustainable but the evidence is less so.

Charities usually hold themselves accountable to providing grants and training opportunities that the socially underprivileged wouldn't have otherwise. Such assistance is important but there is a big gap in tracking their actual goals in creating and sustaining jobs and businesses for the underprivileged. It is always difficult to know if more lasting and meaningful results have been achieved.

Common reasons that I heard are no resources to track, immediate assumptions that the underprivileged are better off with assistance, no demands from funders, etc, there is still a long way to go before we see charities improve to align their market attempts to actual goals. No doubt that such tracking will be more complex but it is necessary to gradually move toward that direction.

Social Sector Malaysia: Just How Important Is Short-Term Charity?

Without a doubt, short-term charity/ welfare is still the prominent form of assistance extended to various socially underprivileged groups in the country. In some cases, it turns into lifelong charity support especially to the abandoned elderly and those with severe disabilities from poor families.

For charity claimed to address poverty, there is unfortunately always a gap to progress beyond short term assistance. How exactly can it tackle poverty effectively when the core mission is narrowly focused on providing child education or free meals to the homeless? This has been the case where action consistently falling short of the lofty claims.

It's probably hard to accept that short-term charity that aims to relieve poverty will have to evolve or gradually cease in the future to pave the way for long term solution. It's like saying the implicit goal is to make it irrelevant, but the fact is it shouldn't last forever.

Is Globalization Shaping Social Sector in Poor Countries?

Interestingly, when we look at the 3 most common economic trends in globalization - foreign direct investment, labor migration and international business, we actually find parallels from social sector trends in poor regions. It's no surprise that we'll read more about them from now.

1) Wealthy donors and investors predominantly from the west have been expanding their philanthropic activities and social enterprise investment to poor countries. There is interest among them to find large-scale solutions to complex social issues, and this is no longer confined to global institutions and foundations.

2) Top talents with university and MBA qualifications flock to work in poor African/ South Asian countries. Decades ago, it would be hard to believe that reverse migration could happen among other professionals beside social workers. A mixture of opportunities and hype about BoP business and social entrepreneurship is increasing their number.

3) MNCs have begun to venture into poor countries, influenced by popular research findings about emerging/ aspiring middle class there. Those that could afford the risks don't want to be left behind in seeking long-term growth opportunities. They start talking a lot more about pursuing profit and social mission as a new form of corporate social responsibility.

These trends in general are favorably reported by the media but it's too early to fully understand the positive and negative impact on poor countries right now. There are plenty pitfalls that we know of and can try to avoid right now like donors/ investors who solely dictate the funding conditions and program goals, professionals who cling on to their notion of business model and scale without much understanding of local culture and environment, or MNCs that hype about social impact but really care more about profit and fail to engage local citizens to create meaningful social change. Decades from now, we might talk about these parallels from social sector in poor countries as common as if we talk about FDI, labor migration and international business in the mainstream media now, but those are the pitfalls that we really don't want to be trapped in.

Where Does IRIS Go From Here?

The goal of IRIS is to be the common standard for social and environmental impact reporting in impact investment industry. In 2011 IRIS data report, several key challenges ahead are highlighted.

The report is upfront about the lack of comparability on non-financial indicators at present, it predicts there will be more consensus in the future as the industry matures with more collaboration. It once again reaffirms the complexity in finding overlapping social and eviromental indicators even at basic output level, we're still far off from developing common outcome/ impact indicators from diverse missions and strategies. The report also acknowledges the lack of additional analyses will restrict insight on particular sectors or geographies. The lack of comparable non-financial indicators is one challenge, and the small sample of enterprises that contribute data/ apply IRIS standard also hinders insight generalization. 

There's no question that IRIS is primarily developed for impact investors, the stated goals for enterprises using IRIS are inclined to 'attract more capital and report to investors.' Like indicator used for analyses throughout the report - earned revenue, employees hired, suppliers worked with, people served and profitability by regions and also sectors, they offer a quick glance of market intelligence to investors. Although the report highlights future potential of doing more segmentation with more enterprise characteristics and even down to the level of which crops can be more profitable and impactful, the debate that will linger is can IRIS capture truly meaningful and real impact with output inclined to investors?

IRIS website states that the annual review process always 'involves broad participation and objective consideration of comments provided by various stakeholders.' It'll be better to be open about how the process incorporates feedback from mission-driven enterprises. I think there should be genuine interests from all key players to seek more information in this area.