February 4, 2023

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Associations and social enterprises: A correlation

A social enterprise is a business organization established to further a social cause in a financially sustainable manner. If you take the words “company” and “business” out of the first sentence, doesn’t that sound like a definition of a club?

Even more: It is assumed that the organizational and legal bases in social enterprises come from non-profit organizations. In this context, clubs, which are non-profit organizations that have traditionally relied on the financial support of their members, have now diversified their revenue generation to further their community causes. Indeed, much like a social enterprise, an association uses business skills for social purposes and does not just rely on selling learning programs, publications or research studies, for example. The correlation doesn’t stop there.

Four other aspects that compare an association to a social enterprise come from the article The 5 Ps of Social Entrepreneurship, written by Monika Mitchell, Founder of Good Business New York.

1. Purpose. Both social enterprises and associations are purpose-driven organisations. In the case of a social enterprise, it integrates “profits with purpose” into its core business model. In an association, purpose is defined by the common interest of its members in advancing a cause, mission, and vision. Both strive to make a difference to society by “doing good and doing good at the same time”.

2. Plan. In order to survive and thrive, both must know exactly what to do, and so a plan, both strategic and short-term, is an essential tool. For a social enterprise, testing and experimenting with what sells and doesn’t sell in the marketplace is critical to its success, which is more or less a similar approach but to a lesser extent for an association whose primary focus is its members.

3rd partners. The pandemic has re-emphasized the value of collaboration, which has become a critical growth factor for both the social enterprise and the association. Strategic partnerships between like-minded organizations can help both the social enterprise and an association leverage their limited resources to maximize economies of scale.

4. Profit. In the end, it boils down to the bottom line. A social enterprise or association may have a clear purpose, a solid plan and reliable partners, but if no revenue is generated, neither is “in business”. A social enterprise relies on having a continuing viable and profitable operation to achieve its purpose of making an impact on society. Likewise, an association must have a surplus of income over expenses in order to serve its members and society in general.

In these aspects, a club and a social enterprise have similar characteristics and aspirations, and it would be worthwhile for both to learn from each other.

Octavio Peralta is currently Executive Director of the UN Global Compact Network Philippines and Founder and Honorary CEO of the Philippine Council of Associations and Association Executives, the Association of Associations. Email: bobby@pcaae.org.