Quarter 4, LAS-5-6

Learning Activity Sheets (LAS)

for Business Ethics and Social Responsibility Grade 12

Name of Learner: ____________________________________ Grade & Section:_______________

School: ______________________________________________ Date: __________________________

SOCIAL ENTERPRISE

What is a Social Enterprise?

A social enterprise refers to a business with certain social objectives as its primary goal while using
a commercial structure to run the organization. Social enterprises usually attempt to make a strong
societal impact while maximizing their profit as well, which is then used to fund their social
programs.
A social enterprise is defined as a business model with the objective of solving social issues and
problems while providing goods and services.
A social enterprise refers to a business with certain social objectives as its primary goal while using
a commercial structure to run the organization.
All social enterprises usually adopt two main goals – the first is to generate profits, while the second
is to reach its social, cultural, economic, or environmental outcomes outlined in the company’s
mission.
Some categories of social enterprises include trading enterprises, financial institutions, community
organizations, and NGOs and charities.

Understanding Social Enterprises

Social enterprises can be both non-profit or for-profit organizations and may take the forms of
many different types of organizations. What is common in all social enterprises is the fact that they
usually adopt two main goals – the first is to generate profits, while the second is to reach its social,
cultural, economic, or environmental outcomes outlined in the company’s mission.

It is important to note that social enterprises operate under the structure of a traditional business,
and on the surface, they may seem to look, feel, and operate like any other traditional business.
However, the key to understanding a social enterprise is to understand its mission, which outlines
its key social objectives.

Profit generation is still extremely important to social enterprises, as earnings are important to
sustain the livelihood of the venture but the important difference is that instead of using its profit to
distribute among shareholders, the profits are used to reinvest in the enterprise to help it achieve
its social mission.

We should note that social enterprises usually offer some sort of good or service to consumers at a
price,, it is not considered a social enterprise if it does not sell anything; instead, it instead is
considered to be a social program.

Social enterprises will often have strong links to a registered charity or non-profit organization –
sometimes a parent company –which feeds its profits to help better support its social mission.

Social Enterprise and Employment

An important differentiator of social enterprises is the fact that they often employ individuals
coming from at-risk backgrounds and those from disadvantaged communities, such as visible
minorities or indigenous groups. Often, such groups face discrimination and prejudice in society
historically.

The goal of training and employing such individuals is to allow them to earn a living wage while
enabling them to create self-sufficiency and rely less on government payouts and the social safety
net. Sometimes, creating employment for disadvantaged individuals form the central mission of
some social enterprises.

Types of Social Enterprises

Social enterprises are usually categorized into four main categories, although they are constantly
evolving and may change over time as new areas are created. Despite their individual differences, all
types of social enterprises attempt to operate while balancing both profit generation and the
achievement of its social objectives.
1. Trading Enterprises
Trading enterprises refer to cooperatives, collectives, and other organizations that are worker- or
employee-owned. They vary significantly in terms of size and organizational structure, but their
joint ownership structure allows a higher degree of economic resiliency in comparison with other
forms of enterprises.

2. Financial Institutions
Some types of financial institutions also fall into the social enterprise category, including
organizations such as credit unions, cooperative banks, and revolving loan funds, which are
membership-owned. Credit unions, for example, are structured so that members automatically
become owners when they deposit money into the union as a customer and the credit union uses
the deposited money to help other members.

Credit unions offer higher savings rates, low interest rates, and focus less on making profits and
more on helping its respective members. Cooperative banks are another institution – which, similar
to traditional banks – takes deposits and provides loans to its customers but operates on a
cooperative basis meaning that they are owned by their customers.

Cooperative banks are criticized for diluting their principles, as they sometimes offer an opportunity
for non-members to use their services, as many are traded on public stock exchanges. They also
raise money in public stock markets, which gives rise to the issue of a separate class of
shareholders who compete with cooperative members for control of the bank.

3. Community Organizations
Community organizations refer to registered social enterprises, which may include community
enterprises, community centers, housing cooperatives, community interest organizations, certain
smaller shops, and sports clubs.

They are typically membership organizations that exist for a particular purpose and trade
commercially with the goal of operating to reinvest profits into the community. Often, the
membership is quite large, and the members are supporters of the organization’s mission.

4. Non-Governmental Organizations (NGOs) and Charities

NGOs and charities operate on both a large and small scales and are usually established to support
a specific social, environmental, or political goal. The profits are used to further the social or
environmental aims of the organization or to provide salaries for people who provide free services to
specific groups of people.

7 PRINCIPLES OF SOCIAL ENTERPRISE

1.MOTIVATED BY A CAUSE
A social enterprise does not aim to maximize profit but rather solve or overcome certain
issues on health, education, technology access, environment or poverty.
2.FINANCIAL AND ECONOMIC SUSTAINABILITY IN THE LONG TERM.
Since the purpose is to solve problem, the enterprise has to ensure that it can attain
financial stability in the long term. It should be financially stable to sustain its worthwhile
projects.
3. NO DIVIDEND FOR INVENTORS
Since a social enterprise do not seek to maximize profit, inventors expect a return only on
the actual amount they have put in.
4. PROFITS GENERATED REMAIN
When investments are returned to the investors, whatever profits generated remain in the
company for expansion and improvement of operations.
5. SENSITIVE TO GENDER AND ENVIRONMENTAL ISSUES
The social enterprise operates ethically by ensuring no gender discrimination and providing
eco-friendly products and services.
6. EMPLOYEES ARE TREATED FAIRLY
The workforce is well-taken care of through fair wages and benefits and better working
conditions.
7. JOY IN EVERY TASK
A social enterprise that strives to work for a cause does it with pleasure.

A social business model is a framework that a social enterprise follows to fulfil its mission and
maintain its financial stability.
9 TYPES OF SOCIAL BUSINESS MODELS

1.Entrepreneur Support Model

The social enterprise provides support services to entrepreneurs who would like to embark
on their own endeavors. Support services like consulting, training and other technical
services are provided to help clients grow their business.
2.Market Intermediary Model
The social enterprise using this model generally guides those struggling to gain markets to
sell their products. It buys the products of the clients and sells them in other markets at a
mark- up.

3. Employment Model
Social enterprise that adopts this model help clients look for jobs and provide them with
training for these jobs.
4. Fee for Service Model
This is the most common business model used by social enterprises. They charge clients with
a certain fee for services rendered like hospitals, schools and museums.
5. Low Income Client Model
In this particular models, social enterprises charge fees but they concentrate on low-income
customers.
6. Cooperative Model
This is also a very popular social business model. The cooperative charges a membership fee
and provides a number of services to members, who also run its operations. The members
combine their resources, including revenue, to purchase goods and services, provide credit
(loan), and others.
7. Market Linkage Model
This model connects their clients to markets where they can sell their products. The social
enterprise acts as a broker to help a small producer access a bigger market. Thus, the social
enterprise facilitates the producer-customer relationship.
8.Service Subsidization Model
Social enterprises using this model sells products and services and use the proceeds to
subsidize their social services.
9.Organizational Support Model
In this model, a social enterprise sells products and services and the revenue generated is
used to fund an organization which runs the program that the social enterprise supports.
The main goal of a social entrepreneur is to implement widespread improvements in the
society. However, a social entrepreneur must still be financially capable to succeed in his or
her cause. A social enterprise can achieve its goals through different methods of income
generation.

METHODS OF INCOME GENERATION

1. Fee for Service- Social enterprises charge fees to clients for services rendered such as
museums, rural clinics and microfinance services.
2. Products- Social enterprises sells products and earn income through mark up or
commission from reselling of product.
3. Services- Skills or expertise can be offered by social enterprises in exchange for a fee.
4. Membership Dues- Social enterprises which operate through membership collect fees in
exchange for newsletters, discounts, insurance, and subsidized trainings, among other
services.
5. Tangible Assets- Social enterprises can generate income by renting or leasing their idle
offices and vehicles to other nonprofit organizations.
6. Intangible Assets- Income is generated by leveraging intangible assets like reputation,
relationships or brand.
7. Investments- Income can be taken from interests on savings deposits, bonds, etc.
 I. EXERCISES

Exercise 1.
A. I. SIMPLE RECALL: Identify the following terms.
_____________________ 1. It is a business model with the objective of solving social issues and
problems, while providing goods and services.
_____________________ 2. These are social enterprises which provide loans and other investment
facilities to small businesses and start up social enterprises.
_____________________ 3. This social enterprise helps struggling business to access markets to
sell their products.

_____________________ 4. This is the most common business model wherein social enterprises
charge clients a certain fee for service like hospitals, schools and museums.

_____________________ 5. It is defined as a framework that a social enterprise follows to fulfill its

mission and maintain its financial stability.

_____________________ 6. This is a social business model wherein a social enterprise charges

membership fees and provides a number of services to its members, who also run its operation.

_____________________ 7. Microfinance is an example of this model.

_____________________ 8. This is a method of generating income by renting or leasing idle offices

or vehicles to other nonprofit organization.
_____________________ 9. This model connects customers to markets where they can sell their
products.

_____________________ 10. They are financial institutions that assist in providing a savings and
loan facility to the inhabitants of a community.

Exercise 2. Answer the following question(s) comprehensively.

1. Should the government support the advocacy of social enterprise here in the
Philippines? Explain.
2. Give at least 5 examples of Social Enterprise in the Philippines

Exercise 3. What I can do.

1. Prepare a proposed personal action plan to assist an existing small business enterprise
to practice ethics and social responsibility in their business operation.

2. Read about Gawad Kalinga Foundation. What impact do the social enterprise of Gawad
Kalinga have on Filipino communities?

Reflection.

In this lesson I learned that _______________________________________________________________

___________________________________________________________________________________________

II. References
DepED MELCS
Organization and Management Curriculum Guide
Business Ethics and Social Responsibility for SHS by C.A Zarate

Prepared by: MARY BERNADETTE S. MANDARIAGA

Subject Teacher

Approved: SALVADOR J. SEMBRAN

Asst. Principal II