January 28, 2023

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Associations and Social Enterprises: A Correlation

2 min read

A social enterprise is a business organization created to advance a social purpose in a financially sustainable way. If you take out the words “enterprise” and “business” from the first sentence, doesn’t it sound like a definition of an association?

Here’s more: it is believed that the organizational and legal principles in social enterprises came from non-profit organizations. In this context, associations, which are non-profit organizations that usually relied on members’ financial support, have now diversified their revenue generation to promote their societal causes. In effect, an association, much like a social enterprise, uses business skills for social good, and not just rely on selling learning programs, publications, research studies, for example. The correlation doesn’t stop here.

Four more aspects that compare an association with a social enterprise are from an article, “The 5 P’s of Social Entrepreneurship,” written by Monika Mitchell, founder of Good Business New York.

1. Purpose. Both social enterprise and association are purpose-driven organizations. In the case of a social enterprise, it incorporates “profits with purpose” into its core business model. In an association, purpose is defined by the mutual interest of its membership to advance a cause, a mission and a vision. Both aspire to make a difference to society by “doing good while doing well.”

2. Plan. To be able to survive and thrive, both need to figure out exactly what to do and hence a plan, both strategic and short-term, are essential tools to have. For a social enterprise, testing and experimentation of what sells or not in the market is crucial for its success which is more or less a similar approach but to a lesser degree for an association whose main focus are its members.

3. Partner. The pandemic has re-emphasized the value of collaboration which has become a vital asset for growth for both the social enterprise and the association. Strategic partnerships among like-minded organizations can help both the social enterprise and an association leverage on their limited resources to maximize economies of scale. 

4. Profit. In the end, it boils down to the bottom line. A social enterprise or an association may have a clear purpose, a robust plan, and dependable partners but if there is no revenue coming in, then both are not “in business.” A social enterprise depends on having a continuous viable and profitable operation to achieve its purpose of having an impact to society. Similarly, an association has to have an excess of revenue over expenses to be able to serve its members and society, in general.

In these aspects, an association 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 the executive director of the UN Global Compact Network Philippines and founder and volunteer CEO of the Philippine Council of Associations and Association Executives, the “association of associations.” E-mail: bobby@pcaae.org.