Only a small fraction of women in rural India have a bank account, reinforcing existing gender inequity. Without access to financial services, women miss out on government benefits, like cash transfers. Alternative for India Development (AID) delivers financial products to women and other underprivileged populations through a unique business model. In partnership with the government and commercial banks, AID established more than 600 Common Service Centers that serve as one-stop delivery points to financial and government services. In just three years of operation, AID opened 200,000 deposit accounts, one-third of which belong to women. Thanks to these accounts, underprivileged populations was able to receive pensions, government subsidies and access free savings accounts.
AID is just one of a large and growing number of businesses that combine profits with impressive development results. These businesses are known as social enterprises, and the innovations they develop play a critical role in providing life-improving goods, services, and employment to hundreds of millions of poor people. Social enterprises can be distinguished from other public and private organizations by the fact that they pursue social objectives through commercially viable business models and are independent from the government.
In his recent blog, World Bank Group President Jim Kim urged the development community to partner with social enterprises to achieve the Sustainable Development Goals. This will require a different approach to scaling results of successful social enterprises, their inclusive innovations, and business models. In a recent Brookings Working Paper we reviewed the literature and experience with scaling up social enterprise innovations and summarized lessons for how scaling up can be best managed. Here we briefly explore the main implications for external donors.
- Focus systematically on inclusive innovations developed and implemented by social enterprises. This requires an explicit exploration of the local ecosystem, i.e., the prevalence and characteristics of social enterprises and the policy and institutional environment in which they work. Through dedicated programs like Development Marketplace and Inclusive Business, the World Bank Group has developed tools and products for doing so.
- Develop a sound understanding of the legal, policy, and infrastructure constraints that social enterprises face in a specific country and sector and design their support in a way that both reflects those constraints but also aims to alleviate them.
- Support the spread of the inclusive innovations in different regions and countries, recognizing that scaling up the impact of social enterprise innovations often means looking beyond the growth of a specific social enterprise that initiated an innovation, as was done, for example, in the cases of women’s health franchises.
- Support the entire innovation-learning-scaling cycle which goes beyond the process of innovation. This requires engaging early on and throughout a multi-year, multi-stage pathway, from early idea through research and development, testing and prototyping, to transitioning to scale, actually scaling, and then operating sustainably at scale.
- Address many aspects of the innovation-scaling process as part of support to social enterprise ecosystem: the enablers (champions, market and community demand, incentives, etc.) and the potential barriers (costs, finance, organizational resources, policy and political environment, culture, and – in fragile and conflict affected states – security).
- Tailor financial support along the innovation-learning-scaling pathway to meet the changing needs of the social enterprises: in the early stages of innovation and testing, grants could be appropriate, but later on, as the innovative models and the enterprises mature, loans, equity and guarantees help move toward financial sustainability and access to commercial finance.
- Provide non-financial support to social enterprises. Technical assistance, project supervision, participation in trustee or advisory boards, and helping to link enterprises with peers through professional and business networks are relevant options.
- Support for effective monitoring and evaluation (M&E) along the innovation-learning-scaling pathway. M&E can be costly, require specialized skills (e.g. randomized controlled trials), and the benefits of learning usually go beyond the individual enterprise. However, donors should be careful not to impose burdensome and irrelevant M&E requirements.
- Help bridge the gap that often exists between social enterprises and government. Partnership with the governments for the long-term success and scale, and donors are often well-positioned to facilitate the establishment of a productive relationship between social enterprises and the government.
- Adjust their internal organizational and operational approaches by (a) working not only though specialized social enterprise units or challenge funds, but mainstream the support for social enterprises throughout their operational work; (b) encouraging a mindset of long-term vision, patience, risk-taking, and flexibility among managers and staff; and (c) keeping operational procedures simple, rather than following the common temptation to add burdensome bureaucratic requirements for staff.