The term social enterprise can be defined as an organization that addresses a basic unmet need or solves a social or environmental problem through a market-driven approach, according to the Social Enterprise Alliance. However, with such a broad definition, a lot of organizations can fall under the category of a social enterprise.
Given our own extensive history in the field, FINCA International has expanded upon this characterization of a social enterprise. In addition to the criteria laid out in the above definition, we believe a social enterprise should also provide goods or services that enable people to work toward lifting themselves out of poverty.
By focusing on all three of these aspects used to define a social enterprise—meeting a basic unmet need, focusing on an environmental or socially-conscious issue and helping people to help themselves—FINCA and its partners are able to have a greater impact in a more lasting and sustainable way.
More than 30 years ago, one of the world’s first social enterprises opened its doors—FINCA, a bank for the poor.
The free market was failing billions of people who could not access financial services. A basic need was unmet. So FINCA jumped into the breach. We started off by making small loans—as tiny as $25—and eventually added savings, insurance and other financial services.
To succeed, we had to go where others feared to tread. And, with support from many people over the years, we proved the banks (and the market) wrong. The poor could be good customers.
Now, we are taking what we learned in the realm of microfinance and the experience of scaling a social enterprise and applying it to solve other unmet needs.
Nearly 140 years after the advent of the lightbulb, nearly 1 billion people still have no reliable access to electricity. Living “off-grid” introduces a host of problems for poor families who are forced to burn dangerous fuels to light their homes and to prepare meals.
To change this, we launched BrightLife. This social enterprise makes life-enhancing products—like solar home systems and clean cookstoves—accessible and affordable to the poor.
And because of our microfinance expertise, we can offer these products to low-income customers affordably and conveniently through mobile phone-based monthly payment plans. Even more, we can link BrightLife energy customers with FINCA banks to introduce unbanked populations to a full range of loan and savings products for added resiliency.
Energy is just one industry where basic needs remain unmet. So, what about improving access to other essential services, like safely-managed sanitation, quality education and more?
To address these market challenges, we are partnering with social entrepreneurs who have innovative solutions to the basic service needs of low-income families. We call this effort FINCA Ventures.
This initiative aims to accelerate the growth of social enterprises developing goods that align with FINCA’s charitable mission:
Right now, these social enterprises are only able to reach some of the world’s poor. But by harnessing market forces—like we did with microfinance over 30 years ago—BrightLife and FINCA Ventures have the potential to scale this outreach dramatically.
We believe that social enterprises can help correct persistent market failures. These initiatives reflect our commitment to advancing market-led innovations supporting the world’s poor. By pairing a mission-driven mindset with a private sector approach to development, we are proving, once again, that the poor can be excellent customers, capable of creating a brighter future for themselves if only given the chance. And, ultimately, we can help to eradicate global poverty in this generation.