EDITOR FOREWORD

Social Enterprise (SE), a concept with 5 corporate (CSR) and years history in , is understood as can thus fully participate in the process of a with the mission of serving developing this 'third sector' (i.e. SE) in society. This type of business in fact existed Vietnam in Vietnam for many years, but not under The Bulletin has four parts: the SE name, and included not-for-profit The model: This section first introduces organizations, agricultural , the model and outlines some challenges villages, and public utility enterprises. that SEs in Vietnam are facing. Social enterprise is usefully considered as is then considered as an SE model a hybrid model incorporating pure business providing opportunities for the and social/community purposes. Social development for vulnerable people in entrepreneurs, besides their passion and Vietnam. Basic operational models that SEs dedication to helping society - especially normally pursue are then introduced. those at the bottom of the income pyramid Good Best practices: two case studies - should be capable to create innovative of SEs are presented with the aim of business models, take product ideas to sharing innovative business ideas, and how market and have skills in financial these SEs achieve success: Tohe in Vietnam management. Currently in Vietnam there and Creative Workshop in Ukraine. are about 200 to 300 social enterprises, Role of CSOs: in Vietnam, at present, some 20-30 years of history but the there are two large organizations majority recently established. supporting SE development pursuing two The CSO-CSR project aims to establish different approaches. CSIP focuses on a network of Organisations awareness raising, capacity building (CSOs) in Vietnam to be more committed through training, development of social to CSR in promoting human rights at work, . SPARK focuses on improving environmental practises and technical assistance and funding for social monitoring business obligations by active enterprises. Some CSO Tips work is engagement of community. The publication introduced in this part. of the 2 Bulletins: Corporate Social For CSR Professionals: two articles Responsibility: from viewpoints to related to enhancing creativity in practices and Social Enterprise: Models, organizations are presented. The first article Practices and Trends are among project considers integrating sustainability into the efforts in attaining its objectives of entire production process of a business. The awareness raising and knowledge sharing second provides 4 principles for managers among CSOs. to enhance innovation in companies This Bulletin No2 is published with the We would like to thank colleagues, the civil aim not only of introducing the concept of society organizations involved in social enterprise, but also sharing ways of contributing articles, sharing views, their organizing this . Civil vision and funding for the publication of society organizations (CSOs), as not-for- this Bulletin. profit entities, and for-profit , are highly committed to implementing Dr. Truong Thi Nam Thang

SOCIAL ENTERPRISE: MODELS, PRACTICES AND TRENDS 1 SOCIAL ENTEPRISES: MODELS

Social Enterprise History, Realities and Challenges in Vietnam

Nguyen Manh Quan 1

Thus, a series of state welfare especially in areas of industrial HISTORY models was born in Western production. In rural areas, The social enterprise model first Europe and North America after agricultural forms appeared in London in 1665, World War II. (Co-op) are socio-economic when Thomas Firmin set up a Social enterprises began to thrive development organizations manufacturing plant to maintain again, as a mass movement, after tapping community spirit: employment for 1,700 workers. British Prime Minister Margaret cooperation, sharing and mutual Right from its inception, he Thatcher came to power in 1979. benefit. This model has also been claims that the firm did not pursue She advocated shrinking the role established in urban areas, in profit maximization and that of the State and claimed that the small-scale and handicraft profit would go to charity State should not be directly industries. They may be regarded (Howarth C. MacDonald & M., involved in providing social as typical social enterprise models 2008). The change in perspective welfare. Since then, Britain has in Vietnam before the renewal. and approach to charity of rich been at the forefront of the SE National Economic Reform people in Europe led to the movement worldwide. According Policy, 1986, was a milestone introduction of various forms of to the latest figures, the number of marking the recognition of the economic activity in which the SEs in the UK in 2011 amounted private sector and individual vulnerable/disadvantaged, poor to 90,000, with a total turnover of smallholders. Proactive role of people, were used as a labor force £ 70 billions. the individuals and the to create benefits for themselves community in the provision and CURRENT STATUS IN VIETNAM and for others (society), rather exchange of services to meet the needs of the people has been than just asking for benefits/gifts The historical record did not recognized and developed since from society (the others). A mention the first launch of forms then. During this period, micro-credit fund was first such as state authorities or rich numerous social enterprises established in Bath, , with people handing over fields to appeared and operated in diverse the primary purpose of offering farmers for planting without rent, forms. International experience, interest-free loans for production. the offering of free classes, or the especially that of the UK from The school of spinning and case of traders and shopkeepers 1978, showed that the context of weaving that was opened in who participated in ‘loan developing social enterprises in in 1790 was the first societyies’, ‘collective savings’ Vietnam has in common the social enterprise in education and (forms of people's credit), and downsized role and scope of the job creation for the blind poor. In who joined ‘trading wards’. But public sector that led to the other models, some such SEs have been a part of development of another organizations/ businesses allowed Vietnam’s historical development. economic sector to take on the workers to sign labor contracts or Upon the success of the public sector in assuming public to become business owners, as revolution, nationalization functions and social welfare. well as to share profits. They policies and centrally-planned included Cooperatives (Co-ops), economy guidelines led to the To date, according to research on affinity (Provident Society), and formation of state-owned SEs in 2011 by CSIP and Spark industrial villages (Industrial enterprises and the strong public (two typical SEs in Vietnam), Society). sector directly involved in funded by the British Council, in In the 20th century, the social providing social welfare for all which 167 SEs were surveyed, enterprise model was less active people. Public services and social the distribution in terms of form and Keynesian doctrines thrones welfare are considered one of the and scope of the impact of SEs in defined the role of State basic state functions. The role of Vietnam are presented in Figure 1 intervention in the economy. the private sector is lackluster, and Table 1.

1 Associate Professor, Doctor, National Economics University

2 SOCIAL ENTERPRISE:MODELS, PRACTICES AND TRENDS ÿÿ ÿÿÿÿ regulation for social enterprises to develop and operate. Although there are various articles and chapters related to the relevant objects of social enterprises in the Vietnam’s legal system, it is still necessary to establish a formal legal framework for social enterprises to establish, operate ÿ  !"#ÿ%&'"()01ÿ!'02ÿ3)(" 4 '5"ÿ1044')6ÿ4 7"!(8ÿ9@ABBCDÿEFGHIEÿ and grow, aside from this official ÿ recognition. Third, the inevitable PQRÿ Sÿ TÿU V Uÿ U  UWÿÿPXXÿYWÿÿÿ consequence due to the lack of a PU Y  aÿ Wÿ` Yÿ Y  `Y QÿbYcÿ formal legal basis is the limited `Xÿ access to financial resources and defghifÿpqrsfgÿtuÿ ƒ„ †‡ÿ†„ˆ ‰ÿ†„‡ÿƒ‡†ÿ‡„†‘‡ÿ vfpfuwxwhgwfyÿ€tgihpwh‚wtpÿÿ capital mobilization and social defghifÿfxtptrwxÿeh’qf€ÿ “gihpwh‚wtpÿ”gfefpqfÿ•ÿ —‡†„˜‘‘—˜‡„™‰‘ÿ— †„˜‘‘ÿ— ˜„™‰‘ÿ—ƒ˜†„ ‰‘ÿ resources. Although the uwphpxf–ÿ Vietnamese government has dty‚€ÿvfpfuwxwhgefÿ—ˆ‘ÿ—† ÿ—†˜ÿ—‡˜ˆÿ—‡ƒÿ issued many policies and spent  !"#ÿ%&'"()01ÿ!'02ÿ3)(" 4 '5"ÿ1044')6ÿ4 7"!(8ÿ9@ABBCDÿEFGHIEÿ resources for the development of gÿ3!)1'!ÿh02"ÿ')ÿijÿk'(lÿ(l"ÿ"m!l0)6"ÿ 0("#ÿ@Anopq&rjHijnÿ ÿ entrepreneurship, business, and CHALLENGES awareness of and attitudes to those who need to be given humanitarian issues is better priority in society, the operation of The development of social appreciated, due to improved social enterprises mainly relies on enterprises in the next period is living standards, better education, benefactors’ charity. Fourth, predicted to be very impressive advanced life quality on one hand besides the above-mentioned because of the following reasons. and the gap between rich and poor obstacles, social enterprises are First, the private economic sector and social inadequacies caused by generally faced with limited in Vietnam has grown. Despite the economic mechanisms which management and operation difficulties due to the economic increasingly creates pressures on capacity. The great humanity and downturn, private businesses, the spiritual life of a nation with beauty in heading towards especially local small and such rich community traditions as disadvantaged/vulnerable peoples medium enterprises (SMEs), have Vietnam. The development of through social enterprises become an important economic robust systems and modern media becomes an important weakness force, comprising more than also contribute to raising in their operation. This target 600,000 businesses, and have awareness and consciousness for audience is hardly considered to made important contributions to student issues. have ‘market potential’, or the national economy in terms of However, the development of ‘qualified human resources’ for GDP (40%) and social labor social enterprises in Vietnam is social enterprises. It is unjust to usage (50%). The ups and downs faces enormous challenges. The require social entrepreneurs to of the world and domestic first challenge is that social play ‘fair competition’ with economy enable businesses to enterprises face lack social enterprises of other forms which accumulate practical lessons. recognition. Despite its long- are better equipped in knowledge, Second, the state economic sector standing, social enterprise is still a abilities, and resources. is increasingly shrinking. new concept to be taken into Despite numerous difficulties, Economic renovation and consideration in the legislative social enterprises still expect a restructuring in general, system. Many different opinions highly promising future not only especially the public economic with the contradictory empirical for the above mentioned reasons, sector, is not only a major evidence from diverse notions but also because of their own challenge to policy making but prevented social enterprises being ‘missionary’ purpose. SEs in also a huge pressure on the formally recognized in the legal Vietnam can positively contribute economy in terms of ensuring system applied to social and to the implementation of social welfare and security. economic institutions in Vietnam. economic development policies Experience from the UK This causes major problems to the and guidelines by the Party and economy after 1978 has shown legality of the social enterprise. the Government, as well as the that the development of social Second, because social enterprises recent in the Vietnam’s enterprises is essential to shoulder have not been legally and formally legislative and policy making this huge responsibility of state- recognized, there is no specific system. owned enterprises. Third,

SOCIAL ENTERPRISE: MODELS, PRACTICES AND TRENDS 3 Fair Trade a social enterprise model in Vietnam: for a Vietnam with development, integration and better equity for disadvantaged group

Huong Ngo 2

may lose their only income opportunity. The concept of Fair Trade has generated social awareness not seen in the neoliberal trade theory proposed by the World Trade Organization (WTO), or in economic reform packages imposed on developing countries in the restructuring programs of IMF and the World Bank. World Fair Trade Organization (WFTO), with a global network of Fair Trade organizations and members in over 70 countries, has established 10 principles and standards with which every Fairtrade organization has to comply. The Fairtrade system has several goals. First, regarding Like many other developing production and trade. This rapidly social development, small countries, Vietnam has joined the led to the depletion of natural farmers, including women, should World Trade Organization (WTO) resources, which inherently have the right to participate in and is currently moving towards belonging to the community, and group activities on a regular basis, an overall free-market economy. no interest in adverse effects on to be informed and to make The first and massive impact of the environment, society and decisions in a fair way among the WTO integration struck community. Small farmers are group members, to raise communities in rural areas with often coerced by outside agents in awareness about clean and the changes caused by the policy terms of prices and asymmetric sustainable production. There are on economic restructuring, bargaining capacity. As in the also cash benefits contributed by including the elimination of state case of coffee farmers around the consumers through commercial protection and protective shields world, there are many collecting companies or directly for industry and local agriculture. intermediaries between producers transferred to the cooperatives or Without state protection, these and exporters, all intermediaries fair trade farmer groups. Second, communities naturally faced are trying to squeeze profits while the economic development of many challenges that they have producers can only just maintain households should be based on never previously encountered. survival standards. In Vietnam, collectivism which reduces Instead of working together for a there are usually about 7 to 12 commercial risk. Manufacturing common goal to build sustainable intermediaries between producers groups should sell through direct local livelihoods by reserving and exporters. Farmers usually export system. The conventional natural resources for the sell coffee at the lowest price export price is 10% more than the collective benefit, individuals level in the supply chain. If they spot market price. Third, Fairtrade compete with each other in do not accept the price offer, they promotes environmental

2 Director, Center for Development and Integration

4 SOCIAL ENTERPRISE:MODELS, PRACTICES AND TRENDS sustainability. Fairtrade standards importers in foreign markets, the agricultural products in Vietnam are annually evaluated to ensure Fairtrade system has created and to participate in global value cleaner products, and sustainable delivered to farmer groups a chains. Green Fair Trade applies farmers who do not use toxic welfare fund of about 1.300.000 the principles of Fairtrade and chemicals and sustainably protect USD/year (about 27 billions makes Fairtrade commitments water and land resources. dong). Farmers can decide how to through product quality and social Each local Fairtrade organization use this fund to improve and environmental standards. in developing countries features a production capacity, coffee Green Fair Trade tea and coffee particular shape and operates quality and market development. products were launched in different functions. Government As another example, Shan Tea Vietnam. Another case study, Vi and Non-government products from Vietnam are Wine Company, is the first organizations, cooperatives and present in more than 20 countries company which registered under producers work together to around the world through the Organic and Fairtrade system to benefit producers, workers and Fairtrade system. More than 422 support the Yen Bai ethnic group traders in different ways, based on Hmong and Dao ethnic families, in organic tea production since the the specific needs of their from 4 (Nam Lanh, early 1990s and is now linked to communities and social Suoi Bu, Suoi Giang and Phinh 20 markets and has successfully objectives and their caoacity to Ho, Van Chan - Yen Bai), are introduced Vietnamese tea associate more directly with the proud of their organic tea products into the global value market. The establishment of products grown at an altitude of chain. Ms. Hua Thu Hien, cooperatives, or other types of 1000 meters asl which provide Director, Vi Wine Company, said: community organizations, sustainable livelihoods. Every “I am very happy to see our according to the Fair Trade year, the welfare fund from Shan organic products meeting the principle partly addresses Tea production devoted to these Vietnamese customers’ demand inequalities and reduces losses on ethnic groups is approximately for unique quality in each product the local market for farmer groups 1.2-1.5 billion dongs. More like a gift, made up with a good and small manufacturers. importantly, the ethnic groups are care and full responsibility and more solid and work closely contribute to the preservation and In Vietnam, projects that support together to sustainably produce development of Vietnamese the development of fair trade for and preserve the natural culture with the local specificities ethnic groups, brocade, arts and livelihood resources and with of various ethnic communities in crafts are operated by Oxfam. good economic position. Vietnam.” From 2008, after Vietnam’s WTO integration, the cooperative model However, the effective operation Mr. Ban Tran Hung, and Fair Trade Club in agriculture of these cooperatives and representative of Fairtrade in has prospered. The top potential Fairtrade, organic-farmer club Vietnam, noted that: "It is really for the Fairtrade model belongs to models, it is necessary to mention essential to associate the the export of such strong the role of commercial units and development of the cooperative Vietnamese agricultural products social enterprises that work model to a social enterprise so as coffee, tea, cashew nuts and closely with farmers to improve that the Fairtrade business model some fruits, vegetables and food their production capacity and can be replicated for better reach like rice and passion fruit. market participation. They have to bring the highest benefit to Currently, there are, for example, supported the development and millions of Vietnamese small coffee cooperatives in Dak Ha, training on corporate social farmers. It's not easy to find a new and Kon Tum, in Thuan An- responsibility values for farmers. path, but I believe that in many Dakmil, Dak Nong Province, and Several organizations promote the countries, so many consumers two in CuM'nga district, Dak Lak development of fair trade. Green want to support the producers. province. As a result, more than Fair Trade, JSC, a combination of They will pay more and require 500 households of small farmers enterprise development programs companies in the global supply and ethnic minorities in the (based on community) and other chain to purchase Vietnamese central highlands have joined the attempts in specific programs to goods through the fair trade Fairtrade system with export improve the integration capability system to known that their capacity of 3000 - 3500 tons/year. of small and minority groups, contribution through spending Thus, from direct export to was, for example, founded with reach to small manufacturers in the goal of promoting Fairtrade Vietnam ".

SOCIAL ENTERPRISE: MODELS, PRACTICES AND TRENDS 5 RECOMMEMDED Operational models of social enterprises

Truong Thi Nam Thang 3

1. Entrepreneur Support security by helping them develop and Model sell their products. This SE achieves financial self-sufficiency through the This model sells business support sale of its client-made products. and financial services to its target Income is used to pay the business’s Operational models population or ‘clients’, being self operating expenses and to cover illustrate employed individuals or firms. SE program costs of rendering product clients then sell their products and configurations used development, marketing and credit services in the open market. The to create social services to client. Marketing supply purpose of this model is to facilitate cooperatives, fair trade, agriculture, value and economic the financial security of clients by and handicraft organizations value, but not the supporting their entrepreneurial frequently use the market activities. The SE achieves financial organizational or intermediary model of SE. Common self sufficiency through the sale of its legal structure of a types of business that apply this services to clients, and uses this model are: marketing organizations, company. income to cover costs associated with consumer product firms, or those Operational models delivering entrepreneur support selling processed foods or services as well as business operating are designed in agricultural products. expenses. Economic development accordance with a organizations, including 3. Employment Model social enterprise’s institutions, small and This SE model provides financial and social medium enterprise and business development service programs use employment opportunities and job objectives, mission, the entrepreneur support model. training to its target population or marketplace Common types of businesses that “clients”, people with high barriers to dynamics, client apply this model are: financial employment such as disabled, homeless, at-risk youth and ex- needs or institutions, management consulting, professional services (accounting, offenders. Its mission centers on capabilities and legal, market research), technology creating employment opportunities legal environment. and product that support for its clients. Social support services Social enterprises entrepreneurs. for employees such as job coaches, soft skill training, physical therapy, or (SEs), in the forms 2. Market Intermediary Model mental health counseling. This SE of not-for-profit model achieves financial self organizations, pure This SE model provides services sufficiency through the sales of its to its target population or clients, businesses or products and services. Income is used small producers (individuals, firm or to pay standard operating expenses social business of a cooperatives), to help them access associated with the business and normal company markets. SE services add value to additional social costs incurred by can base client made products, typically these employing its clients. The model is services include: product themselves on any widely used by disabilities and youth development, production and organizations, as well as social of the following 9 marketing assistance, and credit. The service organizations serving low- models (or, indeed, market intermediary either purchases income women, recovering addicts, a hybrid of models): the client-made products outright or and formerly homeless people. takes them on consignment, and then Popular types of businesses are sells the products in high margin landscape companies, cafes, market as a mark-up. This SE model bookstores, thrift shops, messenger has mission of strengthening markets services, bakeries, woodworking and and facilitating client’s financial mechanical repair.

3 PhD, National Economics University

6 SOCIAL ENTERPRISE:MODELS, PRACTICES AND TRENDS 4. Fee-for-Service Model production and marketing costs, subsidize member services. achieving high operating This model commercializes its efficiencies, cross-subsidizing 7. Market Linkage Model social services, and then sells creative revenue markets to This model facilitates trade them directly to the target markets that require subsidy. populations or “clients”, relationships between the target Health, education, technology, population or “clients”, small individuals, firms, communities utility frequently use this. or to a third party payer. Its producers, local firms and mission centers on rendering 6. Cooperative Model cooperatives, and the external social services in the sector it market. The SE functions as a works in, such as health or This model provides direct broker connecting buyers to education. The SE gets financial benefit to its target population, producers and vice versa, and self sufficiency though fees cooperative members, through charging fees for this service. charged for services. Its income member services: market Selling market information and is used as cost-recovery information, technical research services is a second type mechanism for the organization to assistance/extension services, of business common in the model. pay the expenses to deliver the collective bargaining power, This model connects clients to service and business expenses economies of bulk purchase, markets. In this model, income such as marketing associated with access to products and services, generated from enterprise commercializing the social access to external markets for activities is used as a self- service. Surpluses (net revenue) member-produced products and financing mechanisms for its may be used to subsidies social services etc. The cooperative social programs. Trade programs that do not have a built- membership is often comprised of associations, cooperatives, private in cost-recovery component. This small-scale producers in the same sector partnership and business model is the most commonly used product group or a community development programs use this SE models among nonprofits. with common need. Cooperative model of SE. Types of SE include Membership organizations and members are the primary import-export, market research trade organizations, schools, stakeholders in the cooperative, and broker service. museums, hospitals, and clinics recapping benefits of income, 8. Service Subsidization are typical examples of fee-for- employment, or services, as well Model service SE. as investing in the cooperative with their own resources of time, This SE model sells products 5. Low-Income Client as money, products, labors, etc. This or services to an external market Market Model model achieves financial self and uses the income it generates This is a variation of fee for sufficiency through the sales of its to fund its social programs. The service model, which recognizes products and services to its service subsidization model is the target population a market to members (clients) as well as in usually integrated: business sell good or services. This model commercial markets. activities and social programs emphasizes on providing poor Cooperatives use revenues to overlap, sharing costs, assets, and low income clients access to cover costs associated with operations, income and often products and services whereby rendering services to its members program attributes. Although the price, distribution, product and surpluses may be used to service subsidization model is features… bar access for this market. Examples of products and services may include: healthcare, health and hygiene products, utility services. This model target population at the base of the pyramid. Income is earned from product sales and is used to cover operating costs and marketing and distribution costs. However, due to the low incomes of target population, achieving financial viability is a challenge. This SE relies on developing creative distribution systems, lowering

SOCIAL ENTERPRISE: MODELS, PRACTICES AND TRENDS 7 SOCIAL ENTEPRISES: BEST PRACTICES

employed primarily as a financing mechanism--the business mandate is TÒHE separate from its social mission--the Luong Thu Ha 4 business activities may enlarge or enhance the organization's mission. Currently, social enterprises in members and project managers. Service subsidization model social Vietnam exist in several forms, TOHE commenced operation in enterprises can be any type of business. including charities, not-for- October 2009 with capital of Those that leverage intangible assets profit social and community 500 millions dong invested by such as expertise, propriety content or development organizations, for- members, plus more than 200 methodologies, or exclusive profit or non-profit social millions dong financed by the relationships tend toward service enterprises. Among these, forms Center for Community Service businesses that commercialize these TOHE is distinctive as SEs Initiative (CSIP) and the British assets: consulting, counseling, operated in the form of Council (BC). The project logistics, employment training or profitable joint-stock companies opens an exciting and rewarding marketing. Those that leverage tangible committed to investing profits playground for children, helping assets such as buildings, equipment, in social activities where the them to have fun, to learn and to land, employees, computers, etc. may key beneficiaries are improve their material and launch any number of enterprises that disadvantaged children who get spiritual lives. Moreover, TOHE utilize infrastructure and capital assets: directly involved in the project. desired to guide people, leasing, property management, especially disadvantaged product-based retail businesses; Initially, TOHE was a short- term project that organized children, to see creative work as copying, transportation or printing a good career prospect. Creative services, etc. drawing classes and other creative activities for work can bring high economic 9. Organisational Support disadvantaged children at social returns and is a robust trend in Model welfare centers, hospitals or the world economy. schools in poor and remote Phase of Restructuring and The organizational support model areas. There were three building business model, 2011 - of social enterprise sells products and services to an external market, founding members of the present. After seven years of businesses or general public. In some executive: Nguyen Thi Thanh development, TOHE has cases the target population or "client" Tu, Pham Thi Ngan and Nguyen created its own mark and certain is the customer. The organizational Dinh Nguyen. Paintings of the contributions to social projects support model is usually external: children were to be selected, although it also faces difficulties Business activities are separate from printed on various products … and the founders and operators social programs, net revenues from the such as fashion itemsn, home are coping with many social enterprise provide a funding decorations, furniture, gifts, challenges. The project even stream to cover social program costs toys ... then sold on the market had to suspend operations due and operating expenses of the nonprofit under the TOHE brand. to the expansion of the parent organization. Although Therefore, the program is not operationing scale, financial organizational support models may only a playground for the difficulties, problems in the have social attributes, profit not social children with opportunities for regulatory and operating impact is the perquisite for this type of them to learn, interact and have mechanism. Thanks, however, social enterprise. This model of social fun, they can also generate to the enthusiasm of the enterprise is created as a funding income to cover their living founders and operators, TOHE mechanism for the organization and is expenses. is now on the path of business often structured as a subsidiary Since its ‘takeoff phase’, in restructuring to build a business business (a nonprofit or for-profit 2009 - 2010, TOHE as a model of a sustainable social entity) owned by the nonprofit parent. profitable social enterprise has enterprise. Successful examples of this model cover all or a major portion of the officially come into operation in Restructuring of TOHE’s parent organization's budget./. the form of joint stock company. enterprise and business models The management board of the will focus on the following company includes founding basic operations:

4 PHD Candidate, National Economics University

8 SOCIAL ENTERPRISE:MODELS, PRACTICES AND TRENDS SOCIAL ENTEPRISES: BEST PRACTICES

• TOHE will be positioned as the the distribution channel of  10% of to support other leading lifestyle brand in Vietnam partners such as Weaves of Asia disadvantaged children. which offers consumers products (the ); Nitori (Japan); So far TOHE has organized more with unique and creative designs representative office of Aquarius than 40 classes for 1000 children and special materials. Above all, (U.S.) in Vietnam, Toy City in more than 10 facilities. With the products will embody deep (Vietnam) ... these initial results, TOHE is humanistic values and high  Optimize the advantages of a considered a quite successful and educational significance. With social business including access profitable social enterprise model these products, TOHE believe to financial resources and other in Vietnam today. However, that consumers are willing to support (counseling, training, operation of TOHE in particular accept and pay higher prices networking, partners, market) to and other social enterprises in compared to industry average to stabilize and expand the general is facing difficulties partly possess the product. organization. because they not yet socially  About the market, TOHE will  Restructuring of organizational recognized and appreciated. For keep developing distribution structure and finances to build a social enterprises to become a channels in three directions: 1 / social enterprise with a large community and to make Direct sales to customers who are sustainable business model. greater contributions to society, domestic organizations / Profits are committed to be used requires regulations to create businesses such as Toyota, World as follows: more favorable conditions for Bank, British Council, WWF, these enterprises. On the other Spark ... and individual customers  50% of the profits are used to hold drawing classes; hand, society also needs to have a through TOHE’s retail stores; 2 / good understanding, appropriate Distribution through business  40% are used for scholarships evaluation and proper recognition partners such as online offered to children under of the social enterprises and put NanaHuchy (), Arrow appropriate and practical forms them at the right place in the Global (Japan), Easybizvietnam for children centers / schools business community in Vietnam. (Vietnam) ... and 3 / Sales through participating in the program;

SOCIAL ENTERPRISE: MODELS, PRACTICES AND TRENDS 9 Creative Workshop

Pham Huong Thao 5

Creative Workshop Social are donated to orphans and low- of retail stores selling luxury Enterprise was established to income families. Under pressure children's clothing in Ukraine and design and sell modern clothing to maintain a strong balance sheet overseas. Interestingly, the patterns based Ukraine’s for the long term development of development of the Creative traditional drawings in natural the institution, Sazonova decided Workshop helps PBC to be fiber materials for children and to establish Social Enterprise financially guaranteed, enabling young people. Revenue and "Creative Workshop" in 2001, its promotion activities for its profits are used to promote the focused on producing and selling brands, and to enhance the spirit of national pride, artistic clothes made from natural participation of its members in and cultural traditions during skill materials, with cultural and education supporting programs training for youth work. historical designs for teenagers and activities. In 1992, after the Soviet and children. Business activities Finance: in 2001, expenses to Union collapsed, Valentyna of the Creative Workshop help to cover the activities of PBC ($ Sazonova established a women’s maintain the financial resources 1,351) was drawn from the profits club in her hometown - Kherson, so PBC can realize its mission. of Creative Workshop ($ 6,753); Ukraine - to help women master Challenges faced by the in 2002, 50% of PBC costs ($ their lives in the new era. Initially, Creative Workshop: The retail 18,758) were extracted from the Club supported its members to market for local items (Kherson) Creative Workshop’s income ($ resolve economic and living is not large enough due to limited 9,379). Sazonova decided the difficulties. Then, with the economic conditions and small finance allocation of PBC: grants experience of a professional population, so Sazonova has used for short-term projects and fashion designer, Sazonova decided to move the headquarters investments in new programs. developed S Theatre. Each theater to Kiev and open shops there. At program focused on a social the same time, he opened a chain problem and used costume and drama to raise social OperaOperationaltional M Modelodel of o Peacef Pe aBeautyce B Cultureeauty Culture consciousness and encourage collective effort in community activities from the society. In Peace Beauty Culture (NGO) Theatre S 1996, Sazonova officially named x Information referal (Part of NGO) the organization ‘Peace Beauty x Computer courses Designs are x Resource library Launched Culture (PBC). The name is x Social clubs Fashion School (Part of NGO) derived from the organization's mission to ‘build beauty, culture Excecutive Director of NGO and peace for cultural and social education, for young people, Creative Workshop towards the sustainable and Valentina (For Profit) human development of Ukraine’. Sazonova Designs are Created Since its inception, the organization has provided a Products are sold variety of training services on fashion design, tailored clothing, Retail Expos, career skills, computer courses for Boutiques Festivals teenagers (especially for girls and Designers orphans), and a part of clothing products from this manufacturer

5 PHD Candidate, National Economics University

10 10 SOSCOIACLIA ELN ETNETREPRRPISREIS:ME:OMDOEDLESL, SP,R PARCATCICTEICSE ASN ADN TDR TERNEDNS DS SOCIAL ENTEPRISES: CSOs WORKS

Social enterprises in Vietnam The results of the Peace Center for Social Initiative Programs Beauty Culture organization:  Create long-term funding for humanitarian purposes of the According to Virtue Ventures, a social enterprise organization from the operation of primer for development professionals, 2005: social enterprise Creative "Social enterprise is a society-oriented business Workshop, active in the financial (non-profit/profit-seeking or mixed) that is founded operation of institutions; to address the social problems or market failure of the with a private sector approach, to bring about  Provide services to 2,720 clients; an increase in the efficiency and sustainability and  Create jobs for 12 employees ultimately create change or benefit to society. " and several temporary contracts;  Raise awareness of the people Currently, in Vietnam, there are nearly 200 organizations about the cultural and social issues considered to be social enterprises. Whilst pioneer organizations with 50 volunteers; were established in the 1990s, the concept of social enterprise is  Change the mindset and still, however, very new. In Vietnam, despite their not yet being nonprofit management approach of officially recognized, business activities as tools to serve the public PBC to maintain social activities interest have been around for a long time. The development process more effectively; of social enterprises in Vietnam can be divided into three main  Increased brand value and phases: pre-Doi Moi; 1986 – 2010; the period from 2010. Today, awareness of people about the with the transfer of activities from the cooperative model in the programs PBC organization early stages to a social enterprise model which operates according to market principles with the funds shifted from external financing to business income is well under way. The success factors of Creative SE is now widely known as the model for social initiatives Workshop contributing to supporting the achievement of economic and social  Sazonova and her colleagues goals through: have found the same passion, the • Providing services to improve the lives of vulnerable life ideal, business skills and communities approach to cater to the significant • Creating jobs, improving capacity and creating social activities; opportunities to improve life for people with special circumstances  The high discipline, team leaders and the marginalized of the PBC include those who trust • Offering innovative solutions for new domains and also each other, they understand and investment in energy, recycling, waste management. perform 2 tasks: non-profit and the Currently, resources for social enterprise development in need to generate funds for regular Vietnam are huge. The nation country has the advantages of a activities of the organization; young and dynamic population, high levels of entrepreneurship, high levels of determination, despite facing economic difficulties,  Balance between business and social investment capital, and financial support are abundant, both non-profit operations: be always domestically and abroad. Besides financial resources, social stick to the first operation and entrepreneurs have the opportunity to receive technical assistance, business aims at serving the social including science and technology. In addition, preferential policies objectives; to encourage cooperatives, non-public facilities, public enterprises  Prepare a specific business plan and business units, will bring favorable conditions for activities of and clear strategy. these organizations and social enterprises. Another noteworthy point is that Vietnam’s communications infrastructure has made significant improvements to facilitate exchanges and connections

SOCIASLO ECNITAEL REPNRTIESREP: MRIOSDEE: MLSO, DPERLASC, TPIRCAECST AICNEDS T ARNEDN DTSR E N1D1 S 11 FOR CSR PROFESSIONALS between social enterprises and intermediary organizations to promote social enterprises in the region. Social enterprises are nevertheless a new 8 Steps to Design field of work, so difficulties during establishments phases are inevitable. Sustainable Products Specifically, there is no legal framework governing the operation of social enterprises. This creates obstacles in the establishment and operation of businesses. Funds remain difficult to access, human resources are typically low quality, management capacity is weak and there is limited executive leadership of teams. To support networking by social entrepreneurs, CSIP - Center is seen as one of the leading active units. One of the typical activities of CSIP is its program to support social enterprises (SESP). An annual event, SESP searches, evaluates and invests capital for social enterprises in two stages: seed capital (up to USD7000 dollars) for at start-up phase and up to USD30,000 for social entrepreneurs at take- off stage of business development. CSIP more broadly aims to assist social entrepreneurs to build organizational and business development capacity. At the same time, it helps to develop the social entrepreneurship movement by raising awareness about social entrepreneurs, government advocacy for good recognition and support to social enterprises, as well as to attract participation of other stakeholders, including government agencies, businesses and community.

References: - Research report "Social Enterprise in Vietnam - concept, context and policy announcement" made by the CSIP at the Institute for Economic Management and the Central Council of England, 2012. - www.csip.vn

12 SOCIAL ENTERPRISE:MODELS, PRACTICES AND TRENDS FOR CSR PROFESSIONALS Rules for 4 Innovating 1 Rule 1: Change Where You're Headed Set Big, Audacious Goals. To really push innovation, set goals that are a stretch. The Rocky Mountain Flatbread company, based in Canmore, Alberta, worked with Canadian nonprofit The Natural Step to create their vision of a sustainable restaurant. That vision included deriving 100% of their energy from renewable sources, having zero waste and zero carbon impact, and encouraging people to live more sustainably. Use “Back-Casting,” Not Forecasting. For radical improvements, start with a vision of the future and work backwards to today. This type of goal-setting is called “back-casting” and is the opposite of forecasting. Forecasting examines what happened in the past to plan for the future, and it delivers only minor, incremental improvements. Ensure Everyone Owns Your Goals. To promote a culture of innovation, make employees at all levels responsible for them. Put someone in charge of your environmental or community goals. Have your purchaser or supply chain manager vet potential vendors not just for price but for sustainability. Questions to Ask Yourself: What would our company or product(s) look like in a sustainable society? Starting from a vision of 20 years from now, what should we do differently today? How can we share our vision with our employees and suppliers? 2 Rule 2: Change What You Know Ask Employees for Ideas. Your employees see opportunities every day for saving money or doing things better. Ask for their ideas. Scan Unfamiliar Places for Inspiration. Read books and magazines, and watch videos and presentations on topics you wouldn’t normally. Attend conferences in seemingly unrelated fields. Pay attention to products or company ideas coming from other countries. Get Inspired by Nature. Think about how nature would solve your design or process problem. Tree limbs and human skeletons inspire the engineers designing automobile frames. And understanding how fireflies glow has helped scientists make LED lights 55% more energy efficient.vii “Unlearn” Outdated Knowledge. Challenge the way you’ve always done things. Maybe you could get materials from sustainable sources or buy wind- or solar-powered electricity. If it used to be too expensive to use hybrid vehicles in your delivery fleet, maybe that’s no longer the case. Questions to Ask Yourself: How can we get employees to suggest ideas for saving money or doing things better? What could we learn from companies doing the same thing as us in , China or elsewhere? What could we learn from Canadian companies in different industries than ours? How would nature solve our biggest business problem? What assumptions do we make about our products or services? 3 Rule 3: Change How You Work Rethink Your Business Model. Could your company - or part of it - serve a social purpose? -based company Insertech reconditions and refurbishes old computers and electronics. Companies donate the used electronics, which Insertech refurbishes and sells at reasonable prices to local non-profit and community organizations. Because the company also hires and trains young workers struggling to enter the job market, they receive funding as part of the Quebec Social Inclusion Enterprises Collective. Replace Products with Services. Challenge your assumptions about what your business does. You may be able to increase revenue and decrease your environmental impact by focusing less on selling products and more on providing services. Turn Garbage into Gold. Other companies might be able to use your waste. Montreal company Leigh Fibres would pick up fabric scraps from jacket manufacturer Quartz Nature to use in carpet manufacturing. Leigh Fibres got material for free, and Quartz Nature reduced its environmental footprint and eliminated waste removal costs. Questions to Ask Yourself: Could we offer a product or service that’s good for the environment and people? If we sell a product, could we also sell a maintenance plan or lease the product entirely? Could another company use something we currently throw away? Would they pay for it? 4 Rule 4: Change Who You Work With Broaden Your Networks. Build contacts beyond the usual suspects. In addition to employees, suppliers, investors and customers, broaden your network to include community action groups, lobbyists and social entrepreneurs, non-governmental organizations (NGOs), industry associations and economic development groups. Work with, rather than against, your most vocal critics to diffuse situations before they hurt your reputation. Building bridges into unrelated fields and industries sparks fresh ideas and opens up new markets. Embrace “Co-Opetition”. It’s hard to imagining joining forces with your competitor, but that’s exactly what a group of 30 competing furniture manufacturers in did. Faced with the industry-wide threat of low-cost producers in China, the Ontario business owners formed the Bluewater Wood Alliance to become more competitive, together. Among their solutions: Group purchasing and greening their businesses to curb waste and reduce production costs.viii Go Back to School. Find academic centres with expertise that will help your company. Contact the Research Services department at your local university to discuss contract research options and find potential researchers. Check out funding. Contact an organization which provides free academic resources on innovative business practice. Questions to Ask Yourself: Could we save money or pool resources by working with our competitors? How could we lead change in our industry?

SOCIAL ENTERPRISE: MODELS, PRACTICES AND TRENDS 13 About CSO-CSR Project

www.vietnamforumcsr.net XH C SR & CSOs in Vietnam facebook/csrviet

Background priority Corporate social responsibility is receiving This initiative aims to establish a network of Civil growing interest. A number Society Organisations (CSOs) in Vietnam to be of initiatives were more committed to CSR in promoting human rights introduced in Vietnam at work, improving environmental practises and through multinational monitoring business obligations by active companies and their supply engagement of community. chain in their codes of Period: 2012-2013 conduct. Most of these CSR practices were initiated by the business sector and the Actitivities government, with support from international donors. A mapping study on civil Promoting CSR as a society involvement in CSR comprehensive approach, and its relationship with state especially monitoring and private sectors. corporate is Setting a new civil society still a fairly new territory for network on CSR of 10-15 NGOs in Vietnam, even for interested organizations. those engaged in a single theme of CSR such as labor Training needs assessment issues, environment, or and capacity building in CSR supporting small rural for the newly established enterprises. On the one network of CSOs and for hand CSR is a subject with universities. high potential and opportunities for NGOs to A resource group of experts explore and grow, while, on in Vietnam on the thematic the other hand, NGOs’ issues of human rights, engagement in CSR could environment and labor contribute effectively toward rights. sustainable development. Conduct 2 roundtable dialogues on CSR issues Objectives with relevant stakeholders To strengthen the (governmental authorities capacity of Vietnamese civil and companies). society organizations in addressing issues relevant Organize 2 workshops in to corporate social 2012 and 2013 dedicated to responsibility. these exchanges. To improve the visibility of network member’s A joint project of expertise and best practices for international donors, CEnTER FOR enterprises… DEVELOpMEnT AnD InTEgRATIOn To strengthen 64 rue Clisson 75013 Paris, France Tel 00 33 1 44 18 72 66 No.5, lane 535 Kim Ma, Ba Dinh www.batik-international.org Ha Noi, Viet Nam communication, to develop Tel: 84 4 35380100 partnerships between civil www.cdivietnam.org society organizations and other stakeholders involved With the financial support of in the field of corporate social responsibility: public authorities and enterprises.

14 SOCIAL ENTERPRISE:MODELS, PRACTICES AND TRENDS