Right now I am taking a class about microfinance. The class is structured so that the students are raising money and using it to distribute loans to entrepreneurial men and women in developing countries. The model that we are following mimics that of Grameen Bank founded by Muhammad Yunus. Often Yunus is used in a tokenism approach to business classes when briefly discussing Corporate Social Responsibility (CSR) and how you can operate businesses ethically, i.e., Grameen Bank. But, until last month I didn’t know much about the other work Yunus did.
As I am reading two books published by the 2006 recipient of the Nobel Peace Prize, I am left thinking about this concept of social enterprises and how it fits into the business world. As we have seen for years, handouts do not make men and women in developing countries freer. In fact, it creates a cycle of dependence. This is why the non-profit model of “adopting a child” for a certain amount of money each month I believe is outdated and instills a savior complex. SO if you haven’t noticed yet, I am spending 2019 recognizing my privilege and thinking about SOLUTIONS for the fashion world. I certainly don’t have the answers on either front, but I am sick of hating an industry I once loved. And at the very least I want to create a dialogue on tricky conversations and complex solutions.
So what is a social enterprise
Social enterprises are the middle ground between a charity and a “sustainable company.” Unfortunately, there is no concrete definition. However, I found one that the UK government created that might shed some light on the industry.
“Businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.”From “How To Create A Business That Does Good With A Social Enterprise“, Forbes
Instead of giving your charity dollars to an organization the argument is to give them instead to a social enterprise. This social enterprise could be a microfinance bank or an ethical fashion company. You are investing in growing that typically for-profit company. But instead of thinking about it as for-profit where the bottom line is for $$$ think of it as for-people and profit, there is intention and ethics behind the profit model.
An extreme example- for those of us that have a little more money to spend, instead of donating millions to a charity to see your name on some papers, invest the money into a social enterprise. The craziest thing is investors will see their money return and maybe even see a profit by creating a sustainable, ethical and profitable business.
So how is it moral to donate money and then end up receiving a profit?
This was one question I was left with after learning about social enterprises. But after some research and reflection, I have decided that my concern is based on societies views of morality and charity. We need to start shifting our mindsets about what it means to donate money. If you invest in a social enterprise, you are not doing so solely to make a profit, but you see the importance of investing in sustainable solutions to eradicate poverty. Social enterprises are cyclical. Spent money keeps getting reinvested into helping those in poverty receive healthcare, loans, jobs, etc. to help them help themselves.
How does this relate to ethical fashion?
Wow, great question! So happy you asked. The thing that interests me about social enterprises is that it is finally defining a concept that I have been trying to put my finger on for years now. So often I am frustrated with people around me mindlessly donating their money to charities. While their intentions are poor so often the impact after all of the overhead costs is insignificance. Yet, people can’t fathom buying ethical clothing that is on the expensive side and instead continues to buy fast fashion. For me, any money you have just invested in a charity promising to help children in a developing country has been completely thrown away when you buy clothes made from exploited labor.
Social businesses are the future of fashion because people want to do the right thing. People want to give back and create solutions, now more than ever. People don’t know how to go about that. I think the industry needs to generate some solid marketing campaigns, educate some consumers and change the way we view giving back. Instead of donating being a distant concept of just sending away your money and never seeing it again. Investing in social enterprises supports economies, ensures you get quality products, and creates long-term ethical solutions for employment.
If you can’t be a grant maker for a social enterprise at least be a consumer investing in the future.