SINGAPORE: Funding and awareness were the two main problems raised by social enterprises in Singapore at the Impact Forum on Friday.
The conference focused on turning capital markets into forces for social good.
Experts said a social stock exchange could help these socially-conscious but commercially-run businesses kill two birds with one stone.
There are roughly 200 social enterprises in Singapore, according to the Social Enterprise Association.
The funding model for most of them is like a “sandwich”, where one has money coming from the top – the government and big organisations – and money coming from the bottom, referring to friends and family.
It is the “meat” that needs some beefing up.
Ben Pwee of the Pwee Foundation, said: “There needs to be a lot more players from civic society that would be willing to step up and resource some of these good ideas, help them with their business models, their finance proposals, so that it is robust enough for them to go from prototype, to pilot, to scale. I think that is one of the biggest challenges in that space.”
Some said that a social stock exchange could also help close the gap.
It is a model used in Mauritius, where the social stock exchange – known as the Development & Enterprise Market – has a market capitalisation of US$1.5 billion and 53 listed companies, according to the Stock Exchange of Mauritius’ head of listing, Shamin A Sookia.
The listed social enterprises must have at least 100 shareholders, a track record of at least a year and a market cap of US$700,000.
“But for the social enterprise, in addition to meeting these entry requirements, the social entity has to prove that it has an impact flavour. It has to meet certain impact requirements, meeting social needs,” said Mr Sookia.
Singapore-based Impact Investment Exchange Asia (IIX Asia) is working with the Mauritius exchange to take it global, with active trading happening within the next year.
But even with more funding options, social enterprises in Singapore face other issues.
A Social Enterprise Association survey out this week showed that just a third of the 155 businesses polled are aware of social enterprises, and only 14 per cent could actually name one.
Sixty-six per cent of respondents said they were not prepared to buy from social enterprises yet. Among the 155 respondents, 13 per cent were buyers of social enterprise products and services and 21 per cent were ready to buy from social enterprises.
The Corporate Perception Survey on Social Enterprises was conducted by final year students of NUS Business School on behalf of the Social Enterprise Association.
Telephone interviews were conducted with 155 companies that were randomly selected from the directory of the Singapore 1000 and Singapore SME 1000 from December 2012 to March 2013.
Robert Kraybill, managing director of IIX Asia, said: “Part of our role is to advocate for social enterprises and change those perceptions, to really build this efficacy and this awareness so the average investor, in two years’ time, does know what a social enterprise is and does understand impact-investing.”
And once the public understands both the benefits and risks involved, the funds could follow.
In the meantime, social enterprises continue to turn to big businesses to get financing and help raise awareness.
DBS Bank already offers free banking services and low-interest loans to qualified social enterprises.
DBS CEO Piyush Gupta said DBS has already provided around 30 enterprises with seed money and that more than 100 social enterprises have registered with the bank.
“The notion that people and investors will put money to work in enterprises that have a social agenda and impact, that number is going to grow exponentially,” said Mr Piyush.
Source: Channel News Asia