Though they might not realize it, social entrepreneurs contribute to economic resilience

A survey by Cornerstone Economics reveals the state of social entrepreneurship in Aruba



 

What is a social enterprise and why does it matter?


Imagine organizations that have as their primary purpose to solve social problems. For example, businesses that aim to maximize benefits to society and the environment apart from maximizing profit. It turns out that 18% of institutions on Aruba are social enterprises. These are generally small organizations with a staff between 1 and 10 employees.


Officially social enterprises can be defined as “organizations that try to solve a social problem through the methods and tools of commercial companies, including both those organizations of the social economy - foundations, companies, special employment centers, and cooperatives - and those that operate within the legal framework and tax of commercial companies but whose main mission is to achieve a positive social impact”.


This is especially important in the face of crisis, as was experienced during the COVID-19 pandemic. When tourism grinds to a halt, the economy contracts, unemployment surges, it is important to go back once again to the principle of entrepreneurship. As a mean to survive, necessity-based entrepreneurship pushes individuals and businesses into a form of innovation that allows them to create gain in order to support their livelihood. A sense of community should also be at the forefront of entrepreneurs’ mind, as it is not only enough to create gain for oneself, but the assistance for the wider community should also be provided. Hence, social entrepreneurship might be key in combating the impact of this economic crisis.


Figure 1: Organizations that supplied help to overcome the COVID-19 crisis


While social enterprises represent only about 18% of organizations in Aruba, they were more likely to offer support to overcome the COVID-19 crisis, compared to commercial businesses (Figure 1).


How aware are businesses and institutions about social entrepreneurship?


92% of organizations are not aware of the existence of social enterprises in Aruba (Figure 2). This suggest at the very least that there is a lot of space to highlight those activities that solve social problems.


More than ever, customers have concerns about sustainability, international development, and social justice. They also have an awareness of company practices, values, and actions, and are putting their money where their beliefs are.


Good reason for organizations in Aruba to weave their efforts into their brand narrative, in a way that lets customers know their values and passion.


Figure 2: Awareness of the existence of social enterprises in Aruba



What does the social entrepreneurial ecosystem need to thrive?


Focusing on social objectives next to profit maximization unfortunately also brings with it greater challenges. Social entrepreneurs experience tight cashflow, adverse economic climate and great time pressure (Figure 3).


Figure 3: Top barriers social enterprises experience


This requires a good enabling environment to ensure the passion that drives these initiatives can lead to sustainable success.

- 77% of participants believe it would be of value to have a specific Social Enterprise (SE) legal status in Aruba.

- Access to business support and consultancy would to some extent alleviate 63% of social enterprises.

- 84% of social enterprises currently do not measure their social/environmental impact, a necessity to highlight how they are solving community problems.


More information on the state of Aruba’s social entrepreneurship 2021-2022 assessment results can be found in the report by Cornerstone Economics: