Social Enterprise Is Not Welfare

Vajantha from Nirman

I’ve been visitor to slums before – or rather “squatter camps” as the shanty towns in my native South Africa are know. But I was not prepared for today’s visit to Dharavi, Mumbai’s renowned slum area where some say up to 1.2 million people live. Perhaps I was surprised for some unexpected reasons… I’m not shocked by the conditions people have to live under here. I’m rather impressed with the well organised structures and pockets of clean environment compared to the general level of pollution. And then, the surprise when we see the economic activity of small “sweat shops” where migrant workers produce products for local use (such as various foods for daily sale) and as part of a sophisticate supply chain (including as the hidden suppliers to contractors supplying to international brands). Within hot, confined spaces young people work and live. Apparently they work seven days a week for at least 10 hours a day and, of course, for a pittance. I’m really surprised by the level of economic activity and the conditions locals are prepared to work under. This is not what would happen in a slum area in South Africa!

We are hosted by a local NPO called Mirman. They support migrant workers through programmes focussing on safety in the workplace, skills development, health, personal finance and setting up cooperatives in the construction industry.

Vajanntha, Nirman’s Director explains their work and approach. They operate as a trust, with funded programmes each under the control of a manager. “Becoming more self-sufficient is a major issue,” she says. While Nirman is able to collect some money when delivering programmes (such as charging for the condoms they distribute), they find it impossible to generate funds for operations and staffing. And there are no real opportunities for them to create other revenue streams.

As a not-for profit society, Nirman is involved in addressing the conditions of the most vulnerable people. They are offering “welfare services” where it is difficult, if not impossible, to generate funds as part of their own operations. They are essentially a welfare society, not a social enterprise; and they are likely to remain dependent on grants and donations for all their work.

Interestingly, the Indian government is in the process is finalising legislation that will compel companies to contribute 2% of their after tax profits to social purpose organisations as part of their corporate social responsibility. For welfare organisations such as Nriman, this may become the space where they will have to compete for funds with other NPOs in the welfare field. It may very well become a predictable source of income, which could sustain their operations into the future – but as a welfare organisation, not a social enterprise.