Social enterprises have become crucial in tackling poverty, health, education, and environmental sustainability in Bangladesh. In every society, social business organizations, non-government organizations (NGOs), and various social development initiatives play an essential role in providing services where the market and government have failed to allocate resources efficiently. However, the growing concerns about their commercialization and shifting priorities cannot be ignored. Are the social enterprises genuinely dedicated to their social missions, or are they becoming profit-driven businesses in disguise?
Bangladesh, home to one of the world's largest social enterprise sectors, has witnessed rapid growth in this area over the last few decades. Organizations like Grameen Bank, BRAC, and ASA have pioneered models that blend business and social missions, delivering services to the underserved where government and market systems have failed. Thousands of social enterprises have had a particular impact on poverty alleviation, microfinance, education, the environment, refugee issues, and healthcare.
The rationale behind social enterprises is rooted in market failure and government inefficiency. Services like relief and rehabilitation, education for the marginalized, health facilities for the poor etc. remain unprofitable for conventional business enterprises. Moreover, the state often lacks the capacity to meet the market demand for such public goods. Social enterprises fill these gaps by offering affordable, accessible services that improve lives and create jobs, all while achieving sustainable growth. For instance, Grameen Bank's microfinance program has helped lift millions out of poverty by providing small loans to women without collateral. Similarly, BRAC has established an extensive network for delivering healthcare and education to remote areas. By focusing on social returns, these enterprises align business objectives with the betterment of society.
The existence of social enterprises is not limited to developing nations like Bangladesh. In developed economies such as the United States, Canada, and the UK, such enterprises play a significant role, contributing approximately 6-8% to Gross Domestic Product (GDP). For instance, in Canada, nonprofit social enterprises account for 6.8% of GDP, acknowledging the significant economic role of social ventures. Moreover, developed countries allow these organizations to operate under strict regulations prohibiting profit distribution to private individuals or stakeholders. Likewise, in Bangladesh, the formation of foundations and trusts does not allow entrepreneurs to distribute profits; rather, they are paid the market wage for their regular services.
In Bangladesh, the growing commercialization of social enterprises has intensified concerns about accountability and regulation. While large social enterprises contribute significantly to Bangladesh's economy, their governance structures often lack the checks and balances to ensure full accountability to their communities. The government's NGO Affairs Bureau (NGOAB) monitors some social enterprises, but the lack of strict enforcement mechanisms and clear regulatory frameworks allows for inefficiencies to persist.
Comparing Bangladesh's regulatory environment with that of developed countries like the USA and UK, where social enterprises are strictly regulated, reveals a stark contrast. In these countries, laws ensure that social enterprises are mission-driven, with strict requirements for financial transparency and governance. Given Bangladesh's new political context in 2025, the importance of social enterprises in providing public goods can be enhanced by a more formal, streamlined institutional framework.
Although some social enterprises do profit-making business, the challenge lies in creating a system that enables them to thrive without compromising their social objectives. Financial sustainability is critical for scaling operations, but it should not come at the cost of social impact. Social enterprises' primary role is to address societal issues-whether in education, healthcare, or economic empowerment-and profit-making should be only a means to those ends.
A hybrid financing model is essential to ensure the long-term success of social enterprises. This model includes social impact investment alongside traditional revenue generation, ensuring that both financial and social objectives are achieved. Strengthening the regulatory framework and enhancing the governance structures of social enterprises will also help safeguard these organizations' mission-driven focus.
The writer is an Associate Professor of the Bangladesh Institute of Governance and Management (BIGM)
