One major landmark for a social enterprise is the day it breaks even – achieving financial independence. However, not many social enterprises in Taiwan have reached the break-even stage. One social enterprise that has successfully gone beyond break-even is Aurora Social Enterprise. On October 25th and 26th, the Social Innovation Research Group (SIRG) visited Aurora Social Enterprise’s site in the Ali Mountain.
Aurora Social Enterprise is a Taiwanese social enterprise organized as a farmer’s cooperative. It is run by a social worker and a businessman – their dual perspectives have shaped both investment and programming in the enterprise. Aurora Social Enterprise was created because farmers living on Ali Mountain had a lot of challenges bringing their products to market – the mountainous roads make transportation difficult. Aurora Social Enterprise is a guaranteed buyer for farmers’ products, and pairs with Ma Na, a religiously rooted organization that helps farmers learn more about production techniques and management.
During the visit, we participated in coffee tree trimming, grass cutting, and ate delicious locally prepared delicacies. In the morning of the second day, we interviewed Mr. Wang, the chairman of Aurora Social Enterprise and Ms. Chen, the CEO. Here’s what they had to say:
What’s your definition of a social enterprise?
Mr. Wang: If you think of a spectrum, one side is not-for-profit organizations, the other is for-profit businesses. Social enterprises are anything in between. We describe it as ‘Socialism at heart and capitalism in mind’.
How did you start? From whom did you get the first funding?
Ms. Chen: We used our personal savings at the beginning. Later we found a good angel investor, who shared our vision. That person invested in us and now owns a part of the equity. He (the investor) would go around, ask our stakeholders what they think about the business, and he evaluates us that way.
How do you build trust in the community?
Ms. Chen: It took a long time to connect and convince the farmers. I have been working with indigenous people for about 10 years. I worked in social projects. But only women and children come. Men didn’t. I asked the men in the community why they chose not to come. They said they want economic projects. That’s why a social enterprise model works well in this community. I also think I need to get more people involved. It’s better for the house to be built by 100 people. To give you an example of our integration with the community, we funded the farmers’ children to go to Philippines to learn English. We believe that would help them improve their English skills and broaden their horizon.
What are some innovative practices you apply to the business?
Mr. Wang: We use our group power. Our farmers have formed a group to purchase inputs. We let our farmers learn from each other. They share lots of information together so that they can further innovate. We empower our farmers as if they’re running their own businesses. They learn during this process and run their own ventures. Our hope is to have every farmer think of himself or herself as a business owner. We build trust within the group by organizing the farmers to go to the field and work collectively once or twice a month. We also grant small amounts of microloans to our farmers. Currently, microfinance is not legal in Taiwan, only the banks can make loans. We got around this rule by only allowing our members to be borrowers. Our farmers have to fill out application forms explaining exactly how he/she would spend the money. Our payment schedule can be quite flexible. We know exactly when a farmer harvests his produce as well as his personal character, which big banks won’t know.
What are some of the major barriers/obstacles you’ve faced?
Ms. Chen: Back in 2009, we’ve signed a contract with a counterparty. The party breached the contract and left us. On the other hand, “88 Wind/Water Disaster” destroyed most land and properties in the area we were about to farm. So we would not have been able to fulfill the contract even if the other party didn’t cancel the contract. We were grateful that the farmers wanted to continue working with us. That was also the time we started an internal “microfinance” program.
Do you have any major competitor?
Mr. Wang: The agricultural sector is facing some big issues in Taiwan. There are many social enterprises focusing on agriculture here, but quite a lot of them only focus on social marketing. Many companies want to come in and copy Aurora Social Enterprise’s model, but it is very difficult to execute. For example, not many people have the persistence to travel every week here to the Ali Mountain for years.
How do you allocate profits?
Mr. Wang: We use our profits mainly on expanding the business instead of dividing the fund. Our shareholder didn’t demand dividend. He is quite affluent and invests in other social enterprise as well. We also contribute 3 percent of our revenue to Ma Na, our partnering NPO.
What’s your scaling strategy? Have you faced challenges with scaling?
Mr. Wang: We try to find local connections, someone we can trust and build the relationships. For example, our partnering NPO Ma Na started in 1996 and is now already connected with many groups across Taiwan. We designed the model from the beginning to be a twin social enterprise and NPO. The major concern with scale is there aren’t enough workers for us. And we have to spend time building the whole value chain. Our next step is to build a store in Fujen University to sell our products as well as products from other social enterprises. We would also like to educate more students about social enterprises.
Does being a social enterprise influence your customers?
Mr. Wang: We have two types of customers. One type deals with us because our product quality is good. The other deals with us because we are a social enterprise. But actually very few fall into the latter, because we mainly sell our products to wholesalers.
How do you measure impact?
Ms. Chen: We have our measurement matrices. We track how many people we have, their income for the year, their children, their land, and the amount they loan from us (if they do). We will compare different farmers, analyze their performance and communicate that to them. All data is open to all farmers in the group.
The interview first appeared in the SIRG November newsletter and has been edited and translated from Chinese.
Prior to working at SIRG, Wendy visited Taiwan as part of a student delegation hosted by the government of Taiwan in 2009. She was selected as a finalist to present a business plan to venture capitalist in Hong Kong Poly U Entrepreneurship Challenge. After graduation, Wendy worked as a business analyst for a large company, and later for a private-equity funded start-up in the U.S. She volunteers for SCORE – “advisor for America’s small business” and is one of the youngest financial instructors for underprivileged women in Houston.
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