A Job for Social Enterprise? Poverty and Education in the Philippines

By Cynthia Kao

Completing the mandatory ten years of education is out of reach for many of the Philippines’ 34 million children aged fourteen and under. Poverty, limited government capacity, and rampant corruption all exacerbate the situation, resulting in roughly a quarter of Philippine children failing to complete primary school. Between school fees and the often-critical role children play in contributing to household income, education can seem as a risky financial investment for many families. If access to primary and subsequent levels of education are to improve while the country waits for government action, poverty alleviation is the area ripest for intervention. Social enterprises (SEs) stand ready to help. They have been an active force in the Philippines for some time, with a promising record of successes and room for growth.

The Social Enterprise Alliance defines an SE as an organization that uses the methods and disciplines of business and the power of the marketplace to advance social, environmental, and similar agendas. SEs can be for-profit or non-profit. They are a budding and rapidly growing sector in the Philippines and have demonstrated success in poverty reduction and education promotion across the country.

With Philippine poverty rates at roughly 25%, the burden of paying for education and the need for children to work are among the greatest obstacles to school attendance. Though public education is technically free, miscellaneous expenses, such as school supplies and uniform fees, typically fall to the family to compensate for shortfalls in school funding. Where nearly 20% of the population lives on less than $1.25 a day, parting with just a few dollars in registration fees is a major strain. As a result, students lag behind in completing grades on time, and struggle to complete the mandatory 10 years of education. Only slightly more than two-thirds of those aged 20-24 have completed high school.

Philippine SEs have already stepped up in this regard, perhaps most famously through microfinance, the practice of providing small loans and banking services to lower income individuals and groups who otherwise would not have access to such financial instruments. Microloans often require recipients to establish financial plans for a loan’s use and repayment, and are commonly issued to groups for shared accountability. Ideally, such practices encourage a cycle of investment and loan repayment. Microfinance companies often provide capital or facilitate access to resources, such as healthcare and educational assistance, as well.

The Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI) is one such Philippine SE. It provides financial opportunities to economically depressed communities, as well as educational loans and academic scholarships. Over 46,000 elementary-aged children received education loans from CARD MRI and its corporate sponsors through its ongoingZero Dropout Program, which launched in 2011. As is the case with microfinance groups elsewhere, alleviating family poverty is not the only issue addressed. Rather, many groups have taken on a more holistic approach, enhancing access to such services as healthcare and education, two areas that are effective in breaking the cycle of generational poverty.

Galwad Kalinga (GK) is another SE working in this area. GK aims to lift the poorest members of society, often those living in slum communities, out of poverty by creating stable, middle-class communities. Unlike the private company CARD MRI, GK is a nonprofit that invests donor money in the poor by using an approach that seeks to build a sense of confidence and empowerment among its recipients while working to decrease vulnerabilities in health, food security, and education. Access to housing and new avenues for income generation through GK services help recipients develop the self-confidence and skills necessary to connect with the greater economy. While recipients are not required to repay the houses, there are requirements to pay back certain GK loans (such as the purchased land through small, long-term payments,) to promote responsibility, sustainability, and the assumption of leadership roles in their communities. In addition to health services, GK offers its own educational programs to students aged 3-21 who gain exposure to values such as integrity and community stewardship, as well as training in employable skills. Such education is precisely the type that low household income and distance often prevent children from accessing.

These are just two examples of successful, large-scale Philippine SEs.  Many others are at work on a variety of poverty alleviation schemes, including ecotourism promotion, the online sale of fairtrade products, and efforts to connect local handcrafts with higher end markets.

Seeing SEs tackle both poverty and access to education, which often go hand-in-hand, is encouraging. Purposeful SE outreach to impoverished populations has provided families with new economic opportunities and has given many children the opportunity to attend school. While governmental action is underway to strengthen education systems, corruption and underfunding in the Philippine Department of Education have created serious obstacles to implementing reforms. Addressing such institutional weakness is of course necessary, but in the meantime, poverty reduction and access to economic resources is the most promising step. Social enterprise has already made considerable gains in this regard, and its continued involvement presents an exciting opportunity to breathe new life into the Philippine education system.

The success that SEs have achieved in the Philippines demonstrates the potential that SEs have in supporting education, providing a template for SE activity that can be carefully tailored for use around the world.

Cynthia Kao is the Sustainable Development Fellow for Young Professionals in Foreign Policy. In conjunction with the programming team, she is responsible for the development and implementation of the Sustainable Development module, and is also a contributing writer to YPFP.  She holds a Master’s degree in International Development from Josef Korbel School of International Studies and currently works in Washington, DC.