In a world where profit often trumps purpose, how do social enterprises thrive—much less survive? This was the central question I raised during my talk at the 2025 National Social Enterprise Conference (NSEC) breakout session on Financing and Resource Mobilization for Social Enterprises.
Despite the noble intentions behind the concept of impact investing, the practice reveals stark contradictions. According to the Global Impact Investing Network (GIIN), this type of investment supposedly seeks social, environmental, and financial returns. Yet, the reality is clear: the overwhelming majority of impact investors aim for risk-adjusted market rate returns. In 2024, 74% of these investors had such targets. Only a small fraction aim for below-market returns or capital preservation.
So, if there is truly $1.6 trillion circulating in impact investments globally, why is the grassroots sector—where real impact is needed—barely feeling its presence?
A System that Favors the Wealthy
Unfortunately, many so-called social investors and ESG (Environmental, Social, and Governance) advocates prioritize appearance over actual impact. ESG, in particular, has become more of a marketing tool—often used for greenwashing. From Volkswagen’s diesel emissions cheating scandal to companies like Credit Suisse and even local players in the health sector, we see how good ESG scores can mask deeply unethical practices.
Meanwhile, genuine social enterprises—working directly with marginalized sectors—are often overlooked, disqualified from support simply for being “too small.” Investors frequently set a minimum ticket size of $500,000 USD, a figure unreachable for most social enterprises in the Philippines.
Our Story: The SEDPI Journey
Founded in 2004 with only ₱20,000 in seed capital, SEDPI has evolved through multiple phases over its 21-year history. We professionalized early to build investor trust and reinvested our own earnings to grow. With early support from Cordaid, a Dutch NGO, we expanded our assets significantly—reaching ₱29 million in six years, then climbing to ₱146 million by 2017 through bank financing.
But that growth came at a heavy cost.
When we lost ₱12 million due to a microfinance client, the banks that had lent to us didn’t share in the loss. That’s when I realized—we were being used as a buffer to mitigate their risk. Despite our social mission, we were treated like any profit-driven borrower. This misalignment exposed how exploitative the system could be, especially for mission-oriented institutions like ours.
From Debt-Driven to Equity-Led, People-Centered Growth
In response, we shifted from debt-based growth to equity-led expansion and reoriented our focus away from institutional lending toward nanoenterprise development. We paid off most of our bank debt, wound down our wholesale operations, and endured a decline in assets—from ₱334 million to ₱194 million.
Then the pandemic hit. We lost ₱17 million—but unlike banks, we chose not to charge interest to our clients during this time. While other institutions suspended collections only to later resume them with accrued interest, we wrote it off entirely.
Why? Because we refuse to profit from people’s misery.
Yet again, we were punished by the system: downgraded credit lines, higher interest rates, and demands for collateral—even though we ourselves lend to those without any.
Our Alternative: Social Investments and Partnership-Based Models
We turned instead to social investments from everyday Filipinos: OFWs, retirees, and micro-investors who believed in our mission. Through my financial literacy work and online presence, we built a following that now actively participates in funding our community initiatives.
We don’t treat these investments as loans. Our model is not creditor-debtor, but rather partnership-based. Investors and microentrepreneurs share both the risks and rewards. We sign joint venture agreements instead of loan contracts, promoting a culture of empowerment rather than dependence.
This shift enabled us to grow again—our assets have now returned to ₱310 million.
Savings Over Debt: Empowering the Nanoenterprise Sector
At the heart of our strategy is financial education. Unlike most microfinance institutions that aim to grow their loan portfolios, we aim to reduce loan dependency. We teach our members to save consistently. With every cycle, their loan amount decreases while their savings grow.
Take Maricel, for example—a sari-sari store owner who used to borrow ₱150,000. By emphasizing her repayments to include increasing savings, she halved her loan and invested in a fishpond, diversifying her income.
Our approach empowers clients like Maricel to transition from being dependent borrowers to thriving entrepreneurs.
Scaling the Movement
We’ve serve 20,000 nanoenterprise households across 17 branches in Mindanao—and we’re opening our 18th branch this May 2025. We’ve built disaster-resilient homes and integrated social protection systems, such as enrollment in government social insurance programs—SSS, Pag-IBIG and PhilHealth; and our damayan program.
Our damayan program, a mutual aid system provided ₱11 million in benefits last year alone. All these efforts form part of our broader goal: building in-city, inclusive, and community-rooted development for nanoenterprises, which make up the majority of Filipino businesses.
Decolonizing Finance: A Filipino Model
SEDPI promotes a uniquely Filipino approach to finance—rooted in our cultural heritage. We reject the extractive view of finance and champion:
- People-first over profit
- Damayan (mutual aid)
- Profit-and-loss sharing partnerships
- Compassionate, ethical fee structures
Wwe now refer to delayed payers not as “delinquent” clients or members but as “recurrently recovering disaster-vulnerable clients.” Besides, the main reason for delayed payments are disasters, sickness and death that are caused mainly by the climate crisis and structural injustice.
Building What the System Ignores
While the promises of global impact investing remain largely unfulfilled for grassroots social enterprises, we choose to act. We mobilize resources from within, guided by a deep commitment to community, justice, and financial dignity.
If the system won’t serve us, we will build a new one—together.
Join the Movement
Be a KaSosyo. Help fund change. Let’s empower one another—people to people, not profit over people.
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