{"id":57384,"date":"2025-04-30T22:11:30","date_gmt":"2025-04-30T14:11:30","guid":{"rendered":"https:\/\/sedpi.com\/en\/?p=57384"},"modified":"2025-08-17T19:38:08","modified_gmt":"2025-08-17T11:38:08","slug":"rethinking-impact-how-sedpi-is-decolonizing-finance-and-mobilizing-social-investments-in-the-philippines","status":"publish","type":"post","link":"https:\/\/sedpi.com\/en\/rethinking-impact-how-sedpi-is-decolonizing-finance-and-mobilizing-social-investments-in-the-philippines\/","title":{"rendered":"Rethinking Impact: How SEDPI is Decolonizing Finance and Mobilizing Social Investments in the Philippines"},"content":{"rendered":"\n
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In a world where profit often trumps purpose, how do social enterprises thrive\u2014much 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<\/strong>.<\/p>\n\n\n\n

Despite the noble intentions behind the concept of impact investing<\/em>, 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<\/em>. In 2024, 74% of these investors had such targets. Only a small fraction aim for below-market returns or capital preservation.<\/p>\n\n\n\n

So, if there is truly $1.6 trillion circulating in impact investments globally, why is the grassroots sector\u2014where real impact is needed\u2014barely feeling its presence?<\/p>\n\n\n\n

A System that Favors the Wealthy<\/strong><\/p>\n\n\n\n

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\u2014often 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.<\/p>\n\n\n\n

Meanwhile, genuine social enterprises\u2014working directly with marginalized sectors\u2014are often overlooked, disqualified from support simply for being \u201ctoo small.\u201d Investors frequently set a minimum ticket size of $500,000 USD, a figure unreachable for most social enterprises in the Philippines.<\/p>\n\n\n\n

Our Story: The SEDPI Journey<\/strong><\/p>\n\n\n\n

Founded in 2004 with only \u20b120,000 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\u2014reaching \u20b129 million in six years, then climbing to \u20b1146 million by 2017 through bank financing.<\/p>\n\n\n\n

But that growth came at a heavy cost.<\/p>\n\n\n\n

When we lost \u20b112 million due to a microfinance client, the banks that had lent to us didn\u2019t share in the loss. That\u2019s when I realized\u2014we were being used as a buffer to mitigate their<\/em> 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.<\/p>\n\n\n\n

From Debt-Driven to Equity-Led, People-Centered Growth<\/strong><\/p>\n\n\n\n

In response, we shifted from debt-based growth to equity-led expansion and reoriented our focus away from institutional lending toward nanoenterprise<\/em> development. We paid off most of our bank debt, wound down our wholesale operations, and endured a decline in assets\u2014from \u20b1334 million to \u20b1194 million.<\/p>\n\n\n\n

Then the pandemic hit. We lost \u20b117 million\u2014but 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.<\/p>\n\n\n\n

Why? Because we refuse to profit from people\u2019s misery.<\/p>\n\n\n\n

Yet again, we were punished by the system: downgraded credit lines, higher interest rates, and demands for collateral\u2014even though we ourselves lend to those without any.<\/p>\n\n\n\n

Our Alternative: Social Investments and Partnership-Based Models<\/strong><\/p>\n\n\n\n

We turned instead to social investments<\/em> 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.<\/p>\n\n\n\n

We don\u2019t treat these investments as loans. Our model is not creditor-debtor, but rather partnership-based<\/em>. 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.<\/p>\n\n\n\n

This shift enabled us to grow again\u2014our assets have now returned to \u20b1310 million.<\/p>\n\n\n\n

Savings Over Debt: Empowering the Nanoenterprise Sector<\/strong><\/p>\n\n\n\n

At the heart of our strategy is financial education. Unlike most microfinance institutions that aim to grow their loan portfolios, we aim to reduce<\/em> loan dependency. We teach our members to save consistently. With every cycle, their loan amount decreases while their savings grow.<\/p>\n\n\n\n

Take Maricel, for example\u2014a sari-sari store owner who used to borrow \u20b1150,000. By emphasizing her repayments to include increasing savings, she halved her loan and invested in a fishpond, diversifying her income.<\/p>\n\n\n\n

Our approach empowers clients like Maricel to transition from being dependent borrowers to thriving entrepreneurs.<\/p>\n\n\n\n

Scaling the Movement<\/strong><\/p>\n\n\n\n

We\u2019ve serve 20,000 nanoenterprise households across 17 branches in Mindanao\u2014and we\u2019re opening our 18th branch this May 2025. We\u2019ve built disaster-resilient homes and integrated social protection systems, such as enrollment in government social insurance programs\u2014SSS, Pag-IBIG and PhilHealth; and our damayan program. <\/p>\n\n\n\n

Our damayan program, a mutual aid system provided \u20b111 million in benefits last year alone. All these efforts form part of our broader goal: building in-city, inclusive, and community-rooted development<\/em> for nanoenterprises, which make up the majority of Filipino businesses.<\/p>\n\n\n\n

Decolonizing Finance: A Filipino Model<\/strong><\/p>\n\n\n\n

SEDPI promotes a uniquely Filipino approach to finance\u2014rooted in our cultural heritage. We reject the extractive view of finance and champion:<\/p>\n\n\n\n