about social enterprise cambodia

About Cambodia

The Kingdom of Cambodia is at the heart of Southeast Asia. Today, the population totals 15 million with 2 million living in its capital, Phnom Penh, once called the ‘Pearl of Asia’. Though the second poorest country in the region, Cambodia has one the globe’s highest economic growth rates at an average of 7% over the last decade.

About Cambodia

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Social Entrepreneurship

Though there is no one definition, most agree that social entrepreneurship takes the principles of entrepreneurship to find sustainable solutions to social or environmental problems. A social enterprise uses revenue-generating strategies to directly serve its goal to create social value.

Social Entrepreneurship

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We love the power of social entrepreneurship and we want to tell the world about the incredible work of social enterprises operating in Cambodia today. Our map brings to you some of the most exciting and innovative initiatives seeking to create sustainable change in Cambodia.


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Frequently asked questions

In one word, yes, but things are always a little more complicated. Social enterprises aim to be sustainable and one way of achieving financial sustainability is by spending less than they earn. This results in profits.
A business that makes profits will usually pay these as dividends to shareholders. Some believe that because social enterprises focus on social value, they must instead reinvest all their profits into the enterprise, allowing it to scale its impact. However, others take the view that that ability to pay dividends will help social enterprises attract top people and investors, which is beneficial to the enterprise. So this subject is up for debate!
Countries which legally identify social enterprises often put restrictions on how social enterprises may use their profits.

The dictionary definition of a social entrepreneur is ‘a person who establishes an enterprise with the aim of solving social problems effecting social change’. 

However, we feel this lacks passion, so let’s turn to Ashoka (the largest network of social entrepreneurs worldwide) who say that ‘social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change’.

Schwab Foundation say that ‘social entrepreneurs drive social innovation and transformation…they pursue poverty alleviation goals with entrepreneurial zeal, business methods and the courage to innovate and overcome traditional practices.’

Pamela Hartigan at the Skoll Centre for Social Entrepreneurship says that ‘social entrepreneurship is about disrupting the status quo in an effect to achieve transformational social change’.

These types of organisations can be seen on a spectrum, where their differences are identified by their purpose, which place varying emphasis on their social and economic value creation. An NGO's aim is to achieve social or environmental value, while the primary goal of a traditional business is to maximize shareholder value. A social enterprise seeks to achieve both social/environmental and economic value.

NGO's achieve their objectives by raising funding through donations. Businesses must sell goods and/or services to earn revenues and make profits. Social enterprises also aim to use market mechanisms to generate revenues, providing them with substainable economic value. However, some social enterprises also accept donations, in a 'hybrid' model of financial substainability.

This is difficult to answer simply because of the lack of formal definition of a ‘social enterprise’ and because of the innate complexity of models aiming to combine social and economic objective - categorising common models isn't easy!

It can be said that the business model for a social enterprise is the channel that the social entrepreneur uses to convert inputs into outcomes and the generation of both social value (measurable impact) and economic value (revenue).

Some suggest that social enterprises can be analyzed into the following broad models: 

1.Income generating models – Creates a fully or partially sustainable income stream to grow their social impact through sales. We’ll discuss this further. 

2.System change models – A phenomenon where individuals, organizations, policies and regulations come together to create a new way of doing things that is both feasible and sustainable. These do not rely on traditional business modelling.

Income-generating models usually take one of the three following forms:

1.Engage in a trading activity that has no direct social impact, make a profit, and then transfer some or all of that profit to another activity that does have direct social impact (the ‘profit generator model’)

2.Engage in a trading activity that does have direct social impact, but manage a trade-off between producing financial return and social impact (the ‘trade-off model’)

3. Engage in a trading activity that not only has direct social impact, but also generates a financial return in direct correlation to the social impact created (the ‘lock-step model’)

While these 3 models (and the interaction of for-profit and non-profit) represent the major divisions, within these there are a wide range of business models that create a lot of diversity in how impact is created and how financial sustainability is maintained.”

There are hundreds of things to think about and consider, but if you want to start your own social enterprise, our top tips for first steps are:

1. Be sure your solution actually meets the problem you want to solve. And be prepared to modify this idea.
2. Be sure you know your industry well and are clear that there is a market for your idea.
3. Surround yourself with people you trust, supportive mentors and team members that fill your knowledge gaps.
4. Set realistic expectations – be prepared to fail, maybe a lot! But have the drive and motivation to keep on going.
5. You are prepared to improve your financial literacy and develop your business understanding.

If you are happy with all these points, your next stop could be to take a look at the social business model canvas to help clarify and refine your ideas and check out Impact Hub Phnom Penh which has great resources for people passionate about having a positive impact!”

We should start with the initial intentions of a business. A business can be said to be socially responsible if it implements fair labour practices, environmental standards, ethical procurement guidelines and high standards in customer and supplier relationships.

It may also donate a portion of its profits to nonprofits and scholarships to individuals. However, a socially responsible business does not aim to create social change directly and therefore would likely not be defined as a social enterprise.

Similarly, although companies with CSR initiatives invest profits into the community, their core purpose is to generate wealth for their shareholders; community impact is not embedded into their primary goal nor do they create direct impact through their business products or processes. As such, they would not be defined as a social enterprise.

At present, no. An entity can be registered either as a company or as an NGO. There is no legal definition for a social enterprise.

The law stipulates that “charitable activities and charity-linked activities are tax-exempt”. In theory, an NGO can have commercial activities without paying taxes provided that these activities are directly linked with its mission (such as a restaurant focusing on F&B vocational training might be granted a tax-exempt status). The closer the activity is to the core mission of the NGO, the more likely it is to be tax-exempt. But this is only the theory. In practice, it depends on how the ministry officials of the tax department interpret this law.

Instead, social entrepreneurs have to decide whether to operate their enterprises as a company or as an NGO.


For the moment, the decision is yours!

The benefits of being registered as an NGO are clear:

  • If operating under an existing NGO there is no need to register a new entity - hassle free!
  • NGOs are tax-exempt. This means you could be 11% cheaper because you don’t have to pay Value Added Tax and Revenue tax.
  • There has been no precedent of an NGO facing legal problems for its unregulated business (to date!).

However, the drawbacks can be numerous:

  • Being unregistered (or registered as an NGO) may limit potential business partners because they may only work with with registered businesses.
  • It may limit your access to funding from organizations supporting the development of the private sector who will only find registered businesses (e.g the World Bank).
  • Permits are necessary to export on a large scale, so not being registered and having the proper export permits leaves you vulnerable to corruption.
  • It may cause accusations of unfair competition from registered businesses. Not being registered as a business (and therefore not paying taxes) could alienate parts of the business community and impact the reputation of the social enterprise sector.
  • A commercial structure is necessary for a social business to be able to distribute dividends. By not being registered, you limit the potential for social investors or other shareholders.
  • If the NGO is international, generating a revenue (even in a foreign country) may raise problems at home, be against the law regulating NGOs in its home country and/or raise complicated tax issues.

A complicated situation!

To find out more, Impact Hub Phnom Penh have developed a guidelines for NGOs seeking to transition to become social enterprises.

To be legally compliant, any business must be registered with the Ministry of Commerce (as having a commercial activity), with the Ministry of Finance (regarding the legal structure of the business for tax purposes) and with the Ministry of Labor. Registrations costs in the region of $2,000. There is also an obligation to register at the local level with the Sangkat/Khan where the business operates. The business might also need some extra licenses based on its activity and for VAT should activities exceed the VAT registration threshold.

The mostly widely used structure is the Limited Liability Company (Ltd) since this limits responsibility of the owner, is easy to start ($1,000 of capital and only Director) and sufficient for most businesses.

For the LLC, the most important consideration is Value Added Tax - since you can’t recoup much of it - which is 10% of turnover. Corporation Tax is payable – either 1% of turnover or 20% of profits - whichever is highest. Taxes are due on salaries which is taken from the employer. There are also some smaller fixed-sum taxes such as the patent tax (around $350/year). Strict accounting procedures need to be followed.

Impact Hub Phnom Penh have developed a guidelines on this subject - take a look here.

Various options are available and these are growing.

Investors include impact investors, venture philanthropists and angel investors. Banks loans are of course another possibility, plus loans/gifts from friends and families and the entrepreneur's own savings.

At the early stage of a new start-up, you will probably have better chances with donors (grants from foundations or instituions) and angel investors (wealthy individuals who are willing to take the risks associated with a new venture). 

Another option is to look for incubator programs: resources and expertise for startups to help you define your solution and pilot your product. Usually these programs charge a small interest or ask for equity. Check out Impact Hub Phnon Penh for more information.

When scaling up (growing) you will probably instead need to talk to impact investors. Impact investment is an “investment approach intentionally seeking to generate both financial return and positive social impact ”. Lately Cambodia has been receiving lots of attention by investors seeking for scalable business opportunities with a high social impact. Impact investors can provide support to your team in order to help you succeed. However, you should always be very aware of the terms of the investment and guard your independence.

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Become a part of our country-wide community of social enterprises, all in one, easily accessable online platform!

social enterprise cambodia
T: +855 (0) 15 674 048
E: phnompenh@impacthub.net

#17 Street 306, Between Street 51 and Norodom Boulevard, Boeung Keng Kang 1, Chamkarmorn, Phnom Penh, Kingdom of Cambodia


While working on a recent project for Tina Fountain REALTORS an Atlanta, Georgia real estate company we were required to present several page mock ups that needed lots of content, however, our writers were still weeks away from completion. We used ipsum-generator.com to fill in the blanks.


While working on a recent project for Tina Fountain REALTORS an Atlanta, Georgia real estate company we were required to present several page mock ups that needed lots of content, however, our writers were still weeks away from completion. We used ipsum-generator.com to fill in the blanks.


While working on a recent project for Tina Fountain REALTORS an Atlanta, Georgia real estate company we were required to present several page mock ups that needed lots of content, however, our writers were still weeks away from completion. We used ipsum-generator.com to fill in the blanks.