Poverty Reduction Through Social Entrepreneurship (Present) Act

Senate Office of tie Coccretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES NOV 17 P3:39 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1531 Introduced by Senator JOEL VILLANUEVA AN ACT PROMOTING SOCIAL ENTERPRISES TO ALLEVIATE POVERTY, ESTABLISHING FOR THE PURPOSE THE POVERTY REDUCTION THROUGH SOCIAL ENTREPRENEURSHIP (PRESENT) PROGRAM, PROVIDING FUNDS THEREFOR EXPLANATORY NOTE Social enterprises are mission-driven businesses uniquely structured to address social and environmental challenges while generating profits to support their operations. In the Philippines, they are distinguished by their poor-centric and inclusive business models. According to a study, an estimated 164,473 social enterprises operate in the country, making up 17% of all registered companies. 1 Most of these enterprises are concentrated in Luzon, particularly in Metro Manila, while Visayas and Mindanao, regions with higher poverty rates, remain underserved. Social enterprises integrate marginalized groups, such as smallholder farmers, women, youth, and indigenous peoples, as core stakeholders in their operations. Many are product-focused and operate in sectors like agriculture, retail, vocational training, and microfinance. This focus positions them as essential actors in addressing rural poverty and generating livelihoods in disadvantaged communities. Despite their promise and increasing prevalence, social enterprises continue to face persistent challenges. Access to capital remains a significant barrier, as most rely on personal funds or external grants and struggle to secure investment from 1 Foundation for a Sustainable Society, Inc. Social Enterprise Landscape in the Philippines, Published in March 2025. Available at https://fssi.com.ph/wp-content/uploads/2025/03/FSSI_Social- Enterprise-Landscape-in-the-Philippines_March2025.pdf (Accessed on 21 July 2025). Ibid. Ibid.

commercial banks. Other operational challenges such as bureaucratic red tape, poor market access, and weak infrastructure further hinder their growth and sustainability. 4 Although various government programs intended for micro, small, and medium enterprises (MSMEs) provide some benefits to social enterprises, these initiatives are not specifically tailored to their unique needs. Some government agencies offer financing and capacity-building programs, but coordination remains fragmented and the impact uneven. Hence, this bill seeks to establish the Poverty Reduction Through Social Entrepreneurship (PRESENT) Program, which provides a comprehensive framework to support and scale social enterprises in the country, and recognize them as key partners in poverty alleviation. It promotes inclusive value chains that engage the poor, marginalized, and basic sectors as active economic participants, enabling dignified work, income generation, and equitable wealth distribution for inclusive, sustainable growth. This bill also establishes structural support for the sector through the creation of the Center for Social Enterprise Development and the transformation of the Micro, Small and Medium Enterprise Development (MSMED) Council into the National Enterprise Development Council. These bodies will coordinate development plans, offer financial and technical support, and align national programs to foster enterprise growth. It also creates a Social Enterprise Development Fund for value chain financing and enterprise development services. Furthermore, the bill mandates special credit windows, tailored insurance products, and government procurement quotas to support the financial and operational resilience of social enterprises. Ultimately, this bill represents a significant step towards addressing the structural causes of poverty in the Philippines. By recognizing and supporting social enterprises as key development actors, this measure aims to offer a new paradigm for economic growth, one that is inclusive, sustainable, and anchored in the empowerment of the marginalized. Thus, the immediate passage of this bill is earnestly sought. JOEL VILLANUEVA Q Ibid.

Senate Office of the Sriretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 NOV 17 P3:39 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1531 Introduced by Senator JOEL VILLANUEVA AN ACT PROMOTING SOCIAL ENTERPRISES TO ALLEVIATE POVERTY, ESTABLISHING FOR THE PURPOSE THE POVERTY REDUCTION THROUGH SOCIAL ENTREPRENEURSHIP (PRESENT) PROGRAM, PROVIDING FUNDS THEREFOR Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I GENERAL PROVISIONS

SECTION. 1. Short Title. - This Act shall be known as the "Poverty Reduction

Through Social Entrepreneurship (PRESENT) Act."

SEC. 2. Declaration of Policy. - The State shall promote a just and dynamic

social order that will ensure the prosperity and independence of the nation and free 7 the people from poverty through policies that provide adequate social services and promote full employment, a rising standard of living, and an improved quality of life for all. The State shall provide social justice in all phases of national development and shall guarantee, at all times, the dignity of every human being and full respect for human rights. The State recognizes the important role of enterprises in the economy as a major agent of development, creating off-farm employment opportunities and providing transitional means for improving the livelihood of the people. Towards this end, the State shall pursue an inclusive growth strategy that promotes an environment conducive to the development and growth of a vibrant social

1 enterprise sector engaged in poverty reduction and economic and social development. It shall empower the poor as primary stakeholders in social enterprises, establish a mechanism essential to realizing their potential and achieving their full growth, and extend the assistance necessary for their advancement. The State shall likewise provide technical and financial assistance, incentives, and other services to enable social enterprises to develop into viable and vital anti-poverty agents, and a strong 7 social entrepreneurship movement that will be instrumental in reducing poverty in the country.

SEC. 3. Definition of Terms. - As used in this Act, the following terms are

defined as follows: a) Basic Sectors refer to the disadvantaged sectors of Philippine society, namely: farmer-peasant, artisanal fisherfolk, workers in the formal sector and migrant workers, workers in the informal sector, indigenous peoples and cultural communities, women, persons with disabilities, senior citizens, victims of calamities and disasters, youth and students, children, and urban poor; b) Economic Subsectors refer to networks of related actors and enterprises performing various functions in value chains that transform raw materials into finished products or develop services and distribute or provide them through market channels to final consumers. These subsectors may be identified by key raw material source, by finished product, or final service provided. An economic subsector may be comprised of several competing value chains; c) Marginalized Sectors refer to groups of people who are stigmatized or excluded by virtue of their physical, psychological, economic, social, or cultural circumstance; d) Poor refers to individuals and families whose income fall below the poverty threshold as defined by the Department of Economy, Planning, and Development (DEPDev) and/or cannot afford in a sustained manner to provide their minimum basic needs of food, health, education, housing, and other essential amenities of life; e) Poverty Reduction refers to overcoming the income, resource, and capability deprivation among the poor, marginalized, and basic sectors;

f) Social Enterprise or SE refers to a social mission-driven organization in the form of an association, single proprietorship, partnership, corporation, cooperative, non-stock, non-profit, or people's organizations or any other legal entity that conducts economic activities providing goods and/or services directly related to their primary mission of poverty reduction and improving the wellbeing of the poor, marginalized, and basic sectors and their living environment. In pursuit of this primary mission, a SE: (i) Engages and invests in the poor to become effective workers, suppliers, clients, and/or owners; (ii) Ensures that a substantive part of the wealth created by the enterprise is distributed to or benefits these sectors; (iii) Reinvests its surplus or profits back to the enterprise to sustain the fulfillment of its social mission; and (iv) Utilizes its surplus or profits and mobilizes other resources to assist the poor to become partners in SE or value chain management and governance and/or in community, sectoral, and societal transformation; g) Social Enterprise Service Institution refers to an organization that provides assistance, including trainings, education and other capacity-building measures, research and development, and other activities, to SEs for them to become viable and sustainable; h) Transactional Services refer to enterprise or market-driven activities, such as providing loans, demonstrating new technologies, or conducting trainings, that are necessary for the poor in the SE system to effectively and efficiently perform their roles as workers, suppliers, clients, and owners. Transactional services may be fee-based, such as the granting of loans, or non-fee based, such as the provision of production-related trainings; i) Transformative Services refer to activities that empower the poor, such as leadership formation, organizational development, financial and legal literacy training, asset build-up, and provision of education and experiential learning opportunities, to become conscious change agents for themselves, their communities, sectors, and the society as a whole;

1 j) Value Chains refer to value-adding economic activities that firms and workers do to bring product from its conception to its end use. A value chain typically consists of: (1) raw materials processing; (2) inbound distribution or logistics; (3) manufacturing operations; (4) outbound distribution or logistics; (5) marketing and selling; and (6) after-sales service. These activities are supported by (1) purchasing or procurement; (2) research and development; (3) human resource development; and (4) organizational development; and k) Living Wage refers to the amount of family income needed to provide for the family's food and non-food expenditures with sufficient allowance for savings/investments for social security so as to enable the family to live and maintain a decent standard of human existence beyond mere subsistence level, taking into account all of the family's physiological, social, and other needs. CHAPER II POVERTY REDUCTION THROUGH SOCIAL ENTERPRISES

SEC. 4. Formulation of a Poverty Reduction Through Social

Entrepreneurship (PRESENT) Program. - There is hereby established a Poverty Reduction Through Social Entrepreneurship (PRESENT) Program to progressively improve the position and benefits received by the poor, marginalized, and basic sectors of Philippine society from economic subsector development and growth. To do this, the PRESENT Program shall identify strategic economic subsectors with potential for growth, the geographic concentration of the poor, marginalized, and basic sectors, and how these sectors can be tapped to spur the growth and development of a specific subsector. The PRESENT Program shall involve identifying and developing key SEs and resource institutions as partners in providing transactional and transformational services towards poverty reduction. The formulation of the PRESENT Program shall be guided by the following: a) Promoting sustainable programs that support the development of inclusive value chains in key economic subsectors, with a view to reducing inequality in incomes and increasing self-reliance among the poor; b) Enabling SEs to overcome constraints and to take advantage of opportunities for enhancing the position and benefits of the poor and their living environments,

including those that harness innovative approaches in addressing social problems; c) Developing sustainable mechanisms for the provision of quality and accessible social services to the poor; d) Empowering people by ensuring the participation of the poor, marginalized, and basic sectors; e) Promoting gender sensitivity by ensuring women's equal rights and access to resources of SEs; f) Promoting ecological soundness in the pursuit of sustainable and equitable development; 11 g) Incorporating the PRESENT Program in the government's poverty reduction drive as a major sustainable and comprehensive strategy; and h) Rationalizing of poverty reduction programs by streamlining and coordinating the various anti-poverty programs of the government to reduce inefficiency and duplication to improve the effectiveness of each program. The planning process and framework of the PRESENT Program shall ensure that the poor are engaged as primary stakeholders. It shall add value to and complement ecosystem-based, area-based, and community-based tools and processes in local economic development by promoting and utilizing the economic subsector as a strategic unit of analysis and planning for the development of interventions spearheaded by SEs. The medium-term and annual development plans of the PRESENT Program shall be aligned with the medium-term development plan of the national government.

SEC. 5. National Enterprise Development Council. - The existing Micro,

Small and Medium Enterprise Development (MSMED) Council under the Department of Trade and Industry (DTI) shall be strengthened and expanded to effectively spur the growth and development of MSMEs and SEs throughout the country and to carry out the policy declared under this Act. It shall hereafter be known as the National Enterprise Development Council ("Council"). In addition to the existing functions of the Council as provided under Republic Act No. 6977, as amended, otherwise known as the Magna Carta for Micro, Small and 32 Medium Enterprises (MSMEs), the Council shall serve as the primary agency tasked to

1 carry out the promotion, growth, and development of SEs in the country. It shall also 2 approve the SE development plans as formulated and recommended by the Center for 3 Social Enterprise Development (CSED) created under Section 6 of this Act. To ensure that the Council is able to fulfill its additional mandate as provided 5 under this Act, there shall be created a SE Committee under the Council that shall perform the following functions: 7 a) Promote SE as a key strategy for reducing poverty and enabling inclusive growth; 8 b) Provide oversight for the implementation of the PRESENT Program and activities of the CSED; c) Establish policies, plans, programs, and projects to develop and promote SEs as a tool for poverty reduction in accordance with a comprehensive SE development plan that is fully integrated and consistent with national development objectives and plans; d) Monitor and evaluate the performance of programs and projects of CSED for appropriate incentives; e) Submit annual reports to the President and the Congress of the Philippines not later than June 30 of each year; and f) Promulgate such rules and regulations and exercise such other powers and functions as may be necessary to carry out the purposes of this Act and for the continued enhancement, growth, and development of the SE sector. The SE Committee shall be composed of the Secretary of Trade and Industry, Secretary of Agriculture, Secretary of the Interior and Local Government, the President of the Small Business Corporation, and three (3) representatives each from the SEs, SE service institutions, and SE advocacy groups: Provided, That such representatives shall each come from the main island groupings of Luzon, Visayas, and Mindanao.

SEC. 6. Center for Social Enterprise Development. - There shall be

established a Center for Social Enterprise Development (CSED) under the supervision of the Council to be headed by an Executive Director. The Executive Director shall have the primary responsibility of overseeing the implementation of the comprehensive policies for SE development. Specifically, the CSED shall be responsible for the following:

a) Development and implementation of the PRESENT Program as approved by the Council, with the following components: (i) Formation and Implementation of Plans: The CSED shall formulate and implement social entrepreneurship-oriented strategic and economic sub- sector development plans that shall serve as the basis for major policies, projects, and activities; (iì) Capacity Building and Sustainability: The CSED shall work with qualified SE service institutions and other intermediaries to design and deliver training and education in social entrepreneurship development, institutional start- up or strengthening, human resource competency and skills training, business planning and advisory services, upgrading of accounting and auditing systems, technical assistance for the installation or improvement of management information systems, technology intervention, technology incubation/commercialization, market studies and product development, business matching activities, trade fairs and missions, policy advocacy, disaster resiliency, and other related activities; (iii) Research and Development: The CSED shall, in coordination with DEPDev, Department of Science and Technology (DOST), DTI, and other appropriate agencies, the academe, research institutions, and intermediaries, develop and enhance a research and development system that: 1) Provides recommendations and robust discussions and engagements on poverty reduction vis-à-vis SE development in key economic subsectors and other inputs for the Council to undertake strategic planning for programs and projects; and 2) Equips SEs and supports institutions with services and technologies that are appropriate for enhancing the participation and benefits of the poor in various economic subsectors, and innovative and sustainable approaches to improve access of the poor to quality basic social services; (iv) Information and Marketing Assistance: The CSED shall promote the development and expansion of local and foreign markets for the products and services of SEs. Towards this end, the CSED shall:

1) Establish a marketing assistance program that will assist SEs to match supply with demand in both domestic and foreign markets, as well as promote SE products and services through tri-media marketing, trade fairs, and trade missions; and 2) Develop, install, and sustain a market information system for SEs with the assistance of the DTI and the Department of Tourism (DOT). All government departments, agencies, bureaus, research institutions, and lacal government units (LGUs) shall consolidate and continuously update on a regular basis and make accessible all relevant information and data that would be useful to SEs; b) Establishment and implementation of criteria and processes for the qualification of SEs to be eligible for the support and other incentives provided under this Act and as approved by the Council; C) Identification of sources of financing for the SE sector, which shall not be limited to grants, loans, and equity financing for enterprise incubation, start-up and expansion; d) Management of multi-stakeholder convergence programs and activities among government agencies and private organizations in support of the PRESENT Program; e) Coordination with the concerned government agencies and LGUs in the development and implementation of the PRESENT Program; and f) Coordination with SE stakeholders, including people's organizations, non- government organizations, and multi-sectoral and multi-disciplinary pool of experts from the academe, practicing professionals, business, industry, youth, women, and other concerned sectors, to provide advice and technical assistance on matters pertaining to SEs.

SEC. 7. Role of LGUs in Social Enterprise Development, - LGUs shall be

encouraged to incorporate viable SE development plans in their local development plans and, as far as practicable, collaborate with SEs on the implementation thereof.

SEC. 8. Social Enterprise Development Fund. - There is hereby

appropriated an amount of Nine Hundred Million Pesos (P900,000,000.00) for the

establishment of a Social Enterprise Development Fund (SEDF), which shall be used to fund grants to SEs for the implementation of the PRESENT Program. The SEDF shall be allocated as follows: a) Six Hundred Million Pesos (P600,000,000.00) for value chain financing; and b) Three Hundred Million Pesos (P300,000,000.00) for enterprise development services. After the first year of implementation, such sums as may be necessary to fund the SEDF shall be included in the budget of the DTI under the annual General 9 Appropriations Act. The CSED shall develop the roadmap for the utilization of the Fund, which shall be approved by the Council. CHAPTER III INCENTIVES AND BENEFITS

SEC. 9. Special Credit Windows. - The Land Bank of the Philippines (LBP),

Development Bank of the Philippines (DBP), and other government financial institutions shall establish special credit windows for the following purposes: a) Credit line for business development loan or working capital loan to cover the operational and management expenses of an existing business or income generating project, including receivable financing or purchase of additional inventory, soft or intangible investments, such as trade fair participation or acquisition of software or franchise development packages; b) Fixed asset financing to cover the acquisition of fixed assets like machineries and equipment, motor vehicle, or land for project site or construction of a plant and/or building and the improvement thereof; c) Value chain financing to cover any of the value chain activities such as production, processing, and marketing; d) Domestic letter of credit or trust receipt to provide a standby credit facility for the SE borrower for the purchase of product inputs, equipment, machinery, implements, and spare parts; and e) Revolving credit line for re-lending to finance the livelihood project requirements of the beneficiaries/clients of SEs.

SEC. 10. Compliance with the Mandatory Allocation of Credit

2 Resources. - Loans granted by financial institutions to SEs shall be computed by the 3 Bangko Sentral ng Pilipinas (BSP) as equivalent to two times the amount of the loan for purposes of determining the financial institution's compliance with the mandatory 5 allocation of credit resources to micro, small and medium enterprises as provided 6 under Republic Act No. 6977, as amended.

SEC. 11. Government Procurement. - Eligible SEs shall be entitled to a share

8 of at least ten percent (10%) of the total procurement value of goods and services 9 supplied to the government, its bureaus, offices, and agencies annually. The 10 Department of Budget and Management (DBM) shall monitor the compliance of 11 government agencies on the required procurement from SEs and submit its report to the Council not later than April 30 of each year.

SEC. 12. Insurance for Social Enterprises. - The Insurance Commission

shall issue the necessary rules and regulations to implement measures to ensure that the insurance industry shall provide insurance products, both life and non-life, for SEs and their stakeholders.

SEC. 13. Exemption from the Coverage of the Minimum Wage Law. -

SEs that have total assets, inclusive of those arising from loans but exclusive of the land on which the SE's office, plant, and equipment are situated, of not more than Three Million Pesos (P3,000,000.00) shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.

SEC. 14. Eligibility for Incentives and Benefits. - In the case of SEs

organized as stock corporations, partnerships, or sole proprietorships, the following requirements shall apply to become eligible for the incentives and benefits provided under this Act: a) A SE must not be organized as a branch, subsidiary, or division of a private business enterprise, regardless of the size of such private enterprise, nor may its policies be determined by a private business enterprise: Provided, That this shall not preclude a SE from accepting subcontracts from large private business

enterprises or firms or from joining in cooperative or joint venture activities with other SEs or foundations practicing corporate social responsibility; and b) At least sixty percent (60%) of a SE's total expenditures and profits are plowed back to the enterprise for the benefit of the poor, and such SE engages in practices that optimize the benefits for the poor through the provision of living wages, above-market pricing for economically disadvantaged producers and suppliers, and other best practices that distribute the profit generated by the enterprise. CHAPTER IV OTHER PROVISIONS AND APPROPRIATIONS

SEC. 15. Social Entrepreneurship Education in Schools. - The Council, in

addition to its mandate to promote entrepreneurship, shall coordinate and develop in conjunction with the Department of Education (DepEd), Technical Education and Skills Development Authority (TESDA), and Commission on Higher Education (CHED) a curriculum or module on SEs and its inclusion in the curricula at all levels, especially 17 in the secondary and tertiary levels. A continuing social entrepreneurship education program for out-of-school youth and adults shall likewise be developed and undertaken.

SEC. 16. Social Enterprise Week. - In order to institute continuing awareness

on the importance of SEs as a viable strategy in pursuing poverty alleviation, the week 22 of the month when this Act shall have been signed into law shall be declared as the Social Enterprise Week. The Social Enterprise Week shall be celebrated annually, the celebrations of which shall be spearheaded by the CSED.

SEC. 17. Appropriations. - The Council shall allocate the initial amount of Fifty

Million Pesos (P50,000,000.00) from the existing MSMED Council Fund to support the 27 operations and programs of the CSED. Thereafter, such sums as may be necessary for the continued implementation of this Act shall be included in the budget of the DTI under the annual General Appropriations Act. The budgetary requirements of the cooperating agencies shall be incorporated in their respective budgets. The CSED may raise funds from other sources for specific projects as may be authorized by law.

SEC. 18. Transitory Provision. - Within a period of five (5) years, the Council

2 shall facilitate the development and dissemination of tools and invest in the 3 development of the capability of SEs to plan, monitor, and evaluate their social and 4 financial performance and outcomes. In addition, the Council shall develop socially 5 acceptable benchmarks for evaluating the performance of SEs and utilize such to more 6 effectively develop and regulate the sector.

SEC. 19. Implementing Rules and Regulations. - Within ninety (90) days

8 from the effectivity of this Act, the DTI shall, in consultation with relevant government 9 agencies and stakeholders, promulgate the implementing rules and regulations (IRR) 10 to effectively carry out the provisions of this Act. Failure of the relevant government agencies to promulgate the IRR within the specified period shall subject the heads of these government agencies to administrative penalties under applicable civil service laws. Should the IRR contain provisions that are contrary to this Act, the heads of the government agencies responsible for such provision, when done in bad faith or with gross negligence, shall be held administratively liable.

SEC. 20. Separability Clause. - If any portion or provision of this Act is

declared unconstitutional, the remainder hereof or any provisions not affected thereby shall remain in force and effect.

SEC. 21. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 22. Effectivity. - This Act shall take effect fifteen (15) days after its

complete publication in the Official Gazette or in a newspaper of general circulation. Approved,