Wed. Apr 24th, 2024
social entrepreneurship

What is social entrepreneurship ?


Social entrepreneurship involves using creative and lasting approaches to tackle social or environmental challenges. Entrepreneurs in this field apply business principles to make a positive impact on society and address urgent issues. Unlike traditional entrepreneurship focused solely on profit, social entrepreneurs aim to generate both social impact and financial sustainability. In India, numerous examples highlight the growing prominence of social entrepreneurship.

One noteworthy instance is the success of SELCO India, founded by Harish Hande. This organization addresses the lack of access to sustainable energy in rural areas by providing affordable solar power solutions. SELCO has positively impacted thousands of lives, especially in remote regions, by enabling households and businesses to access clean and reliable energy, thereby contributing to poverty alleviation and environmental conservation.

Another prominent example is the work of Arunachalam Muruganantham, the founder of Jayaashree Industries. Recognizing the need for affordable menstrual hygiene products, Muruganantham developed a low-cost sanitary napkin-making machine. His initiative has empowered women across rural India by not only addressing a critical health issue but also creating economic opportunities through the establishment of small-scale businesses run by women. These examples underscore the transformative potential of social entrepreneurship in India, showcasing how innovative solutions can address societal challenges and foster inclusive development.

Social entrepreneurship meaning

Social entrepreneurship is a dynamic and innovative approach to addressing social issues through entrepreneurial principles. Unlike traditional entrepreneurship solely focused on profit, social entrepreneurship places a dual emphasis on both generating positive social impact and achieving financial sustainability. Social entrepreneurs identify pressing societal problems, such as poverty, environmental degradation, or inadequate access to education and healthcare, and develop creative and sustainable solutions. These individuals leverage business strategies to create and scale initiatives that drive positive change, often working in collaboration with communities and other stakeholders. The goal of social entrepreneurship is to contribute to the betterment of society, fostering inclusive and sustainable development.

A key characteristic of social entrepreneurship is its emphasis on systemic change. Social entrepreneurs seek to not only alleviate symptoms of social issues but also address their root causes, aiming for long-term, transformative impact. Through their endeavours, social entrepreneurs play a crucial role in driving innovation, inspiring community engagement, and reshaping traditional approaches to problem-solving. As a result, social entrepreneurship has gained prominence globally as a powerful force for positive change, with individuals and organizations working towards creating a more equitable and sustainable world.

Types of social entrepreneurship

Social entrepreneurship encompasses a diverse range of initiatives, each with its own focus and approach to creating positive social impact. Here are several types of social entrepreneurship:

  1. Nonprofit Social Enterprises: These organizations operate like businesses but channel their profits into achieving social or environmental goals. They often rely on a combination of earned income, grants, and donations to sustain their operations. Examples include BRAC, a non-profit organization addressing poverty in various countries, and Grameen Bank, which provides microfinance services to empower the poor.
  2. For-Profit Social Enterprises: These businesses integrate social or environmental objectives into their core mission. They aim to make a profit while simultaneously addressing societal issues. An example is TOMS Shoes, which operates on a “one-for-one” model, donating a pair of shoes to a child in need for every pair purchased.
  3. Cooperatives: Social cooperatives are enterprises owned and operated by a group of individuals, often workers or producers, who share the profits and make decisions collectively. For instance, Aravind Eye Care System in India operates as a cooperative to provide affordable and high-quality eye care services.
  4. B Corps (Benefit Corporations): Benefit Corporations are for-profit companies that commit to meeting certain social and environmental standards. They are legally required to balance their financial goals with their commitment to making a positive impact. Patagonia is a well-known example, committed to environmental sustainability and ethical business practices.
  5. Hybrid Models: Some social enterprises adopt hybrid models that combine elements of both for-profit and nonprofit structures. One such example is Embrace, which manufactures low-cost infant warmers for premature babies in developing countries, using a business model that blends profit and philanthropy.
  6. Social Innovation: This involves the development and implementation of new ideas, products, or services that address social challenges. Social innovators may work within existing organizations or create new ventures to introduce novel solutions. Examples include organizations like Ashoka that support and promote social innovation globally.
  7. Community-Based Enterprises: These social enterprises are rooted in specific communities and are often initiated and led by community members. They focus on addressing local issues and fostering community development. The Gaviotas community in Colombia, for instance, has developed sustainable technologies and practices to improve living conditions in their region.

These diverse types of social entrepreneurship demonstrate the flexibility and adaptability of the approach to address a wide range of social and environmental challenges.

Types of social entrepreneurship in India

Social entrepreneurship in India has gained significant traction as a powerful force for positive change, addressing a myriad of societal challenges with innovative and sustainable solutions. One noteworthy example is SELCO Solar Energy, founded by Harish Hande, which focuses on providing clean and affordable energy solutions to rural communities. Through the installation of solar power systems, SELCO has not only illuminated countless households but has also contributed to economic development and improved living standards.

Another impactful initiative is Aravind Eye Care System, demonstrating the transformative potential of social entrepreneurship in healthcare. By offering high-quality and affordable eye care services, Aravind has played a pivotal role in reducing preventable blindness and enhancing overall eye health. These examples underscore how social entrepreneurship in India goes beyond traditional business models, integrating a social mission to create meaningful and sustainable impact in diverse sectors, from energy and healthcare to education and beyond.

India has seen a rise in various types of social entrepreneurship, reflecting the diverse range of challenges the country faces. Here are some notable types:

  1. Clean Energy and Sustainable Development: Given India’s energy challenges, social enterprises like SELCO Solar Energy have emerged. SELCO focuses on providing sustainable and affordable solar solutions to rural communities, addressing both energy poverty and environmental sustainability.
  2. Healthcare Access: Numerous social enterprises in India focus on improving healthcare access. For example, Aravind Eye Care System operates as a social enterprise, providing high-quality and affordable eye care services, including cataract surgeries, to low-income populations.
  3. Education Initiatives: Social entrepreneurs in India are addressing the education gap through innovative models. Pratham Education Foundation is a notable example, employing various strategies to improve the quality of education for underprivileged children across the country.
  4. Agricultural Innovation: Agro-based social enterprises are working to empower farmers and improve agricultural practices. The National Dairy Development Board (NDDB) and its subsidiary, Mother Dairy, have played a crucial role in supporting dairy farmers and promoting sustainable agriculture.
  5. Microfinance and Financial Inclusion: Social enterprises like SKS Microfinance (now Bharat Financial Inclusion Limited) have pioneered microfinance models, providing financial services to the underserved and promoting financial inclusion in rural areas.
  6. Women’s Empowerment: Several social enterprises in India focus on women’s empowerment. SEWA (Self-Employed Women’s Association) is a trade union that promotes the rights of self-employed women workers and has played a significant role in empowering women economically.
  7. Waste Management: With the increasing concern about environmental sustainability, social enterprises like Goonj have emerged to address waste management issues creatively. Goonj focuses on recycling and upcycling unused and discarded materials to meet the basic needs of marginalized communities.
  8. Technology for Social Good: Social entrepreneurs in India are leveraging technology to address social challenges. For instance, the Akshaya Patra Foundation uses technology to optimize the supply chain for its mid-day meal program, ensuring nutritious meals reach schoolchildren efficiently.

Characteristic of social entrepreneurship

Social entrepreneurship is characterized by several key features that distinguish it from traditional entrepreneurship. Here are some fundamental characteristics of social entrepreneurship:

  1. Mission-Driven Focus: Social entrepreneurs are motivated by a deep commitment to addressing and solving social or environmental issues. The primary goal is to create positive change and make a meaningful impact on society.
  2. Innovative Solutions: Social entrepreneurs often develop innovative and creative solutions to address social problems. They look for new approaches, business models, and technologies to tackle challenges in more effective and sustainable ways.
  3. Sustainability: While addressing social issues, social entrepreneurs strive for financial sustainability. They aim to create models that can generate revenue to support their mission, reducing dependence on external funding sources over time.
  4. Systems Thinking: Social entrepreneurs typically adopt a holistic approach, considering the interconnectedness of social issues and seeking systemic change. They address root causes rather than just alleviating symptoms, aiming for long-term impact.
  5. Social Impact Measurement: Measurement and assessment of social impact are integral to social entrepreneurship. Social entrepreneurs use metrics and evaluation tools to track and communicate the outcomes and effectiveness of their initiatives.
  6. Community Involvement: Successful social entrepreneurship often involves collaboration with communities and stakeholders. Social entrepreneurs work closely with the people they aim to serve, incorporating their perspectives and engaging them in the decision-making process.
  7. Adaptability: Social entrepreneurs need to be adaptable and resilient, as they often operate in dynamic and challenging environments. They must be open to learning from failures, adjusting strategies, and evolving their approaches based on real-world feedback.
  8. Ethical Leadership: Ethical considerations play a crucial role in social entrepreneurship. Social entrepreneurs prioritize transparency, fairness, and ethical behavior in their operations, recognizing the impact of their decisions on the communities they serve.
  9. Risk-Taking: Social entrepreneurs are willing to take calculated risks to achieve their social objectives. They may challenge existing norms and take on ventures that others might find too risky or unconventional in pursuit of their mission.
  10. Social Advocacy: Beyond their immediate initiatives, social entrepreneurs often engage in advocacy and policy work to influence broader social change. They may work to shape policies, raise awareness, and promote social justice at a systemic level.
  11. Empowerment: Many social entrepreneurship initiatives aim to empower marginalized or underserved populations. This could involve providing skills, education, employment opportunities, or other resources that enable individuals and communities to improve their own circumstances.

These characteristics collectively define social entrepreneurship as a dynamic and impactful approach to addressing pressing social and environmental challenges while fostering sustainable and positive change.

Importance of social entrepreneurship

Social entrepreneurship plays a crucial role in addressing and mitigating various societal challenges, contributing significantly to positive social change. The importance of social entrepreneurship can be understood through several key aspects:

  1. Innovative Problem-Solving: Social entrepreneurs bring a fresh and innovative perspective to addressing social and environmental issues. They develop creative solutions that often challenge traditional approaches, leading to the discovery of more effective and sustainable ways to tackle problems.
  2. Addressing Unmet Needs: Social entrepreneurship often focuses on addressing unmet needs within communities, particularly those that may be overlooked or neglected by traditional business models or government interventions. This includes providing solutions in areas such as healthcare, education, clean energy, and poverty alleviation.
  3. Creating Sustainable Impact: Social entrepreneurs aim not only to solve immediate problems but also to create lasting and sustainable impact. By developing models that are financially viable and scalable, they can continue to address social issues over the long term without relying solely on external funding.
  4. Empowering Communities: Social entrepreneurship frequently involves empowering communities and individuals, particularly those who are marginalized or underserved. By providing access to resources, education, and economic opportunities, social entrepreneurs contribute to building stronger and more resilient communities.
  5. Filling Gaps in Social Services: In many cases, social entrepreneurs step in to fill gaps in social services where government or traditional institutions may fall short. This can include providing affordable healthcare, education, or access to basic necessities in areas where these services are lacking.
  6. Driving Economic Development: Social entrepreneurship can stimulate economic development by creating employment opportunities and supporting local businesses. Initiatives that empower entrepreneurs within communities contribute to economic growth and poverty reduction.
  7. Inspiring Change: Social entrepreneurs serve as inspirational figures who demonstrate that it is possible to blend social impact with business principles successfully. Their success stories can inspire others to pursue ventures that contribute positively to society, fostering a culture of social innovation.
  8. Promoting Social Justice: Social entrepreneurship often involves addressing issues of social injustice and inequality. Initiatives may advocate for the rights of marginalized groups, challenge discriminatory practices, and work towards creating a more equitable and inclusive society.
  9. Encouraging Collaboration: Social entrepreneurs often collaborate with various stakeholders, including governments, nonprofits, and the private sector. This collaborative approach facilitates the sharing of resources, expertise, and knowledge, leading to more comprehensive and effective solutions.
  10. Catalysing Systemic Change: Social entrepreneurs are often at the forefront of driving systemic change. By addressing root causes rather than symptoms, they contribute to reshaping societal structures and policies, fostering an environment conducive to positive transformation.

Thus, social entrepreneurship is essential for its ability to drive innovation, address societal needs, and create sustainable and positive impact. It plays a vital role in complementing and, in some cases, challenging traditional approaches to social issues, ultimately contributing to the betterment of communities and society as a whole.

Difference between social entrepreneurship and business entrepreneurship

Social entrepreneurship and business entrepreneurship represent two distinct yet interconnected realms within the entrepreneurial landscape. While both involve the dynamic process of creating and managing ventures, their fundamental objectives and driving forces set them apart. Social entrepreneurship is driven by a profound commitment to addressing societal challenges, emphasizing social or environmental impact alongside financial sustainability.

In contrast, business entrepreneurship is characterized by a primary focus on profit generation, market competitiveness, and business growth. This table outlines the 10 most important differences between these two forms of entrepreneurship, shedding light on the contrasting motivations, operational focuses, financial models, success metrics, and long-term goals that define the unique nature of each approach.

S.NAspectSocial EntrepreneurshipBusiness Entrepreneurship
1Primary MotivationSocial impact and addressing societal issues.Profit generation and financial success.
2Focus of OperationsAddressing social or environmental challenges.Creating and expanding businesses for profit.
3Financial ModelBalancing social impact with financial sustainability.Maximizing profits for business growth.
4Success MetricsSocial impact metrics, sustainable change, and community development.Financial metrics, revenue growth, and market share.
5Goal of InnovationSolving social or environmental problems creatively.Creating new products, services, or improving efficiency for market advantage.
6Risk ToleranceWillingness to take risks for social and environmental causes.Focus on managing financial risks and optimizing returns.
7Customer BaseOften underserved or marginalized communities.Wider consumer base driven by market demand.
8Resource AllocationBalancing financial resources with social impact goals.Allocating resources to maximize profitability.
9Long-Term ImpactAims for sustainable, lasting positive change in society.Focus on long-term business viability and growth.
10ExamplesSELCO Solar Energy, Aravind Eye Care System.Apple Inc., Amazon.

Major challenges of social entrepreneurship in India

Social entrepreneurship in India faces several challenges that can impede the growth and impact of innovative initiatives aimed at addressing social issues. Some of the major challenges include:

  1. Limited Access to Funding: Social enterprises often struggle to secure funding, especially in the early stages. Traditional financial institutions may be hesitant to invest in ventures with a dual bottom line of social impact and financial sustainability. Limited access to capital can hinder the scalability and sustainability of social enterprises.
  2. Regulatory Complexity: Social enterprises may face challenges navigating complex regulatory frameworks. Ambiguity in laws, compliance requirements, and tax regulations can create hurdles, particularly for organizations attempting to balance social and financial objectives.
  3. Lack of Awareness and Understanding: There is a need for increased awareness and understanding of social entrepreneurship among various stakeholders, including investors, consumers, and policymakers. Misconceptions about the nature and impact of social enterprises can hinder their acceptance and growth.
  4. Scalability Issues: Many social enterprises struggle to scale their impact beyond a local or regional level. Achieving scalability while maintaining the integrity of the social mission is a complex task, often requiring strategic partnerships, innovative business models, and effective management.
  5. Skill and Talent Gap: Social enterprises may face challenges in attracting and retaining skilled professionals who are dedicated to both the mission and the business aspects. The unique blend of skills required, encompassing business acumen and a deep understanding of social issues, can be a limiting factor.
  6. Measuring and Communicating Impact: Demonstrating and quantifying social impact is crucial for social enterprises. However, measuring impact in a way that is credible, standardized, and comparable can be challenging. Communicating impact effectively to stakeholders is also vital for gaining support and building trust.
  7. Resistance to Innovation: Resistance to change and innovative solutions, both within communities and established institutions, can pose challenges for social entrepreneurs. Convincing stakeholders to adopt new approaches, especially when they challenge traditional norms, requires persistence and effective communication.
  8. Infrastructure Challenges: In certain sectors, inadequate infrastructure can pose significant challenges. For example, social enterprises focusing on healthcare or education may face obstacles related to transportation, technology, or basic utilities, hindering their ability to deliver services effectively.
  9. Market Acceptance and Consumer Behavior: Convincing consumers to adopt products or services with a social impact can be challenging. Price sensitivity, skepticism, or lack of awareness about the social benefits of products may affect market acceptance.
  10. Long Gestation Period for Impact: Achieving meaningful social impact often requires a long gestation period. Investors and stakeholders may need patience and a willingness to accept a longer return on investment, which may not align with traditional business expectations.

What is social innovation and entrepreneurship ?

 Social innovation involves the development and implementation of creative and novel solutions to address pressing social issues. It goes beyond conventional problem-solving by introducing transformative ideas, products, or processes that bring about positive societal change. Social entrepreneurship, on the other hand, is the practical manifestation of social innovation, where individuals or organizations apply entrepreneurial principles to turn innovative solutions into sustainable ventures with a dual focus on social impact and financial viability.

In India, numerous examples illustrate the synergy between social innovation and entrepreneurship. One notable instance is the work of Harish Hande, founder of SELCO Solar Energy. Through innovative business models, SELCO has provided affordable solar energy solutions to rural communities, addressing both energy poverty and environmental sustainability.

Another example is Arvind Eye Care System, which combines social innovation in healthcare delivery with a sustainable business model, providing high-quality and affordable eye care services to underserved populations. These examples showcase how social innovation, coupled with entrepreneurial approaches, can create tangible and lasting positive impact in diverse sectors, contributing to the overall development of society.

What is the role of entrepreneurship in social development ?

Entrepreneurship plays a pivotal role in social development in India by fostering economic empowerment, addressing societal challenges, and driving sustainable solutions. Entrepreneurs contribute to social development through job creation, innovative problem-solving, and community engagement. Here are examples highlighting the multifaceted role of entrepreneurship in India’s social development:

  1. Job Creation and Economic Empowerment: Example: Self-Employed Women’s Association (SEWA): It is a trade union and social enterprise that empowers women by providing them with opportunities for self-employment. By promoting entrepreneurship among women in various sectors, SEWA contributes to economic empowerment, poverty reduction, and gender equality.
  2. Innovative Solutions to Social Issues:  Example: Goonj: It is a social enterprise that addresses the issue of clothing and waste in a creative way. It collects unused and discarded materials, upcycles them into useful products, and distributes them to communities in need. Through this innovative approach, Goonj not only addresses material poverty but also promotes sustainable and community-driven solutions.
  3. Access to Affordable Healthcare: Example: Aravind Eye Care System: It combines entrepreneurial principles with a social mission to provide high-quality and affordable eye care services. Their innovative model allows them to reach a large number of patients, including those in rural areas, contributing to improved vision and overall health in the communities they serve.
  4. Rural Development and Sustainable Agriculture:  Example: Amul (Gujarat Cooperative Milk Marketing Federation): Amul is a cooperative that has played a crucial role in rural development by empowering dairy farmers. By creating a successful business model around milk production, processing, and marketing, Amul has uplifted the socio-economic status of farmers, contributing to rural development and poverty alleviation.
  5. Clean Energy Access: Example: SELCO Solar Energy: SELCO Solar Energy focuses on providing solar solutions to rural and underserved communities. By leveraging entrepreneurial strategies, SELCO has facilitated access to clean and affordable energy, improving the quality of life, supporting economic activities, and contributing to environmental sustainability.
  6. Education and Skill Development: Example: Barefoot College: Barefoot College, founded by Bunker Roy, empowers rural communities by providing education and skill development opportunities. Through a decentralized and community-driven model, the college has trained individuals, particularly women, in various skills such as solar engineering, healthcare, and water management, enhancing their capacity to contribute to local development.
  7. Financial Inclusion: Example: Bharat Financial Inclusion Limited (BFIL): BFIL, formerly known as SKS Microfinance, has played a significant role in providing microfinance services to rural women, enabling them to start and expand small businesses. This fosters financial inclusion, improves livelihoods, and contributes to the overall economic development of marginalized communities.

These examples demonstrate how entrepreneurship, when driven by a social mission, can be a powerful catalyst for positive change. By creating sustainable models that address societal needs, entrepreneurs contribute to social development in India, fostering inclusive growth and improving the well-being of communities.

History of social entrepreneurship in India

The history of social entrepreneurship in India is rich and diverse, with a legacy that spans several decades. While the roots of social entrepreneurship can be traced back to various grassroots movements and community initiatives, the formal recognition of the field gained momentum in the latter part of the 20th century. Here is a brief overview of the history of social entrepreneurship in India:

Pre-Independence Era: Even before India gained independence in 1947, there were individuals and movements focused on social change. Mahatma Gandhi’s philosophy of “Sarvodaya” emphasized the welfare of all, and his concept of “Gram Swaraj” aimed at self-sufficient, self-governing villages. This laid the groundwork for community-driven social development.

Post-Independence Period: After independence, India faced numerous challenges such as poverty, illiteracy, and lack of access to basic amenities. Social workers and activists emerged to address these issues. The establishment of NGOs like SEWA (Self-Employed Women’s Association) in 1972 showcased early efforts to empower marginalized communities.

1970s-1980s: Emergence of Social Enterprises: The 1970s and 1980s saw the emergence of social enterprises that combined business principles with a social mission. The Chhattisgarh Hastshilp Vikas Nigam (CHVN) and the National Institute for Rural Development and Panchayati Raj (NIRDPR) were early examples of organizations focusing on rural development through entrepreneurial approaches.

1990s: Rise of Microfinance and Social Ventures: The 1990s witnessed the growth of microfinance institutions (MFIs) like SKS Microfinance (now Bharat Financial Inclusion Limited) that provided financial services to the poor. This period also saw the establishment of organizations like Aravind Eye Care System, which combined a social mission with sustainable healthcare services.

2000s-2010s: Social Entrepreneurship as a Recognized Field: The 2000s and 2010s marked a significant shift with the formal recognition of social entrepreneurship as a field. Organizations like the National Innovation Foundation (NIF) and the Schwab Foundation for Social Entrepreneurship began actively supporting and recognizing social entrepreneurs.

Ashoka, a global organization supporting social entrepreneurs, expanded its presence in India during this period. It identified and supported individuals with innovative solutions to societal challenges. Notable social entrepreneurs like Harish Hande of SELCO Solar Energy, Bunker Roy of Barefoot College, and Anshu Gupta of Goonj gained prominence for their impactful work during this era.

Present Day: Today, social entrepreneurship in India has evolved into a vibrant ecosystem with a diverse range of initiatives addressing issues such as education, healthcare, clean energy, and poverty alleviation. The government, corporate sector, and international organizations are increasingly recognizing the importance of social entrepreneurship in driving inclusive and sustainable development.

The history of social entrepreneurship in India reflects a dynamic journey, from early community-led initiatives to the formal recognition of the field as a powerful force for positive change. The resilience and innovation demonstrated by social entrepreneurs continue to shape the landscape of social development in the country.

MCQs (UGC-NET) related to social entrepreneurship

1. What is the primary objective of social entrepreneurship? a) Profit maximization b) Social and environmental impact c) Market dominance d) Cost reduction

2. Which term refers to the process of creating and managing a business with the goal of solving social problems? a) Corporate Social Responsibility (CSR) b) Social Innovation c) Social Entrepreneurship d) Philanthropy

3. In social entrepreneurship, what does the “double bottom line” typically refer to? a) Profit and loss b) Social and environmental impact c) Revenue and expenses d) Market share and competition

4. Which of the following is a key characteristic of a social entrepreneur? a) Pursuing only financial gains b) Risk-averse behavior c) Focusing solely on personal success d) Innovative solutions to social issues

5. What is the term for a legal structure that allows a business to pursue both profit and social or environmental goals? a) Nonprofit organization b) Hybrid organization c) For-profit organization d) Government agency

6. Which stage of social entrepreneurship involves identifying and understanding a social problem or need? a) Ideation b) Implementation c) Evaluation d) Scaling

7. What is the term for the process of measuring and assessing the social impact of a social enterprise ? a) Financial analysis b) Social audit c) Market research d) Cost-benefit analysis

8. Which of the following is an example of a social entrepreneurship initiative? a) Launching a new smartphone app for entertainment b) Starting a community-based recycling program c) Opening a traditional retail store d) Investing in the stock market

9. Which of the following is a potential challenge faced by social entrepreneurs? a) Lack of societal problems to address b) Difficulty in generating profit c) Limited access to resources and funding d) Avoiding social impact measurement

10. What is the concept of “impact investing” in the context of social entrepreneurship? a) Investing solely for financial returns b) Investing in companies with negative environmental impact c) Investing in businesses with the intention of creating social or environmental impact d) Investing in government bonds

Answers:

  1. b) Social and environmental impact
  2. c) Social Entrepreneurship
  3. b) Social and environmental impact
  4. d) Innovative solutions to social issues
  5. b) Hybrid organization
  6. a) Ideation
  7. b) Social audit
  8. b) Starting a community-based recycling program
  9. c) Limited access to resources and funding
  10. c) Investing in businesses with the intention of creating social or environmental impact

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