Social Business

A social business is a non-loss, non-dividend company designed to address a social problem. The profits are used to expand the company’s reach and improve the product/service.

Social Business in an enterprise that matches socio-environmental goals typical of the Public Sector and of Third Sector Organizations with the economic sustainability and efficiency of a traditional enterprise.

The resources invested in a Social Business, unlike those employed in aid or charity projects, keep on generating socio-environmental benefits thanks to the auto-sustainability of Social Business and can be recouped by the investor.

Professor Yunus wrote the seven principles that every Social Business must follow:

  1. Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization
  2. Financial and economic sustainability
  3. Investors get back their investment amount only. No dividend is given beyond investment money
  4. When investment amount is paid back, company profit stays with the company for expansion and improvement
  5. Environmentally conscious
  6. Workforce gets market wage with better working conditions
  7. …do it with joy

There are two different types of Social Business, Type 1 and Type 2:

  1. Refers to social businesses that create a product which has a direct social impact. For example, Shakti doi, the fortified yogurt, directly fights malnutrition.
  2. Social business functions as a profit-maximizing business, except that all of the net-profits are placed into a trust, which will help a disadvantaged group of people, or a profit making business owned by the poor people.