“Let’s have 1 percent of the economy be social businesses in the next five years”.
Meet our social entrepreneur Moses from Uganda, who shows how growing pineapples can improve the future of an entire community.
“Let’s have 1 percent of the economy be social businesses in the next five years”.
What keeps social entrepreneurs in developing countries from growing their ventures? Around the world social entrepreneurs are creating innovative businesses that reduce poverty and improve the lives of their customers. These pioneers often encounter many hurdles along the way that make growing a social business a significant challenge. With insights from more than 120 interviews with early-stage social entrepreneurs in developing countries, we explore the common financial and non-financial obstacles they face.
The survey showed that access to financing is still a major issue for most of the entrepreneurs: loans are expensive, require significant personal collateral and traditional financing providers don’t take the social mission of the business into account. Besides access to capital, especially in the missing middle, social entrepreneurs also have challenges finding new customers for their products and services, managing their operations and technical excellence, as well as recruiting and retaining high quality staff. Based on our findings we distilled specific conclusions and recommendations for entrepreneurs, investors and intermediaries. We want to thank the Robert Bosch Stiftung, which has made this publication possible.
More than 40 million Brazilians live in housing that suffers from residual damp, mold, and poor ventilation, all factors that contribute to serious public health problems. Jardim Pantanal is a poor community, in the East Zone of São Paulo built on wetland at the edge of the city. High humidity and frequent flooding mean many residents live in housing that is permanently damp and in constant need of repair.
Founded in 2014 Moradigna provides building and renovation services to low-income households in Jardim Pantanal, helping residents improve their living environment and their health.
Matheus Cardoso, founder of Moradigna is a resident of Jardim Pantanal. “When families realize they can transform the whole house they feel empowered, knowing that they can live in a better environment. Its is not a privilege, it’s a human right. A house is the most important part of many peoples lives, to Moradigna, making people feel comfortable and healthy inside their own home is very gratifying.”
Currently, Moradigna employees +22 workers from the local area and has transformed more than 100 houses, impacting more than 500 lives. Moradigna has proven that there is a huge unmet demand of this kind of service in low-income communities in Brazil.
Our founders Saskia and Sophie were recently interviewed by the Berliner Morgenpost about changing the world, our move to Berlin and the challenges of running a successful, international non-profit.
Read the article in full (in German) here: http://www.morgenpost.de/berlin/article207504513/So-wollen-diese-Berlinerinnen-die-Welt-verbessern.html
Our serial entrepreneur Gjergji is setting up a textile social business to create over 130 better paying jobs with exceptional working conditions for vulnerable women in Albania. Located in an area with some of the highest unemployment rates in Albania, Gjergji’s social business reinvests all profits to create much-needed fair jobs in the region. You can now support him on KIVA’s crowd-lending platform by lending any amount to his social business, starting with as little as 25 USD.
The company will not only create income-opportunities for women. It is also a commitment towards a healthy working environment, state of the art machinery and training opportunities for employees. We have seen it over and over again in the past: Invest in the women and you invest in their families. Gjergji has already supported over 20 garment factories in Albania and has been a leading advocate of better working conditions in the Garment Industry in Albania. With the first clients already lined up to order, your support to Gjergii will help his social business grow and provide livelihoods for disadvantaged women.
„Die Menschheit hat dringendere Probleme als die nächste Foto-Sharing-App für Teenager.“
Do you want to know more about our CEO and Co-founder, Saskia Bruysten? She was recently interviewed on Social Business and her personal success story by the German newspaper Frankfurter Allgemeine Zeitung.
Here are the highlights.
Prof. Muhammad Yunus started the year at the 102nd Indian Science Congress, where he was awarded a gold medal by the Indian Prime Minister, Narendra Modi, for giving the poorest a life of hope, opportunity and dignity. He was also invited by Prof Anil Gupta of IIM-A to launch the Festival of Innovations at Rashtrapati Bhawan where he co-chaired a session with the President of India, Pranab Mukherjee. The Festival of Innovations is an initiative of the National Innovation Foundation.
Seperately, In a high profile panel discussion televised by NDTV, Prof. Muhammad Yunus was invited to speak about the Grameen experience in ‘banking for the poor’ and the relevance of the social business model for India.
Prof Yunus launched a Masters program in Social Entrepreneurship and Innovation at the Rajiv Gandhi National Institution of Youth Development (RGNIYD) in Chennai. He also met with the Governor of Tamil Nadu where he advised him on address youth unemployment in the state through entrepeneurship.
He closed his India trip with a roundtable held in his honour by the Maharashtra Finance Minister to seek his advice on converting the state’s 1.7 million Self Help Groups into “super happiness groups” through social business! Read more here.
For more information on YSB India, contact:
The Social Success Note aims to leverage commercial capital for social good.
Crowding in commercial capital to finance social businesses
Across the world, small and medium enterprises (SMEs) lack access to finance. They experience a missing middle estimated to range between $2.1 trillion and $2.5 trillion in developing countries alone. This financing gap is even more acute for impact-oriented SMEs as these enterprises look to achieve both a social and financial return which may, in certain circumstances, come into conflict.
Money, however, is not the problem. There is an estimated $210 trillion invested commercially by institutional and retail investors around the world. Over recent years, a variety of innovative financing tools, including impact investing and results-based financing, have emerged to help channel some of this capital to achieve greater social outcomes. The most prominent example of this movement is the emergence of Social and Development Impact Bonds that seek to mobilize commercial capital to fund proven social programs, with a promise to be paid back by government if these programs achieve desired social outcomes. The Social Success Note extends this approach to social businesses.
Partnering with The Rockefeller Foundation
The Rockefeller Foundation has played a decisive role in activating a dynamic around impact investing. The Foundation is supporting the use of innovative financing mechanisms to mobilize private sector capital through its “Zero Gap” portfolio. Zero Gap is focused on solutions that can ultimately catalyze large-scale capital from institutional investors, as well as households and retail investors.
Within this portfolio, Yunus Social Business and The Rockefeller Foundation are developing the Social Success Note (SSN), an innovative pay-for-success financing mechanism that addresses the investment gap for impact-oriented SMEs and social businesses. Through a new alignment of incentives and interests among entrepreneurs, investors, and philanthropic outcome payers, the SSN holds the promise of addressing the missing-middle financing gap for impact SMEs by mobilizing commercial capital into these businesses while overcoming the long-entrenched trade-off between social impact and financial return.
Piloting the Social Success Note
The Social Success Note is a new and unique financial innovation that allows capital to flow into underfunded sectors (e.g., low income geographies and “push” product sectors) deemed traditionally too risky or unprofitable for mainstream capital. It also allows existing social businesses to delve deeper into their area of social impact, like targeting a poorer customer segment than traditional IRR investment hurdle rates would allow.
Yunus Social Business (YSB) and The Rockefeller Foundation are working together to launch the pilot in 2016 with one of YSB’s investment-ready social businesses.