What is Social Business?

Details

Category: Yunus

Published on Friday, 06 April 2012 15:20

A SB is a non-dividend company created to solve a social problem. Like an NGO, it has a social mission, but like a business, it generates its own revenues to cover its costs. While investors may recoup their investment, all further profits are reinvested into the same or other social businesses

A Social business is a cause-driven business. It must be financially sustainable and mission-oriented. The company must achieve its social objective and at the same time cover all costs through a revenue model.
The success of the business is not measured by the amount of profit made in a given period, but the impact of the business on people or the environment.

Investments in social businesses purely support the accomplishment of a social objective, and an investor should desire no financial gain. In fact, in a social business, investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. 

Examples of social objectives are: healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, safe drinking water, renewable energy, etc. Real-life examples of social businesses can be found here.

In short, Social businesses are non-loss, non-dividend companies created to solve social or environmental problems.