The Social Business Revolution: Why is Venture Philanthropy the Most Effective Form of Giving?

The Social Business Revolution: Why is Venture Philanthropy the Most Effective Form of Giving?

July 5, 2019

In the world of giving, the question of how to give effectively is becoming increasingly important

How should we give? Along with the issue of how much, questioning the model into which we donate our money is becoming more and more pertinent in the modern age. As we seek to optimise the way we spend and invest our money, it’s not surprising that we are also looking to optimise the way we give. There is a scarcity in the philanthropic capital available - so it’s important that it is spent well.

Venture philanthropy, as described by the European Venture Philanthropy Association, is about “matching the soul of philanthropy with the spirit of investment, resulting in a high-engagement and long-term approach to creating social impact”. It’s a fresh way of looking at charitable donations as money that should be used in the most effective and efficient way possible. Instead of giving money away, venture philanthropy invests into the ingenuity, knowledge and talent of entrepreneurs that want to make social change in their communities.

As a Philanthropic Venture Fund at Yunus Social Business, we turn donations into investments and growth support for social businesses that either provide essential products and services (like healthcare, safe water or clean energy) or secure higher incomes for the poor. A social business combines the mission of a charity with the business acumen of a for-profit business. Unlike a charity, it generates profit and aims to be financially self-sustaining, while profits are reinvested in strengthening the social mission.

Our Chairman and Co-Founder, Professor Muhammad Yunus states, “A charity dollar has only one life, a social business dollar can be invested over and over again”.  And he is right, we estimate that on average, $1 of social business donation produces the same impact as $8 of a traditional charity donation. This is because as the social business repays the loan the donation is recycled to create more impact over and over again.  


How does this work in practice?

Let's take the example of a social business model that provides safe water to schools. They sell and maintain environmentally-friendly water purification systems at affordable rates that can be paid for over a long period of time. The Venture Philanthropy model multiplies the donation in two different ways: 1) the social business creates an ongoing impact as it is financially sustainable and 2) the loan is repaid meaning the money can be invested into other social businesses over and over again. That means clean water for millions of children delivered with a sustainable model. If we compare this to a traditional charity model - the money will quickly run out:

We estimate here that one filter costs $1,000 and each one reaches a school of 500 children.



Any investment comes with risk, but starting an early-stage social business in a developing economy is incredibly difficult. They face an array of different challenges such as lack of infrastructure, political instability and environmental factors like drought. Some businesses will fail and we have to take this into account. On average 3 out of every 4 of our companies will succeed in becoming a sustainable business creating social impact - so the risk is worth taking!


By rethinking the way we look at charity, the capital donated can be employed in a much more effective way. Maybe it’s time to consider how you donate your money?


You can set up a monthly donation to Yunus Social Business: www.yunussb.com/donate

Previous post

There is no previous post

Next Post

There is no next post

YSB presents the Social Success Note in partnership with The Rockefeller Foundation

Prof. Yunus visits Haiti Oct. 12-15

YSB 10 Years Celebration: Here's What Happened!

10 Years Of Social Business: Anniversary Report

Yunus Social Business Turns 10 Years Old!

6 Female Founders Changing the World with Social Business.

We are delighted to share the Yunus Social Business 2018 Impact Report.

We've been featured in the Hauck & Aufhäuser Magazine (German)

The Need of the Hour Amid COVID-19

Join Yunus Social Business on the Global Climate Strike this Friday!

Why Now? Is the Social Business Movement Reaching A Tipping Point?

Ist „#Social“ das neue „#Digital“? Unsere Gründerin Saskia Bruysten schreibt in Capital Magazin

We are delighted to share the Yunus Social Business 2018 Impact Report.

What are the Yunus Social Business team listening to? We list our favourite podcasts.

Remote Work is Here to Stay

It goes without saying, we are living through unprecedented times.

Corona Pandemic: Time Is Running Out Fast, A Letter From Prof. Muhammad Yunus

Thinking Ahead: Securitization Structure Helps to Democratise Technical and Medical Education in Bra

Yunus Social Business Co-Initiates New Alliance With World Economic Forum to Help Social Entrepreneu

“Going Back to That World Is Equal to Committing Suicide.” - Professor Muhammad Yunus on the Opportu

Amidst the COVID-19 Crisis, MBA Students Go Online to Support Our Social Businesses in India

“I Was Truly Blown Away When I Heard the News” - Yunus Social Business Has Distributed 650k USD to H

The Quick Social Business Christmas Gift Guide

Read Our Latest Impact Report

The Life-Savers Now Need Saving

COVID Response Alliance for Social Entrepreneurs, Initiated by YSB and WEF’s Schwab Foundation

Building The COVID-19 Response Alliance for Social Entrepreneurs

Fuelling social-business entrepreneurship in Kenya and beyond

YSB Launches Coursera Courses: Education For A World of Three Zeroes

Yunus Social Business and the Schwab Foundation for Social Entrepreneurship partnership

Your mission is bigger than your job.

Living Up To Our Mission: Our 2020 Annual Report

IKEA Foundation and Yunus Social Business launch the Enterprise Support Landscape Study series

IKEA Foundation and Yunus Social Business (YSB) announced the launch of their Enterprise Support Landscape Study series, a collaborative research project into the social-business landscapes in India, Kenya, Colombia and Brazil.

See the highlights from our 2019 East Africa Partner Tri

Earlier this year we took a group of philanthropists and partners to visit some of the social businesses in our portfolio in Uganda including Godson Commodities, Impact Water & Tugende. We also visited Kenya to see some of our pipeline companies.

YSB launches landmark research into Social 'Intra'preneurship at The World Economic Forum

Released at the World Economic Forum in Davos, our global study interviewed 50+ executives and social intrapreneurs (SIs) from almost 50 blue-chip multinationals, including IKEA, Morgan Stanley, BASF, Allianz, Renault, and SAP .

Closing the gap between business and social impact

Why do we need a social sector? Shouldn’t businesses create economic opportunities and governments ensure a just distribution of these opportunities and set incentives and boundaries such that the environment is protected?

Tickets are LIVE – MIA #2 Closing Ceremony

The MAN Impact Accelerator #2 isn’t quite over yet and now is your chance to celebrate the journey and the closing of another successful batch.

The 3 Basics Every Mentorship Program Must Have. (Guest piece by RITU SONI SRIVASTAVA)

In this guest post, Ritu Soni Srivastava (https://ritu.io/mentorship-basics/) talks about her involvement as mentor of the MAN Impact Accelerator (our corporate innovation accelerator program) and the 3 things she would encourage every mentorship program to adopt.

Cookie Consent

We use cookies to provide necessary website functionality, improve your experience and analyze our traffic. By using our website, you agree to our Privacy Policy and our cookies usage.