What is a Social Business?
According to 2006 Nobel Peace Prize Laureate Mohammed Yunus, “A social business is a non loss non dividend business designed to solve a social problem. It follows the following seven principles:
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.
“A social business has owners who are entitled to recoup their original investments… Yet any profit it earns is reinvested back into the business. Ultimately income is passed on to the target beneficiaries in such forms as lower prices, better service, and greater accessibility.”
What makes Grameen-Jameel a social business? Grameen-Jameel is the first social business in the Middle East and North Africa. In keeping with Professor Muhammad Yunus’ concept of social business and seven principles, Grameen-Jameel’s core objective is poverty alleviation through microfinance. The company has a double bottom-line approach, where both financial and social returns are maximized. While the company is structured as a for-profit limited company, it does not distribute dividends to its shareholders; rather it reinvests them back into the business in order to reach more poor people.
“A social business is one which aims to be financially self-sufficient, if not profitable, in its pursuit of a social, ethical or environmental goal. Examples of social businesses in the United Kingdom included The Ethical Property Company, Divine Chocolate and Fair Finance.” – Wikipedia