FAQ on Social Business
Guidelines from Grameen Social Business
Social Business leads to generating wealth and addresses social needs that enable societies to function more efficiently. Social Business provides a necessary framework for tackling social issues by combining business know-how with the desire to improve quality of life. Therefore instead of being self-focused Social Business is all about others.
Equity investments from the SB fund into social businesses will (1) not cover the management costs or profit for the fund (as no dividend can be given) and (2) will ultimately be a drain on the fund as only the original investment amount can be returned to the fund?
Early social business examples are trying to overcome malnutrition, the lack of safe drinking water or to improve access to health care and information technologies in developing countries. What other social business opportunities can we find?
What about the ground realities? How can your yogurt factory, the tiny little seed, grow, if the prices for milk are going up? You cannot simply adjust your selling price, because your customers are extremely price sensitive.
In CREATING A WORLD WITHOUT POVERTY, we have a few pages about the cooperative movement, in which we say that a co-op is not a social business because it is not necessarily dedicated to a social cause such as helping the poor. What about a co-op that does dedicate itself to helping the poor–for example, a co-op of poor workers who band together to build and grow a business? Could this be a social business?
There seem to be quite a few organizations with social missions that are financially self-supporting thanks to business-style revenue streams from sales of goods and services. However, most were started not through investments or loans but through charitable grants. Am I right in thinking that these cannot be social businesses? If that is the case, does this affect our thinking about Grameen Bank, since in its early years Grameen Bank did receive some grants from foundations and others? Also, is there, in your view, a big disadvantage to using grants as a source of startup capital? If so, what is it?
Are you aware of any organizations anywhere in the world that fit your definition of social business, other than Grameen Bank and the various Grameen joint ventures you are working on (Danone, Intel, Veolia, BASF)?