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.

FAQs

Who can run a social business?

Can social business be applied to environmental issues?

Should social business avoid making profit?

What kind of non-monetary return could social businesses generate?

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?

If loans are given, the Fund will receive interests. If equity is given, will the Fund in return receive shares and dividends on equity?

The funds which are given to the investees/borrowers can these be loans and equity or loans only?

When selecting investees/borrowers, do these need to be social businesses? If yes what type of social business?

Considering the relationship between the Social Business Fund and the investees/borrowers – is this/does this need to be a social business relationship?

How do you very the measurement of the impact of the social business?

How do you measure the success of a social business?

Does it only have to be a multinational company investing?

Do the same laws of businesses govern social businesses?

If I do not have the funds to invest, but I have a good idea, whom should I contact?

Can someone who started a social business decide to take profit?

What is the difference between a social business type II and a PMB?

Do the fund investors get their money back?

Who will invest in social business? Why?

What is the forecast of sustainability?

Who runs the social businesses?

How much do social business managers and workers earn?

What is wrong with earning a profit?

How can regular businesses and social businesses operate in the same market?

Will social businesses create competition with regular businesses?

Are social businesses taxed?

What is the difference between a donation to charity and donating to a social business fund?

What is the difference between corporations with donation programs and social businesses?

What is the difference between non-governmental organizations (NGOs) and social businesses?

What is the difference between corporate social responsibility (CSR) and social business?

What is the definition of a type II social business?

What is the definition of a type I social business?

What is the definition of a social business?

How did the financial and economic crisis affect your social business activities so far?

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)?

The definition of relative poverty in Germany is people whose income falls below 60% of the average income. Is that a reasonable definition to use for the purposes of a Social Business Fund there?