A social business is a new kind of business. It’s quite distinct from either a traditional profit-maximizing business or a not-for- profit organization. A social business is outside the profit-seeking world. Its goal is to solve a social problem by using business methods, the creation and Sale of products or services. A social business is also a non-loss, Non-dividend Company designed to address a social objective. The profits are used to expand the company’s reach and improve the product/service.
What is a Social Business? A Social Business is a new kind of business, with a goal to solve a social problem by using business methods, including sale of products and services. There are two kinds of social businesses: Type I and Type II.
Type I Social Business: This kind of social business is a non-loss, non-dividend providing model devoted to solving social problems and owned by investors who reinvest all profits in expanding and improving the business. The investors can take back their original investment over a period of time, but cannot take any profit.
Type II Social Business: This kind of Social Business is a profit-making company, owned by poor people, either directly or through a trust that is dedicated to a predefined social cause. Since the profits are directed towards poor people, this profit is automatically serving a social cause. The Grameen Bank, which has the poor people as its depositors and customers, is an example of this kind of social business.
These were developed by Prof. Muhammad Yunus at the World Economic Forum in Davos, January 2009
* 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
* Financial and economic sustainability
* Investors get back their investment amount only. No dividend is given...