No Loss, No Dividends: Social Business Spurs Social Change

Earlier this month, Nobel Peace Laureate Muhammed Yunus met with Secretary of State Hillary Clinton to discuss the concept of social business and address how the U.S. government and U.S. aid organizations can adopt social business principles to combat poverty.

Social business, a concept coined by Yunus, addresses and attempts to solve social problems through sustainable business models. The increase in corporate social responsibility, community development initiatives, and a visible concern for environmental and social progress has encouraged the rapid development of this concept.

“No Loss, No Dividends” is the motto of social business. This understanding blends the objectives of non-profit and for-profit businesses. For example, in social business, all profits are reinvested into the business to ensure sustainability, expansion, and growth. However, investors only receive the return of their original investment, allowing for the company to pursue long-term philanthropy.

Social business provides a sustainable outlet for tackling social injustice and combating poverty. Although many companies adopt certain aspects of the social business model, several challenges have hindered its inception into the business arena. For starters, social business is at odds with the traditional business mentality of maximizing profits and expanding services for personal gain. Additionally, social business is a daunting challenge for small organizations and start-up companies as they lack the reputation, security, and financial reserves to attract investors, maintain a competitive edge, and prosper from the start. Multilateral cooperation between companies committed to social business is a way to introduce the concept into the business mentality, encourage the collaboration between various economic sectors, and reduce the initial financial burden on a single company. 

Increasingly, companies have adopted programs highlighting social responsibility and striving to create social change. These companies vary in size, economic sector, and social goals. For example, Coca-Cola’s Live Positively campaign addresses the significance of balanced living, while The Kenneth Cole Foundation Awearness teams up with various change-agents and organizations to support causes such as HIV/AIDS awareness. In 2006, Toms, a shoe company committed to a “One for One” movement, began providing a pair of shoes for a child in need for every pair of shoes purchased.

As corporate social responsibility expands in depth and scope, the demand for resources and tools to promote social change has increased. Ashoka Changemakers, a global online community committed to social entrepreneurship, inspires efforts aimed at social change and offers various resources to achieve new goals.

To date, social business has been largely institutionalized by Grameen Bank, a micro-credit finance institution established by Yunus. During the past decade, Grameen Bank and its subsidiaries have teamed up with several corporations to launch social business ventures aimed at improving the living conditions of residents of Bangladesh. Examples include: Danone Foods Ltd. to offer children yogurt containing necessary nutrients often lacking from traditional rural diets; Adidas to provide low-cost shoes and protect many from diseases commonly acquired by walking barefoot; and Intel to develop digital solutions to address challenges in healthcare and agriculture. While these initiatives began in Yunus’ native Bangladesh, his concept has spread internationally and offers hope for increased global engagement to respond to social problems.

Photo Credit: Wikimedia Commons