I’ve been reading Muhammud Yunus’ 2007 book “Creating a World Without Poverty“. Plenty of stuff on the Grameen bank, but the bit that really interested me was the section on social business.
According to Professor Yunus there are social enterprises, and social businesses. Social enterprises include not-for-profit organisations, publicly funded organisations and so on. Social businesses are a type of social enterprise that use the tools and techniques of business.
Social businesses differ from ordinary businesses in that rather than having the primary objective of making a return to shareholders, the primary objective of a social business is solving social or environmental problems.
These objectives can be very varied. A social business can serve a particular community and solve any social or environmental problem. Social businesses may employ people from a particular disadvantaged community; but even where that isn’t the case, ownership is spread widely and democratically.
In Yunus’ definition a social business must also serve a disadvantaged community. Robert Owen’s co-operative movement doesn’t fit this definition, according to Yunus, because it isn’t “inherently oriented towards helping the poor or producing any other specific social benefit”.
I think I understand this, and I’d be interested to know what the co-operative movement think of that exclusion.
But what I do like about Yunus’ definition is the idea that a social business, unlike a charity, doesn’t have to divert energy to raising funds. And unlike a not-for-profit, profit isn’t minimised. It’s just used differently, being reinvested into the same or a different venture.
This recycling of profit creates the ability to achieve “lift-off” velocity and start solving social and environmental problems in new and exciting ways. It means surplus profit, once initial investors are paid back, can be used to invest in new companies, with new aims.
And I’d like to humbly suggest one bit of reframing.
In one sense, we are all disadvantaged. We’re disadvantaged by a crazy financial system that rewards the few to the detriment of the many. We’re disadvantaged by a political system that seems to be largely ignoring the risks of climate change and environmental destruction. We’re disadvantaged by an economic system that prioritises conspicuous consumption over personal health and well-being.
Surely that creates an amazing opportunity? For the creation of social businesses which address the needs of not just one community, not just one particular group. Instead their purpose is change the system and to serve all of us, the whole of humanity.
That, to me, seems worth doing.