Social Business and Microcredit Forum

Hosted by The University System of Georgia

October 17, 2011

Professor Muhammad Yunus

Prof. Muhammad Yunus is the 2006 Nobel Peace Prize Winner and is known worldwide as the “Father of Microcredit” and “Banker to the Poor”. He is also the recipient of hundreds of national and international awards including the US Presidential Medal of Freedom and the US Congressional Gold Medal. Muhammad Yunus’s vision is the total eradication of poverty from the world. Professor Yunus was chosen by the Wharton School of Business for PBS documentary, as one of The 25 Most Influential Business Persons of the Past 25 Years. In 2006, Time magazine listed him under “60 years of Asian Heroes” as one of the top 12 business leaders.

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The Concept of Social Business

Social business is a cause-driven business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. The purpose of the investment is purely to achieve one or more social objectives through the operation of the company; no personal gain is desired by the investors. The company must cover all costs, make a profit, and at the same time achieve a social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. The impact of the business on people or the environment, rather the amount of profit made in a given period measures the success of a social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s.

Social business introduces a totally revolutionary dimension to the free market economy. It does not interfere with the mechanism through which the normal Profit Making Business (PMB) works and prospers – capitalization, expert business management, competitiveness etc., – but investors here do not receive any dividend, though they can recover their investment if they want to, and may reinvest in other social businesses or PMBs. The satisfaction gained in achieving the stated social goals are the only motive behind the investment, and the business will be evaluated according to that standard. Essentially it is a non-loss, non-dividend business aimed at social objectives – education, health, environment, whatever is needed to address the problems faced by society. The profits here remain with the business and help it to grow. The whole thing is based on the premise that entrepreneurs need not be motivated only by the profits they personally receive. They can also be motivated by social goals and may enjoy success in this arena with equal satisfaction. The important thing is not to mix up a Social Business with a PMB. In fact the inclusion of Social businesses alongside PMBs in the business world will give the free market capitalism a larger, nobler and a more fulfilling purpose. Its advantages over straightforward charity include efficiencies, continuous use with each turnover, competition with PMBs following the same rules, and utilization of business innovations as one of the most important advantages.