Social Business

The Nobel Prize winning economist from Bangladesh, Dr. Muhammad Yunus, has been promoting the concept of "Social Business" around the world. He has written a book explaining in details the concept behind social business and how it can operate and sustain. Briefly, a social business can be summarized by these points:

1. it is an enterprise that produces a good for the benefit of the society
2. the primary motive of the business is not profit maximization, but to benefit the society
3. the organization is run as a non-profit, and any profit that is earned is either invested to make the social good better, or spent for the benefit of the local community.
4. investors can invest in the firm, and they need to be paid back along with some interest.

Besides producing a product that benefits a society - like Danone producing nutritious yogurt in collaboration with Grameen Bank in Bangladesh - the social business provides employment to the locals, and improves the community by investing any profits earned by the firm. Investors will invest just as if they are giving money to a charity, except this time the investor will recover his/her investment, along with some profits. Dr. Yunus goes in depth in the book how a firm can raise capital from investors.  

In short, a social business is a concern that is not run by profit-motive, but for the benefit of the society. If this idea catches on, it can change the concept of charity. If charitable organizations were converted into social businesses, then they could invest charitable donations to produce a good that not only benefits the region, but also improves the local community. Thus this idea needs to grow. My one concern is the long term continuity of the idea of social business. If the idea becomes a worldwide phenomenon, then it can bring a huge improvement in all parts of the world.

The one important thing that will help the concept of social business to grow is to keep the idea of profit maximization away from social businesses. Even if the social business has the potential to become very profitable, the owners should refrain from changing the mission and vision of the firm.