Practicality for social business, says laureate

“First is to identify the social issue, seek solutions and then bring business ideas to solve the issue,” said Yunus, who founded Grameen Bank to lend money to the poor worldwide.

While a conventional business is about maximising profits and not caring for other people’s well-being, a social business takes the opposite approach by stressing social objectives, such as alleviating poverty and unemployment, preserving the environment and advancing education, he said.

Yunus delivered this message in a keynote address at the Social Business Symposium hosted by the Asian Institute of Technology, the Yunus Centre at AIT (Asian Institute of Technology) and the Thai Health Promotion Foundation.

He is promoting the social business concept, which grew out of his successful experience in running Grameen Bank to provide collateral-free loans to the poor in Bangladesh.

A social business is not charity work, which is one-way giving and often is not sustainable. A social business charges customers for its products or services just to cover operating costs and any profit realised will be reinvested to expand the business. 

“It is a non-dividend company,” he said.

Traditional capitalism, which encourages people only to make money, is the source of all crises – financial, health and environmental, Yunus said.

His social business model is a new tool for tackling social issues. For example, Grameen Bank sells seeds to people in Bangladesh. The objective is to feed the poor, not to make money.

Another project is a social business set up by Grameen and Danone, a French dairy firm, to produce and sell yoghurt at an affordable price to provide nutrition for poor children.

Responding to the challenges to starting a social business, Yunus suggested making the business model very simple and forgetting about funding. “Money is not an issue, but the idea is an issue.” 

Companies and people can be found that want to provide financial support to a good idea, he said. 

Yunus also has promoted a social business investment fund – a vehicle for investors to put money into social businesses around the globe, or in their communities. 

“Investors would get zero returns but they would get their original investment back,” he said.

One such fund is the Danone Communities Fund, which was launched by the shareholders and employees of Groupe Danone. 

Microcredit and the social business model can apply to both developing and developed countries, since the poor are the same everywhere, Yunus said. 

Now Grameen Bank has four branches in New York, providing microcredit to the poor. The average loan is US$15 (Bt465). 

Grameen Bank does the opposite of what conventional banks do. Conventional banks lend money to the rich while Grameen offers microcredit to the poor, he added.

Krissada Raungarreerat, chief executive officer of Thai Health, said many people wanted to operate a social business but they lacked business skills.

Potential areas for developing a social business include providing welfare for the disabled and homeless, and improving the quality of education, he said.