Muhammad Yunus and Social Business

Last summer I wrote a post about the book A Billion Bootstraps which led to Amy and I getting involved in Microfinance. Since that time, I’ve been wrestling in my mind with how to combine some of the most successful elements of capitalism with those of non-profits in order to create charities that are self-sustaining. The idea is to structure companies in such a way that they could generate their own consistent revenue stream by other means than donations and bake sales. The companies however would still be non-profit and targeted on specific philanthropic initiatives.

Well, long story short, I got a little distracted last fall and was never able to reconcile the concept in my mind. That is until I picked-up Muhammad Yunus’ new book Creating a World Without Poverty: Social Business and the Future of Capitalism. After reading this, its safe to say that the creator of Microfinance has done it again. 

In this book Yunus introduces the idea of the Social Business model which he defines as:

a non-loss, non-dividend business. Rather than being passed on to investors, the surplus generated by the social business is reinvested in the business. Ultimately, it is passed on to the target group of beneficiaries in such forms as lower prices, better service, and greater accessibility

Yunus’ first voyage into Social Business was a joint effort between Grameen Bank and Danone to offer highly nutritional yogurt at prices that are affordable to the poorest people in Bangladesh (great overview available here).

It only took until Chapter 2 in the book before my head was spinning with ideas about, not only how to expand this concept to address our country’s poor, but also what will be required to create a true Social Sector and bring the idea of Social Business mainstream.  Thoughts of creating Social Venture Capital Funds and working with Congress to create new and unique tax and entity structures is rather exciting. Expect to hear more from me on this in future posts.

I also have to think that the answer to America’s (and the world’s for that matter) Health Care crisis lies not in relying on our Government to push some type of “Universal” Plan, but rather in creative individuals creating a social business model to redirect industry profits back into solving the problem.