Social Business

A social business is a business with a social aim. The term refers to Muhammad Yunus who describes social businesses as following: "this new form of business is basically the same as profit-maximizing businesses: it is not a charity, but a business in every sense. The managerial mindset must be the same as in a business: when you are running a social business, you think and work differently than if you were running a charity, even though your objective is different from a profit-maximizing company. At the same time as trying to achieve their social objective, social businesses need to recover their full costs so they can be self-sustainable. Their owners never intend to make profits for themselves (there are no dividends), but they are entitled to get their money back if they wish. Rather than being passed on to investors, surpluses generated by the social business are reinvested in the business, and thus, ultimately, passed on to the target group of beneficiaries in such forms as lower prices, better service or greater accessibility. Thus, a social business is designed and operated just like a ‘regular’ business enterprise, with products, services, customers, markets, expenses and revenues. It is a no-loss, no-dividend, self-sustaining company that sells goods or services and repays investments to its owners, but whose primary purpose is to serve society and improve the lot of the poor." (Muhammad Yunus, Bertrand Moingeon and Laurence Lehmann-Ortega (2010): Building Social BusinessModels: Lessons from the Grameen Experience; in: Long Range Planning Vol. 43, pp. 308-325)