The Ultimate Guide to Social Business Investment

For 10 years now, the Grameen Creative Lab has been dedicated to promoting Social Business all around the globe. As a Social Business expertise company we are focusing our scope of work on three pillars, which are:

         Interact

         Incubate

         Create

One of our main areas of work is to spread the concept of Social Business and to encourage corporates and organizations as well as individuals to support and start a Social Business. But before we can convince anyone of aligning its economic activities with the principles of Social Business we need to bring the concept – invented by Nobel Peace Prize Laureate Professor Muhammad Yunus – closer.

Still today, though there are many definitions existing on the web, there seems to be a clarification needed. What is Social Business is thereby the leading question, although it should be asked, what is the impact of Social Business and why is it important to support this kind of business model?

A sustainable economic business model

Although the word social is really prominent and important to Social Business, a social business is still a business as any other. Unlike charity where the project mainly aims to reach a social goal without focusing on being self-sustainable, a Social Business aims on both: A Social Business offers and sells products or services and must cover all costs as well as be financially sustainable, while achieving a social objective.

The aim is to build a sustainable, long-lasting and of course successful business model that generates enough revenue to pay its employees at least the average market wage, to secure sustainable business practices. What is left (the profit) is ploughed back in the company for improvements and impact maximization. The owner and any other investor renounce to dividend.

As such, a social business is a non-loss, non-dividend company.

The difference between social business investment and charity

This kind of investment has nothing to do with charity. In charity, you give your money as a donation to a non-profit organisation to support a social cause. By this, your money is gone and you get a donation receipt. Of course this money is of high value to the organisation and its work, but the donated dollars and euros have left the economic cycle and thereby the chance to generate more impact. They have ended their life.

That doesn’t mean that charity isn’t good! It’s really important because it focuses on major problems within its community and brings awareness to inhumanity and injustice in our world. But still, the money spent will not be reinvested or fuels a financially and economically sustainable business that consistently generates revenue and by thus impact – and this is what Social Business is doing!

First, the money you invest into a Social Business is not lost. It’s an investment that the investor can gradually recoup, but cannot take any dividend beyond that point. Furthermore, as soon as the original investment has been recouped by the investor, profit stays within the company to expand its outreach and increase the social impact.

The 7 principles of Social Business

Beside the main characteristics of being a non-dividend non-loss company a Social Business is based on the following seven principles:

1.        Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization.

2.      Financial and economic sustainability

3.      Investors get back their investment amount only. No dividend is given beyond investment money

4.      When investment amount is paid back, company profit stays with the company for expansion and improvement

5.      Gender sensitive and environmentally conscious

6.      Workforce gets market wage with better working conditions

7.       …Do it with joy

Following this principles needs dedication and the unbroken will to rethink and redesign the way businesses work today.

Create long-lasting change through Social Business Investment

By investing in a Social Business partners can be sure that the investment isn’t lost but serves a good cause and will have an endless life. The impact generated through social business will be always bigger than it is “just” through donations and charity organisations as Prof Yunus says: “A charity dollar has only one life, a social Business dollar has an endless life.”

If you want to find out more about successful Social Business cases and how investors think about how their investment contributes to creating more social impact throughout the world visit the Global Social Business Summit – the global leading conference on Social Business – and get in touch with the global Social Business community.

You are a change maker and a dedicated ambassador within your company and need to convince your boss to send you to the Global Social Business Summit? Don’t miss our article about 5 reasons why you need to attend to the Summit: READ MORE

Go to: www.gsbs-2018.com for more information about the summit

Visit www.grameencreativelab.com to find out more about our work and impact

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