Abridged excerpt from book “51 Questions on Social Entrepreneurship“.
What is a Social Business?
A social business is one that is completely committed to achieving a social objective, so while not operating at a loss, it also doesn’t hand out dividends beyond initial investments made to the company.
Professor Yunus specifically defines two types of social businesses: Type I and Type II.
Type I Social Business
According to Professor Yunus, a Type I social business is focused on social objectives. It either produces a product or delivers a service targeted to the poor or to addressing a pressing problem. The yogurt is the result of a joint venture between Yunus’ Grameen Bank and the multinational brand Danone.
Multiple iterations of the yogurt were tested to maximize nutrients while ensuring the cost was low enough (for example, it was originally sold at 5 Bangladeshi Taka, around $0.07 US, to ensure that the ventures met Yunus’ vision of a true social business).
Type II Social Business
Type II social businesses can adopt a profit-maximizing, dividend-generating model, as long as they are owned by the poor and disadvantaged. The profits can be returned to the owners or employees through dividends or indirect benefits.
The most famous example of a Type II social business is the Grameen Bank itself because it is owned by the disadvantaged borrowers of the bank, who are mostly women.
This is an abridged excerpt from the book, “51 Questions on Social Entrepreneurship” by Neetal Parekh. You can learn more and buy the entire book—which is told as a story of three aspiring social entrepreneurs and which dives into key aspects of social entrepreneurship including defining the space, legal structures, securing funding, and measuring impact at 51questions.com