Social business is a cause-driven, for-profit, non-dividend business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company; no personal gain is desired by the investors. The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way.

The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goals.

Within our economic system, there are currently two prevailing approaches to organizations. The first is that of the private sector where companies sell products or services to make money. However, there are important issues in our society which are not addressed by the private sector because they do not offer profit-making opportunities. This usually leads to government interventions to create legal and institutional frameworks to advance the common good and to protect the interests of weaker members of society.

Where both governments and the markets reach their limits, charities may fill the gap. The problem is, of course, that the system does not work well enough. We live in a world of terrible injustice and widespread poverty. Governments and charities have the will to improve it, but they lack the efficiency and innovativeness of the private sector. So why not combine the two sides?

Let’s bring the methods of business to the task of solving social problems such as poverty and create – social businesses!

7 Principles of Social Business

  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 salary with better working conditions
  7. … do it with joy!

Good To Know

Social Business prioritizes solving Social Problems and even Recycles Profit to that end. Conventional businesses exist only to make money for the owner/shareholders, sometimes even at the cost of the society.

Corporate Social Responsibility (CSR) programs are the philanthropic programs/activities of companies meant to do social good. Social Business is a company by itself which is dedicated to achieve a social goal. Note – CSR funds established by Conventional Businesses can be used for Social Businesses.

Social Businesses are currently using regular business law. But a new regulatory structure specifically tailored to the needs of Social Business should be created.

A cooperative is owned by its members. It is run for profit to benefit its member- shareholders. It is not Social Business. If the member-shareholders are poor people then a cooperative can be treated as a Social Business.

Social Businesses could also be created to fight against climate change. Social business investors, with a strong environmental commitment, could invest in a company which plants trees, increasing the space under forest cover and oxygen in the atmosphere. Entire tracts of land where forests once existed could be regenerated through social business. Other potential areas can also be brought under forest cover through social business.

Social Business is favorable for rural areas of developing nations in a greater extent. Once you get into solving social problems you have the opportunity to develop more Social Business models. Since the rural people face many social problems, Social Business has a major role to play in the rural areas.

The profit generated from Social Business can be used for further expansion of the business and a portion may be saved to meet future circumstances. It is also frequently used to payback the inventors for their investment. But under no circumstances may this payback amount exceed the invested amount. And of course, NO DIVIDENDS.

A social business is like any other business. It will follow the same principles of competition, and bring more competition in the market. Consumers will be the beneficiaries. The more the number and varieties of businesses the more is the competition. Social business will strengthen the forces of free market.

A Social Business must be self sustaining. It should generate enough income to cover its own costs. Part of the economic surplus the business creates is invested in expanding the business and a part is kept in reserve to cover uncertainties.

Step 1: Pick a Social Problem,

Step 2: Start brain storming ideas,

Step 3: Come talk to us and… yep. That should do it.

An NGO is a non-profit organization that operates, contributes to, or participates in, various projects on education, training or other humanitarian, progressive, or watchdog activities. They usually collect donations to run programs for disadvantaged or distressed people. The difference is that NGOs operate on donations, whereas a Social Business is a self-sustaining business.

In a profit-maximizing company, you measure success by the amount of profit made in a given year and developing the prospect of earning more in future years. In a social business company, you measure success by the success achieved in reaching the social goal in specific measurements (reducing the number of malnourished children, reducing the death of infants, number of people receiving safe drinking water, etc).

Yes, since there is no category of business in the company law known as social business, it will appear to the tax authority as a normal business organization and will be treated as such. Social businesses are taxed the same way as any other business.

Live Examples

Get In Touch!

We are looking forward to start a project with you!

We live to initiate change. And the best way to do that is to do it together. We’re always open to ideas from all corners of the world, be it a new project or a competition, maybe a training session or even an SBYA for your area or school or university.

Just drop us an email at [email protected]  and we’ll get right on it. Let’s work on something so crazy people won’t stop talking about it.

SBYA Global Foundation

House – 692,

Road- 09, Mirpur DOHS,

Dhaka-1216, Bangladesh

Business Hours

Sunday – Thursday | 10:00 am – 6:00 pm

Phone

+8801784-398934