Professor Muhammad Yunus has articulated social business as a revolutionary approach to the free market system. Its premise lies in the notion that entrepreneurs are not only motivated by the profits they personally receive, but can also be motivated by social goals.
A social business is a non-dividend company created to solve a social problem. Like an non-governmental organization, it has a social mission, but like a business, it generates its own revenues to cover its costs. While investors may recoup their investment, all further profits are reinvested into the same or other social businesses. A social business is a cause-driven business and must be financially sustainable and mission-oriented. The business must achieve its social objective and at the same time cover all costs through a revenue model. The success of the business is not measured by the amount of profit made in a given period, but the impact of the business on people or the environment. In Professor Yunus’s Seven Principles of Social Business, he briefly outlines the key objectives of the social business model.
Simply, social businesses are non-loss, non-dividend businesses created to solve social or environmental problems. For example, social business can be used to confront some of these social objectives: health care for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, safe drinking water, and renewable energy. Examples of existing social businesses include Grameen Danone, Grameen Veolia, and Grameen GC Eye Care Hospital.