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Social Businesses: Creating Solutions for Social Problems
Track: Partnerships Expanding Market Inclusion
Date: Friday, October 11th
Time: 9:00 – 10:30 AM
Muhammad Yunus, Nobel laureate and founder of scores of social businesses (including Grameen Bank) as well as the Yunus Centre, opened the plenary session “Social Businesses: Creating Solutions for Social Problems” at the 2013 Partnerships against Poverty Summit with his hard-earned wisdom. The basic idea of social business is this: if you move the organizing principle of the capitalist business model away from profit and center it on solving social problems, you have a very powerful tool. He said,
[Social business is] an expanding system; whatever you have invested, it’s coming back, and you’re reinvesting it and you create new things…It departs from the conventional idea that business has to be something profit-centered…If you take the profit part of it separate—that I don’t want to make profit, I want to dedicate the business to solve problems—suddenly this becomes a very powerful tool.
Secretary Imelda Nicolas, chairperson of the Commission on Filipinos Overseas, moderated the plenary, leading Professor Yunus, Dr. Jaime Aristotle Alip of CARD MRI (Philippines), and Nasser Al-Kahtani of the Arab Gulf Program for Development (AGFUND in Saudi Arabia) in a discussion about the necessity of the social business model to alleviate social problems. They argued for this model and how to connect social investors with social businesses to effectively combat poverty was discussed to be of paramount importance.
Contrasting elements of the conventional business model with that of social business, Professor Yunus stated, “Simple businesses do not ask the right question. If you ask the question: ‘Do you want to change the world? Invest in us and change the world.’ That’s what social business is all about.”
Financial sustainability was stressed as a key element of the social business model throughout the plenary with all speakers addressing the virtue of profits being reinvested in the business to increase positive impact.
Dr. Alip of CARD MRI focused on similar aspects of the merits of social business, recounting his experience assisting Filipinos living in poverty by empowering them through access, ownership, and control of resources. CARD MRI, a leader in microfinance and community-based social development, is a “Type II” social business where it is profit-oriented but owned by the low-income clients it serves—thus the profits serve the beneficiaries rather than external investors.
Moreover, Dr. Alip said, “We [CARD MRI] create employment; we don’t seek employment.”
He went on to showcase the expansion of CARD MRI into health insurance and pharmaceutical companies in order to address the diverse needs of low-income clients. Dr. Alip spoke on behalf of all social minded businesses, saying, “We are not just in the business of microcredit, we are in the business of poverty eradication.”
Expanding on Dr. Alip’s ideas, Nasser Al-Kahtani of AGFUND agreed that a social business is not only focused on one cause such as microcredit, but will undertake any initiative that is necessary to address the problem. AGFUND is classified as a “Type I” social business, which reinvests profits in the organization in order to provide services to address client vulnerability and alleviate poverty.
Al-Kahtani stressed, “Poverty is something that’s complicated, [but] the solution is so simple. We [often] try to solve the problem in a complicated way.”
Each of the dynamic speakers shared their unique experience with funding, creating, and/or implementing social businesses to address various problems confronting individuals living in poverty. Contrary to profit maximization and “me-centered” businesses, Professor Yunus explained, “We created social business on the basis of selflessness.”
The goal of all social businesses and their advocates is to help communities bring themselves out of poverty by addressing social problems and generating profit that is reinvested in the business for financial sustainability. By meeting this “double-bottom line,” social businesses revolutionize capitalism and solve social problems.
Watch the full video of this plenary