Why Social Business?
All good and lasting things in business exist to solve problems. Social business focuses on problems different than business as usual. They focus on social, environmental and other systemic problems that affects a community local or global.
There are gaps in our social life left by lack of public institutions, or their lack of power. Social entrepreneurs and social business in extent believe these problems can be solved by applying modified business methods.
Social businesses focus when local public institutions fail; homelessness, poverty, lack of electricity, water and sanitation. Also, they can focus on the problems where global public institutions are not enough. These are the problems that are created in conflicts between ethnicities, tribe or larger tribes; nations.
The few examples of global problems that can be solved by business, at least can be tried are; inter-racial, inter-ethnic and inter-communal conflicts, climate change, world hunger among many more.
We in Colive focus on global conflicts inter-communal conflicts, largely know as post-conflict zones. It is our starting ground. We are hoping to create a successful example of communication and cooperation to start a conversation in the World. Because, we believe that global problems can be solved by global communication and cooperation.
We also do all we can for the environment. The communities doesn't come in exchange of environment. We teach our farmers in post conflict zones about regenerative organic agriculture. These methods are not only for organic cultivation but organic farming in a minimal carbon emission way that build the soil for generations.
You might know these problems and heard them mentioned under different names. So, why business and not some trust, charity or non-profit organisation.
Money is a strong engine that drives change in either direction as all tools do; good and bad. We focus on the good.
The money you "invest" in a social business (or its product) is a powerful indication that shows the social business that there is a public demand for its solution. It shows that you care. The second, it creates a sustainable drive to solve the problem and move on to the next one.
What is in a name? | Definition of a social business
Yes, there are many names for how the tackle the same social and environmental problems. There are non-profit companies, corporate social responsibility programs, social enterprise, ethical business, ethics based business and on and on.
We choose social business. The name fits the simplicity and the easy handle we look for in a name when describing what we do. It is a strong term in its foundation for us to build on.
Prof. Muhammad Yunus 3 founder of the Grameen Bank, created the original meaning of a social business.
"A non-dividend company that is created to address and solve a social problem."
However, we dig a little deeper and add to the Yunus' definition with certain aspects underlined. For us that are two aspects to any social business; it is a cause-driven business and it has a market-driven approach. We also referred to (1) and (2)
Definition of a social business for us;
Profit-second organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach. 1
A social enterprise's main purpose is to promote, encourage, and make social change. 6 Social enterprises are businesses created to further a social purpose in a financially sustainable way.
Changing meanings in different regions
In the USA, the "social business" term is traditionally associated with doing charity by doing trade, rather than doing charity while doing trade. In Europe and other regions, there is a stronger emphasis on organising community, democratic control of capital and not philanthropy.
Both of these meanings work on different aspects, so we don't box ourselves in the meaning we might face in the market we are in. We do take it into account but not ruled by it when we talk to our customers
To profit, or not to profit
Yes, that is the question. It is a misleading statement for social business. Muhammad Yunus, believes that a social enterprise should be modeled exclusively to achieve a social goal. We don't agree with that fully. Yes, it should be modeled to achieve a social goal, however, the efforts to serve its customer is need to be in that model too. Because, social business still have to be a business. Because, earned revenue must be the main source of income for the organization/venture. 1
This naturally creates duality in the goal. Social and business goals should play to one another though. A business can't try to solve the microplastics problem in the oceans and extract oil to be used in industrial setting at the same time.
The incentives of the company are designed such that greater impact directly correlates to a great profit. Investors and business partners today want to know that the companies they choose are doing more than just providing a product or service. They look for companies that are doing good. They will feel a special connection to companies whose values align with their own. 7
We are firm believers that company operations have to touch the community or the social goal in some way. Social businesses can't simply exist or rather shouldn't adding 10% for charity on top of a commodity product and call it a day.
The Social Enterprise Alliance (SEA) states the social enterprise's social mission is to help the disadvantaged, which is executed by directly providing goods or services (not money).
So, we go more with The Social Enterprise Alliance (SEA) understanding that social business should not be motivated by profit, rather profit motives should be secondary to the primary social goal. Profit should be on the passenger seat not the driver. It should feel comfortable enough to stay in the car but not call the shots.
"A charity dollar has only one life; a social business dollar can be invested over and over again." Prof. Muhammad Yunus
Social business vs. non-profit organisations
Non-profit by definition are not generating revenue but collecting donations in order to fulfill a specific goal for a specific problem. They, by nature, are charities, not businesses.
Social businesses are sustainable, and earned income from sales is reinvested in their mission. They do not depend on philanthropy and can sustain themselves over the long term.
Social business vs. NGO
NGOs provide public services external to a government hierarchy. There are plethora of examples. One would be to help refugees coming to Europe with language and job skills. The governments might not be able to willing to ramp up financing and capabilities to help people in need, that is why there are NGOs in theory.
Social business and NGOs differ in their funding. NGOs receive public funding almost exclusively and partner with private businesses in a non-financial way only if they serve the purpose of the NGOs.
Social business vs Corporate Social Responsibility (CSR)
Many commercial enterprises would consider themselves to have social objectives, but commitment to these objectives is motivated by the perception that such commitments will ultimately make the enterprise more financially valuable. These are organisations that might be more properly said to be operating corporate responsibility programs. Social enterprises differ in that their commitment to impact is central to the mission of the business.
Principles of social business
We adhere by the six principles of social business according to Professor Muhammad Yunus and Hans Reitz, the co-founder of Grameen Creative Lab:
- 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
- Financial and economic sustainability
- When investment amount is paid back, company profit stays with the company for expansion and improvement
- Gender sensitive and environmentally conscious
- Workforce gets market wage with better working conditions
- ...Do it with joy
- And, we add one more; Their models can be expanded or replicated to other communities to generate more impact.
Colive is a social business.
In essence, that means that profit comes second for us in the decisions we make.
We care about the global community we are from.
We care about the environment around us.
We care about the striving in each and every corner of the world.
We source our products from post-conflict zones to build up economic activity there.
The guided economic activity in turn will be a local force for good.
Next up, we will talk about how we work to accomplish our social mission. We will talk about the methods we employ and how each bottle of olive oil serves a larger purpose.
For peace and taste,
- J., Lane, Marc (2011). Social enterprise : empowering mission-driven entrepreneurs (1st ed.). Chicago, Ill.: American Bar Association. ISBN 9781614382003. OCLC 886114442.
- https://socialbusinessearth.org/ - (3 - definition_