What is Social Business (SB)? Definition: an SB is a company that is not loss-making, does not distribute dividends, and that is designed to settle a social problem.
The profits are reinvested to develop the company’s action and to improve the product or service offered.
It's a third way between profit-making commercial businesses on the one hand, and the public sector and not-for-profit charities on the other. Instead of looking for profits, its main objective is to meet a social need by following a business model.
A business guided by a mission
The investors/owners can gradually recover the money they have invested, but they receive no dividends. The sole goal of the investment is to reach one or more social objectives. No personal gain is sought by the investors
It is managed like a commercial business and must be viable. The SB must cover all its costs and generate profits, all the while achieving its social objective.
It may give itself the aim of:
- giving the poorest access to healthcare, housing or financial services;
- improving the nutrition of undernourished children;
- providing drinking water;
- introducing renewable energies, etc.
The measure of success of an SB is not the cost amount of the project, but its positive impact on people or the environment.
The types of SBs
Type I SBs focus solely on activities with a social objective. The products developed are intended for the poor.
Type II SBs may undertake no matter what kind of project, even if profit-making, on the condition that they are owned by poor people. The latter may gain indirect dividends or benefits from it.
More on the SB companies supported by the Foundation…
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