Muhammad Yunus and Social Business

Rodney Schwartz
CEO, ClearlySo

 

social business languageRecently, I was asked to write a review of Muhammad Yunus’ latest book on Social Business for the Stanford Social Innovation Review—the issue will be out shortly. Yunus, the undisputed founder of micro-finance, is someone for whom I have a great deal of admiration, in particular for his insight into innovation at the “bottom of the pyramid” and the benefits of lending mostly to women. I found the book an easy read, although I was somewhat concerned by the unnecessarily rigid limitations on what a social business could be.

Separately, I had occasion recently to look at the Wikipedia entry for "social business". What I found troubled me—the entry had become a summary of the book and an advert for Grameen. This concerns me for several reasons:
 
  • First, it seems contrary to the spirit of Wikipedia itself as an open forum where opposing viewpoints are aired.
  • Second, the concept of social enterprise and business dates back at least 150 years in the UK to the Rochdale pioneers, founders of the cooperative movement, and the great Victorian social businesses (like Cadbury’s) and the mutual societies. The Wikipedia entry contained no reference to these. Such historical revisionism gives me a slightly Orwellian chill.
  • Third,ClearlySo has an undeniable commercial interest in a broader definition. Many of our 1400+ social business and enterprise (SBEs) members from over 40 countries would be unnecessarily excluded from the ranks of social business, although this is how they see themselves.
  • Finally, there is a risk that by limiting the category only to non-profit businesses you undermine the basis for much social investment in the UK, Europe and the United States. This would be seriously damaging and seems unnecessary.
 
As deserving Nobel Peace Prize winners, one does not criticise Yunus or Grameen lightly. But an effort to impose rules that could exclude experimentation in the sector concerns me. It prompts three simple, but highly important questions:
 
  • Is there no room for several definitions of what a social enterprise/business is?
  • Can we recognise that the Grameen approach of leveraging substantial amounts of corporate capital in exchange for the CSR benefits is but one approach to enabling the social economy?
  • Is it not possible that opportunities for social investment in Europe and the US are very different from those that exist in Bangladesh where Grameen was founded?
 
Join Rod Schwartz, CEO of ClearlySo, in this provocative conversation.
 

 

  • Debbie Alves

    Definitions of Social Enterprise

    I agree wholeheartedly, Rod. One can trace social enterprises back much further (as one can also do with a non-economic development form of microfinance — something that has been key to helping immigrant groups in the US throughout our history). I also have great admiration for Dr. Yunus and the Grameen organizations, but there are definitely important aspects overlooked in a lot of the discussions, none of which detracts from his important contributions.

    Perhaps we need definitions of the environments and social structures in which different types of social enterprises operate. I certainly would not limit it to US/Europe and Bangladesh. One example would be the CSR type, but cooperatives in many cultures often provide vital social enterprise roles, without the corporate-CSR interplay. Another example would be the government-capital-smallholder application of agricultural extension programs — something else that fueled the US’ tremendous gains after World War I, and which has been successfully realized in other countries. The for-profit model is a third.

    Definitely topics to be discussed, debated and examined further.

    • Rod Schwartz

      Definitions of Social Enterprise

      Dear debbie

      Yours is the first of 15 replies as I open this morning!

      I have nevcer had such a strong response to anything I have ever written on Social Edge

      thanks for your reply and apologies to all those it will take me time to reply to–i am a crap typist

      Your comments are spot on, I completely agree

      we need a breadth of definitions

      in fact, what we need most of all are not defintions, but getting stuff done

      who cares what we are if, whatever we do (within legal parameters) we make the world a better place

      thanks–rod

  • Rubens Turkienicz

    clarity is required

    Dear Mr. Schwartz,

    Your concerns are understandable.

    Before plunging into a sterile discussion, how about a few clarifications – if you would so kindly answer these simple questions:

    a) What for do you need a definition of "social business" at all?

    b) "Social" means collectivity, why the qualifier for any noun at all?

    c) "Business" could mean anything – from busyness (occupation) to ripping other people off. What is your definition (if you need that) of "business"?

    In my mind, what is important is that we overcome the dominant mentality – e.g.: "social" meaning charity, and other aberrations (or else apologies for fooling some people some of the time).

    Moreover, are we building a new way of being social, a world community that works for the common good in each instance – or else are we just finding new names for the same "system" that brings us to this terrible condition for ourselves and this little planet full of wonderful beings?

    Last but not least, how are we going to act in accordance with our inevitable interdependence and stop playing with words? I say NOW!

    Thanks for listening. Your eventual response will be duly appreciated.

    Only the best to all of us, here and now, and for our children’s children,

    Rubens Turkienicz

    • Rod Schwartz

      clarity is required

      Dear Rubens

      Thanks for your reply

      I do not see this as a sterile debate at all

      And your challenges are appropriate, thought-provoking and quite fertile

      Allow me to take them each in turn:

      a) In general a definition is not necessary. Our company, ClearlySo (www.clearlyso.com) has over 1400 social business and enterprise (SBE) members. We restrict membership to those which qualify as either. For social enterprise we use the UK Government’s definition (why re-invent the wheel?) and we felt obliged to come up with one for social business, as otherwise the site would have no meaning, and we feel obliged to say what we mean. We try to keep our definition as broad and inclusive as possible, but we needed something to eliminate businesses which have no social element, of course. People coming to the site to find SBEs expect some pre-qualification, especially, for example, investors. I welcome other people’s definitions as well. What I objected to, in Yunus’ book and the wikipedia site, was a seeming attempt to impose a definition onto others. We can each have our own definitions, and, as I said in the previous reply, should spend more time on the work, than the definitions.

      b) "social" has many meanings, but words like "social" added to words like "business", or "investment", or "enterprise" have come to have a particular meaning of their own in English.

      c) The Oxford English Dictionary will have many definitions for business, including the ones you suggest. I was only saying I did not think Yunus’ strict and inflexible definition of the combination of the words "social" and "business" are in the sector’s best interest

      I completely atgree, social is about more than charity, and the social enterprise or business model has much to commend it, relative to charity, I think

      As for acting, instead of wrodplay, I am with you

      regards, rod

  • Harry Poliak

    Muhammad Yunus and social business

    Hello, with regard to the definition of social enterprise with out a doubt it can take many forms.

    I think what Professor Yunsus and his model of social business is attempting to do is define a way of approaching a business venture by putting social causes and the human element in front of making profit. If you understand his model, you will see there are two types. One for investor which are non loss non dividend businesses. What you put in you get back and profits remain in the business for programs, development and expansion and the other type, owned by the poor where they retain the profits. I think what Prof. Yunus is attempting to do is create a Brand for a profit making business that addresses a particular social issue.

    A social enterprise could be a bunch of school kids holding car washes and giving the money to charity and that would not be a social business.

    As for being Orwellian thats an opinion, the actuality is that his work defines a business model and that is a new thing. With regard to Cadbury’s not knowing the current history, I would guess ( and I express this with hesitancy) that today they are a regular corporation looking for highest dividend for shareholders. I doubt if a soft drink and chocolate (sugar laden and detrimental to ones health) would classify as a social business.

    • Rod Schwartz

      Muhammad Yunus and social business

      Dear hary

      Thanks for your reply

      My view is that a careful reader of the book will see a much larger objective than the one you are describing, but lets just agree to differ on that

      Furthermore, if these kids want to call themselves a social business, I for one will never object!

      Cadbury’s current history is a sad one, having been acquired by the US financial giant Kraft. their rich history was of a social business, dating from the Victorian era–a model for us today

      Kind regards, rod

  • MidiBerry

    Monopolies in Thinking and Action?

    Hi Rod

    I enjoy checking out your discussions on Social Edge. for I’m invariably thereby stimulated into fresh ideas and perspectives. I particularly appreciated seeing some reference from you here to social pioneers in the UK, for looking back from where we come from can yield understanding about where we’re going and it’s also good karma to appreciate one’s ancestors!

     

    I went to school in a town that owed much to the amazing Early family, who helped hugely to put ‘Witney blankets’ on the map when they succeeded in getting a large Hudson’s Bay order in 1805 and actually shared it with other blanket makers in the town who had formed a guild in the town in 1711. I would personally love to see ‘a spirit of sharing’ as a defining principle for social enterprise.

    ‘Mr Richard’ – as the then MD and descendant of the original founder was affectionately known – and his company were still a great force for gentility, benevolence and philanthropy in Witney when I was a child. This was before duvets and quilts captured serious market share in the business of keeping people warm in bed. The Earlys did not keep up with changing times, and over the years one saw yet another family business struggling and going the way of so many other socially as well as economically inspired businesses in the UK.

    I personally don’t get too het up by what Wikipedia offers – it is designed to offer alternative views, so the option is always there to write in contributions and have one’s own ‘two pennorth’. I do think it is important to remain vigilant about claims for the Grameen ‘legend’ and to share information about where it is working well, where it is encountering challenges, and what the strengths and limitations of such an approach may be in different contexts. The micro-loan business in general is becoming stocked with urban legends and examples of claims that do not hold up under detailed examination and careful evaluation, as some who have run and/or evaluated projects can testify.

    None of this careful scrutiny need detract in any way from acknowledgement, admiration and gratitude for Yunus as a ‘father of the modern micro-loan phenomenon’.

    Forgive me if I smile a little at your thesis, when I discover that your web-page advertises Clearly So as "The global hub for social business, social enterprise and social investment" and as "the online marketplace for social business". That use of the little word ‘the’ could be interpreted as attempting to be quite exclusive and monopolistic in tone itself. I feel anyone who tries to capture ‘the’ market on the multiplicity of social enterprise in today’s extraordinarily diverse world of experimentation and activity needs boundless ambition as well as a lot of luck, so good luck to you if that is what you are doing! May wind fill your sails, especially if it is to the benefit of the whole…

    Elsewhere, you say that ClearlySo is on a mission to “talk the social sector into existence”. Would it surprise you to know that some of us believe that the social sector is actually already alive and flourishing, albeit with plenty of scope for expansion and / or development… I’m sure it wouldn’t, not really! :)

    All the best, Midi Berry

       

    • Rod Schwartz

      Monopolies in Thinking and Action?

      Dear Midi

      I was about to log off and give my fingers some rest

      Your reply was so interesting that I felt obliged to answer (sorry Jo, you will be in the next batch!)

      Firstly, thanks for the story of the Early’s and Witney

      An inspiring story–I will look into it more (despite the sad end)

      On wikipedia, we will make our adjustments, but to do so before posting would have been silly

      As for Grameen and its legends, I am always suspicious of these stories, and as time passes they and many great legends take on a life of their own–one which looks increasingly beautiful and perfect–these myths and others are nevertheless also offer powerful lessons, as I know Grameen does. I have no first hand experience of Grameen to know any more, but thanks for the warning

      On ClearlySo and our boast of being, "The global hub for social business, social enterprise and social investment" and as "the online marketplace for social business", your caution is well-noted. We used to say "the first", which we believed to be true, but shifted–maybe we should shift back? We could say "a", or "just another", but that hardly seems ideal. We actually think it is "the best by a mile", but that seems quite boastful. We will give it some thought, I appreciate your point that it sounds exclusive and monopolistic, which is not our intention–just to be the best, as we define it

      I also agree, the social business and enterprise market needs diversity and experimentation and, more than anything, we welcome that. I think if you checked our social business blog (www.clearlyso.com/sbblog/) you would see we argue for this.

      lastly, I agree, the sector does exist, otherwise we would not be having this conversation :-)

      On the other hand, "Talking the sector into a more substantial existence" seems turgid–any other ideas?

      Thanks very much, Midi

      best, rod

  • jo davidson

    sustainable choice

    As much as I admire Muhammad Yunus too I agree with you Rod, limiting the definition of what a social business is, is just magical thinking in the service of denial. Or as Orwell had said ‘myths that are believed tend to become true.’

    In doubting, questioning and seeking sustainable choice, the main definition difference is one of social development yeah? Gandhi was more onto it than Orwell and he had said, ‘constant development is the law of life and who always tries to maintain dogmas in order to appear consistent, is driven into a false position.’

    Of course Orwell was right too, ‘during times of universal deceit, telling the truth becomes a revolutionary act…but beware Big Brother is watching you.’

    • Rod Schwartz

      sustainable choice

      Jo

      Thanks as ever

      As a literary expert I cannot keep up with you, but I am grateful, as ever, for your comments–and in this case, your support :-)

      First, I too worry about repeated myths becoming true

      Second, thanks for the Gandhi quote, and may I add that I think it was Immanuel kant who also said, "consistency is the hobgoblin of small minds", so when we stick stubbornly to dogmas only for the sake of consistency, we are not only being false, but tedious

      and lastly, thanks–I feel his eyes upon me

      best, rod

  • Terry Hallman

    Too much concern with Wikipedia

    Watch this first:

    http://www.youtube.com/watch?v=WMSinyx_Ab0

    • Rod Schwartz

      Too much concern with Wikipedia

      Thanks Terry

      I tried the link but went onto a car racing ad

      what have I missed?

      rod

      • jo davidson

        collaboration

         

        I saw the vid Terry and I get it, wikipedia is about what people what it to be, subjectively holding up history – power to the people.

        Rod, Kant was also onto it (although by now, a very old skeleton and not at all fertile) but he was right, ‘from such crooked wood as that which man is made, nothing straight can be fashioned.’

        • Rod Schwartz

          collaboration

          Jo

          Thanks again

          Your knowledge of literature never ceases to impress

          Do please explain the vid

          bon weekend, rod

      • Terry Hallman

        Too much concern with Wikipedia

        Rod,

        Try http://www.youtube.com/user/VPROinternational

        Then, click The Truth According to Wikipedia from the playlist.

        Or, search The Truth According to Wikipedia

        Producer is VPRO International.

        Or, search for VPRO International directly.

        [[[[Avoid The Quants. (public disclaimer to CMA.) That one's about an economic doomsday device. See NYSE 6 may for prelim test results]]]]

        • jo davidson

          creative vibrancy of business

          hey again Rod yeah no need to be impressed with me, mostly my learning comes from a literature degree in poetry (but I did think that last Kant quote pretty funny.) Due to this conversation, I’ve been reading Creating a World Without Poverty and what I found striking is quite early on he had said to help eliminate global poverty, he’d ‘developed a series of businesses, some operating on a profit-making basis, some as nonprofits that were improving economic opportunities for the poor’ so even he saw potential possibilities for his broadened concept of social business to spread in other ways. As he also says (in the Yunus center blog) ‘there can be other social business.’

          I think Prof Yunus’ biggest achievements have been improving the lot of women and proving that access to capital, even on a tiny scale, can have a transformational effect on human lives, regardless of the limits of what investors can claim back or produce for themselves.

          To cut a long story short, the vid looks at Web 2.0 and Internet democracy in action, and since you already mentioned these below, you must be psychic.

          • Rod Schwartz

            creative vibrancy of business

            Jo

            Firstly, thanks for the vid summary–not psychic, if only!

            Second, there are many things to thank and praise Yunus for:

            1) Grameen empowers women but also has shrewdly calculated they are better loan repayers than us blokes

            2) the genius of getting folks to co-sign each other’s loan agreements–another version of what one might call "social capital"

            3) the massive waste of those who lie in what we call the bottom of the pyramid

            hmmmmmmmmmm……..poetry degree?

            If only I had the capacity to understand poetry I would not find all this definitional stuff so baffling

            best, rod

          • jo davidson

            commit and see what happens

            I understand Prof Yunus’s position, whether people are personally generous or not, when business institutions become predatory the world needs a plan B…

            …the only problem with a poetry degree is it doesn’t actually qualify you for anything, you’re better off as a social investment advisor, also I enjoy your conversations you’re a naturally funny guy. I chose poetry because my drug of choice is the written word.

            My last point, we’re all psychic we’re just conventionally trained to turn it off (it’s a bit like wearing x-ray glasses people get freaked out about seeing what’s underneath.) Me personally, I’m working hard to turn on my psychic abilities and I’m on a mission to do it.

            Don’t forget, Big Brother is still watching you, I feel his eyes on me too.

          • Rod Schwartz

            commit and see what happens

            Dear Jo

            Businesses seek to make profits–that is not new

            In fact, if anything, I sense business being less predatory than in the past

            Nevertheless, other plans, B, C, D……..are a great idea

            The more the merrier

            Social investment advisor–I like that title

            However, i suspect it pays about as well as poet, maybe less well

            As for being funny, that’s a first

            I have been trying to be deadly serious in these posts!!

            Good luck with your x-ray glasses, and tell me what you think you see

            Lastly, what on earth do you mean about Big Brother?

            ….and how do you know he’s a male?

            If you wish to try to sneak under his/her radar please email me at rod@schwartzuk.com

            best, rod

  • Van Battle

    Muhammad Yunus and Social Business

    While the exercise of defining the concept of Social Business and its genesis, is an invigorating, intellectual exercise; we should be diligent in maintaining our focus on the ultimate goal, which is to assist those at the "bottom of the pyramid". As more individuals, countries, enterprises become involved, the definition and its history will change. That is inevitable and expected.

     

    There was a time when "Give me your tired/Your huddled masses yearning to breathe free" was a nobel cause. To some it now appears to be a burden.

    The need for the concept will always remain regardless of how it is defined. Those at the "bottom of the pyramid", probably care little about the intellectual exercise.

    • Rod Schwartz

      Muhammad Yunus and Social Business

      Dear Van

      I completely agree with your sentiment, even if you are not that guy

      The BOTP is the key focus, and how we should measure success–not the elegance of our definitions

      having said that, I also care about CO2 emissions reduction, and assisting the disabled and some other things

      Intellectual exercises should be kept to where they belong….the pub

      best, rod

    • Harry Poliak

      Muhammad Yunus and Social Business

      Well said.

      Just like a shoe is an item and is distinguishable by its particular brand, the same could be said of Social business so Grameen or Yunus Social business can be viewed as a branded model. What is exciting is that there are different way of looking at things and a movement that is dealing social issues in a new way.

      • Rod Schwartz

        Muhammad Yunus and Social Business

        Thanks harry

        and good point

        apparently, according to Jeff Mowatt, Yunus has refined his definition along these lines as well, as a Grameen social business–let many flowers bloom!

        regards, rod

  • Hicks_kristen

    Social Business

    Should there be any definitions or restrictions on "doing good". I find Social entrepreneurs constantly redefining, and reinventing themselves and their work.

    • Rod Schwartz

      Social Business

      Dear Hicks

      Thanks for your feedback

      Yes, we do spend times redfining ourselves incessantly

      Maybe we need to be more busy

      :-)

      best, rod

  • Allan Bussard

    What is in a name?

    Here in Slovakia, the previous government launched a much publicized "social enterprise" scheme. The result was a "misplaced" €11 million, a major audit by the EU, cutting off of EU funds for this program and the loss of the use of the term "social enterprise" for at least a decade.

    I would rather not worry about defining what social enterprise is, and rather focus time investing in, building, learning from and reproducing enterprises that are true enterprises, and truly social. I am part of the Council of Europe expert group on Social Enterprise. Believe me, we will never get anywhere in the definition battle. Let’s create models that work.

    • Jeff Mowatt

      What is in a name?

      Allan, With our own private efforts based in Eastern Europe, it’s not difficult to imagine where that money was "misplaced". As you’ll see below from my efforts to engage openly, there is no willingness to discuss the application of public funds.

      http://www.facebook.com/…/segreatdebate?ref=ts

      • Rod Schwartz

        What is in a name?

        Jeff

        Thanks as ever for your input

        will give a longer answer to your reply shortly

        rgards, rod

    • Rod Schwartz

      What is in a name?

      Dear allan

      Thanks for your input

      Shame about the Govt programme

      I wrote in my last social edge post a month ago what I feel about that sort of thing–in my travels I came across a similar problem is Serbia.

      Just dreading a scandal here which brings the term into dis-repute, whereas now we are all the rage–things like this can feel very cyclical

      In your capacity as CoE expert, I would love to speak with you

      Would you kindly let me have your email address?

      or email me at rod@clearlyso.com

      among other things, I would like to invite you to our 5th annual social business conference, with special prices for those coming from Europe

      http://www.clearlyso.com/ev…=9&conversationId=49169

      also, I have a few things to chat with you about

      please contact me

      regards, rod

  • Jeff Mowatt

    Wikipedia advertising

    Rod, as many of those who’ve attempted to contribute to Wikipedia on the most benign of subjects will tell you, it’s an endless battle to prevent vexatious alteration. By and large, it has become advertising space for those willing to make the greatest effort.

    I note that Yunus now qualifies his description as Grameen social business.

    Yes we’re in a bit of a mess with all these social definitions and social business is further complicated by another faction using the same term to describe social medial business when here we’re talking about social purpose business – I think.

    I asked the same question myself recently

    http://www.businesszone.co.uk/…/whats-your-definition-social-business

      

    There’s a social dimension to most business, though I believe what we’re talking about is a business for which a social outcome is the primary objective.

    Having started a Linkedin group for ‘Social Business and For Benefit corporations’ which has grown to 500 users, yet those there representing social investors won’t contribute much more than to claim that the social business model is too narrowly defined, where Yunus once referred to capitalism being interpreted to narrowly.

    We’ve seen from the recently example of a UK Department of Health minister, in describing social enterprise as too narrowly defined, an interpretation that no other would recognise.

    There’s plenty of scope for business to do good by any other name, so why does one particular definition have to be stretched to accommodate all?

    • Rita Kaali

      social entrepreneurship as an umbrella term

      I have also just finished reading both of Professor Yunus’ books, Creating a World without Poverty and Building Social Business, and appreciated the definition he gives about what a social business is and isn’t, as the terms are often used very generally. This was a particularly helpful distinction:

        

      “But social business and social entrepreneurship are not the same thing. Social entrepreneurship is a very broad idea. As it is generally defined, any innovative initiative to help people may be described as social entrepreneurship. The initiative may be economic or non-economic, for-profit or not-for-profit. Distributing free medicine to the sick can be an example of social entrepreneurship. So can setting up a for-profit healthcare center in a village where no health facility exists. And so can launching a social business.

      In other words, social business is a subset of social entrepreneurship. All those who design and run social businesses are social entrepreneurs, but not all social entrepreneurs are engaged in social businesses.

      … Now that the concept [of social business] has been introduced and is being translated into reality, I am sure that many in the social entrepreneurship movement will be attracted to it. The social entrepreneurship movement can start giving special attention to the creation and promotion of social businesses by devising and sharpening appropriate tools and institutional facilities needed to support this new type of enterprise. Some social entrepreneurs may be encouraged to move in the direction of social business because they can achieve much more in terms of social benefits than is possible through traditional structures.” (from Creating a World without Poverty by Muhammad Yunus)

    • Rod Schwartz

      Wikipedia advertising

      Jeff

      Thanks for your excellent reply

      On wikipedia, we shall make an effort, but I did think there was an important point to adress, and did so

      delighted to see there is a qualified view on social business, but it is hard to go back and re-issue the books!!

      Feels a bit like a retraction newspapers do buried somewhere on page 32 after a mistaken headline

      As for why one definition should be stretched, it already was

      The question is why it should be limited?

      And furthermore, there is already quite alot of usage around the term in English–why change it?

      regards, rod

    • Rod Schwartz

      Wikipedia advertising

      Jeff

      Thanks for your excellent reply

      On wikipedia, we shall make an effort, but I did think there was an important point to adress, and did so

      delighted to see there is a qualified view on social business, but it is hard to go back and re-issue the books!!

      Feels a bit like a retraction newspapers do buried somewhere on page 32 after a mistaken headline

      As for why one definition should be stretched, it already was

      The question is why it should be limited?

      And furthermore, there is already quite alot of usage around the term in English–why change it?

      regards, rod

    • Rod Schwartz

      Wikipedia advertising

      Jeff

      Thanks for your excellent reply

      On wikipedia, we shall make an effort, but I did think there was an important point to adress, and did so

      delighted to see there is a qualified view on social business, but it is hard to go back and re-issue the books!!

      Feels a bit like a retraction newspapers do buried somewhere on page 32 after a mistaken headline

      As for why one definition should be stretched, it already was

      The question is why it should be limited?

      And furthermore, there is already quite alot of usage around the term in English–why change it?

      regards, rod

  • NickTemple

    And that’s not all…

    Thanks for this Rod – I think it’s a valuable contribution. You know my take on definitions: more interested in what we do, than what we call it. I only get involved when I see others defining things in an exclusive or partial way (eg. social entrepreneurs have to scale; a social enterprise is x and not y). For me, the difference between social enterprise and social business is that the latter can distribute profits / returns. A social entrepreneur can start either…

    Worth noting that I raised similar concerns about the social entrepreneurship page on Wikipedia. Which similarly has tended to exclude or ignore (eg. the world outside the US, history and so on), or become an advert / self-promotional tool. I’m sure the Istanbul Bilgi University awards are great, but why that warrants them a mention above all other university programmes, I’m not sure. Similarly, Tom’s Shoes is great, but why do they get an external link above all other social enterprises and businesses?

    [There is a certain irony, one could note, to certain comments on this post also. Jeff, one might ask about these: http://en.wikipedia.org/…/People-Centered_Economic_Development and http://en.wikipedia.org/wiki/Inclusive_capitalism ]

    • Jeff Mowatt

      And that’s not all…

      That’s precisely what I meant about vexations alteration Nick. There’s a blog that goes along with that, with the theme that "profit for purpose" is a fraud scheme to extract government funding.

      Allan above relates funds being ‘misplaced’ in Slovakia, we’ve challenged similar issues in Ukraine regarding siphoning of funds which hasn’t gone down well with some. A degree of harassment can be anticipated.

      What Rod relates of Grameen is reflected by many other examples of where crowdsourcing definitions is a matter of brute force. I could write there today truthfully, that I’ve run a non-loss non dividend distributing business for social purpose since 2004, but I know tomorrow someone will have deleted it.

      it’s not surprising really that we have no shared definition or indeed any solidarity among us.

          

      • NickTemple

        And that’s not all…

        Not sure we’re going to agree Jeff, so I won’t prolong this. My point was about advertising + self-promotion. Those who comment on all possible forums / related articles, always ensuring they link back to their business page (or pages) within that comment (or tweet), are always going to be open to self-promotion accusations. So it is with those who utilise or create Wikipedia pages in the same way. It is always very obvious to the external eye / anyone who knows about the subject.

        Re. definitions, I’ll throw in our list of bookmarks, as we’ve been tracking the various definition debates since 1997… see http://del.icio.us/SSE/definition

        • Jeff Mowatt

          And that’s not all…

          Now I understand your point Nick, it could have been made directly. If the social enterprise community offers no means of expression, then I’m both obliged and justified in using whatever means is at my disposal to promote a cause.

          Not knowing one’s place is always go to present a problem to established hierarchy and when it comes to having ones self-funded efforts undermined, I’m going to keep on speaking up.

          Here’s one of those earlier debates:

          http://www.socialedge.org/…/profit-for-a-purpose-september-2006

        • Terry Hallman

          And that’s not all…

          Nick,

          Could you please elaborate "Re. definitions, I’ll throw in our list of bookmarks, as we’ve been tracking the various definition debates since 1997… see http://del.icio.us/SSE/definition"? I didn’t see links back to that time. November ’05 is the earliest of 38 bookmarks listed.

        • Rod Schwartz

          And that’s not all…

          Nick

          I love replies that begin with the words " lets not prolong this" :-)

          best, rod

          • Terry Hallman

            And that’s not all…

            usually followed by "but…" ¦÷{›

      • Rod Schwartz

        And that’s not all…

        Jeff

        Thanks as ever for your post

        Wikipedia is about brute force and effort

        but it’s also about legitimacy and being reasonably articulate

        generally I find that well written sensible stuff does not get overwritten

        another way to look at "brute force" is to think of it as Internet democracy in action

        Lastly, that we have no "shared definitions" is I think what makes us human

        sometimes I think solidarity would be very boring

        All the best, rod

    • Rod Schwartz

      And that’s not all…

      Dear Nick

      thanks as ever for your post

      would you believe it … we agree

      I think you of all people will appreciate the fact that I favour action over definitions, having said that,I did think Yunuse went too far in his book which is why I responded

      Looking at Wikipedia for "social entrepreneurship" made me realise quite a few things:

      1) I guess there is even more at stake in laying claim to the word and therefore even more competing egos

      2) you are right about the US centric nature of the debate. Having said that, I saw many examples from other countries, but still see the debate as far too anglo saxon in nature, as I commented on another social edge post last year entitled " are the only innovations in social entrepreneurship anglo-saxon"

      3) lastly, I am going to Istanbul at the end of September for the global economic symposium, so thank you to the tipoff line on Istanbul Bilgi University– I will look them up!

      Wikipedia is about diversity of definitions but people have always used it for subtle advertising. I guess the key is to be subtle

      best, rod

  • Samantha Caccamo

    Muhammad Yunus and Social Business

    Dear Mr. Schwarz,

    There are always going to be misinterpretations of social business just like there are in microcredit. Everyone knows that social enterprise has been around for a long time. Prof. Yunus revisited the concept and developed his own which has very clear and defined principles, and I happen to agree with them. One of the principles is the 0% dividend for investors. I don’t believe in using a social enterprise to make money out of the poor or out of solving a social problem and I agree that there should be no return for the investors. This is just my view. People are free to disagree and act differently.

    There is plenty of room for other definitions of social enterprise….this is exactly why Prof. Yunus felt the need to develop a specific type of social enterprise with a clear set of principles and he called it Social Business.

    Kind regards,

    Samantha

    Founder

    Social Business Earth

    • Rod Schwartz

      Muhammad Yunus and Social Business

      dear samantha

      I do not think what I am talking about mis-interpretation, those assume fixed definitions, but rather different interpretations of some very popular words

      I am not an expert in micro credit so I would not venture there

      Yunus’ principles are very good ones

      I think if it were possible to do everything necessary with what capital is available at 0% we should–the problem is, unsurprisingly, there is not much available at that rate

      thus, if we want to help the poor and others in need, we have to figure out a way to utilise some capital which demands a return

      Lastly, there are many definitions of both social enterprise and social business, it is tricky to come in after a word is already being used and then attempt a firm definition of it

      thanks you for your challenge and feedback

      regards, rod

      • Beau Seil

        Access to Capital – Muhammad Yunus and Social Business

        Rod,

        I think you bring up a few interesting points in your response to Samantha and wanted to add a few of my thoughts.

        (1) Sources of Capital: Over the last few years, as we have worked on establishing and growing multiple social enterprises with outstanding management teams and market solutions, I have not seen a large amount of investors willing to take a 0% return. This includes foundations, DFIs and other forward thinking groups. With so many social enterprises out there and the "perceived risk" that surrounds the creation of businesses that serve the poor, I get concerned that the use of the "social business" model may not be possible at the current time.

        There is only one Grameen and one Dr. Yunus whom I feel have the gravitas to get walk into a large organizations and/or corporations and engage them in large, scalable projects that serve the poor. With this said, I also think it will be difficult to get corporations to engage in such projects going forward especially if they set up social businesses in potential markets, and the existence of those social businesses will effectively preclude them from operating in such markets in the future (i.e., Danone will likely be unable to ever enter Bangladesh on a commercial basis and "compete" against Grameen Danone unless they want to unleash a PR backlash as they compete with the "poor").

        (2) Long-term vision: I definitely have a tremendous amount of respect for the "social business" model approach as defined by Dr. Yunus, but almost feel that this is a long-term vision and legacy that we should be striving for as a global society…..the establishment of socially responsible businesses that benefit all stake holders and in my opinion make good business sense because they are all about long-term value creation.

        If we hold the social enterprise sector to the "social business" standard, I tend to believe that we will have a difficult time scaling businesses to reach millions of lives and provide beneficial products and services to the poor at a fair (non-predatory) price point that they can afford. In my opinion, the business world needs additional data points that show there really is a "fortune at the bottom of the pyramid" and that businesses can actually serve the poor in a sustainable way. I just don’t understand how making profits off a social enterprise blanketly "exploits" the poor and keeps them down, especially when there are no market mechanisms or businesses that are currently meeting their needs and working to eradicate the "penalty of poverty" attached to products and services via multiple unnecessary intermediaries in the distribution chain.

        Just a few thoughts I wanted to share. Could be right or wrong, and could go on with a bunch of other thoughts, but wanted to just throw a few things out there.

        Thanks for starting the discussion and keeping it going.

        Best,

        Beau

        • Rod Schwartz

          Access to Capital – Muhammad Yunus and Social Business

          Dear Beau

          Thanks for your wonderful comment!

          Allow me to reply in order:

          1) capital

          Yup–there are not too many 0% investors out there–certainly not of an amount which is equivalent to the need. So either we can sit on our bums waiting for these pots of gold, or we can do something that might do good AND generate a surplus which will allow dividend or interest payments, or even growth in capital value

          Yunus is quite a unique brand which companies value affiliating with

          there are other celebrities like Bono (much to my surprise) who seem to have similar power, or clout–after that the list is limited

          But lets not be naive–the businesses are getting quite a juicy return, the dividends foregone pale in comparison

          2) we agree

          Thanks for your kind words

          regards, rod

  • Gail Vida Hamburg

    All the definitions of social business are valid, each in its own way

    Hi Rod,

    Interesting article. While establishing Rainworks Omnimedia LLC http://www.rainworksomnimedia.com (I’ll call it a social endeavor until there’s a reason not to), I attended many social enterprise conferences in North America to learn about the field I felt moved to transition into after a full career in small business and arts and entertainment production. I found much diversity in the types of people and businesses gathering under the social enterprise umbrella (stretching my rain metaphor here a bit ;-) . There were not for profits with sustainability programs, ‘no loss, no dividend’ L3Cs, Fortune 500 companies with stomach churning ideas to exploit the bottom of the pyramid for profit (cheap cosmetics for women head of households living on 60 cents a day so she can feel better about herself, anyone?), double and triple bottomline companies successful in only one bottolmline: social return on investment (the employment of women and children who would otherwise be lost to the sex trade for example is ROI enough for me) but not on financial ROI. There were also very real cultural differences in the understanding of social enterprise/business between those from the developed and developing world. Those who hail from the developing world understand/view/see/feel social business/social enterprise differently. The problems in their countries are so commanding, so overwhelming, the need to build civil society and offer basic necessities so urgent, that many of them do subscribe to Prof. Yunus ‘no loss, no dividend’ definition of social business and his second definition of social business: a profit-making company owned by poor people, either directly or through a trust that is dedicated to a pre-defined social cause. In the developed world, however, there seemed to be no demarcation between promoting a social cause and ideal livelihood. Any concern I had about the neglect of social problems while panels discussed the importance of salaries for social enterprise workers being on par with the for-profit world, were dispelled when I heard young Americans, social entrepreneurs all, talk about the innovative ways they planned to cure social problems while making enough money to keep them firmly entrenched in this brave new world of social work. As I write this, I’m in the middle of a $7 million dollar venture capital raising campaign for my social endeavor. Prof. Yunus has been an inspiration for so many of us in too many ways that count. While his ‘no loss, no dividend’ isn’t applicable to me or my investors, all the definitions of social business/social enterprise are correct, each in its own way.

    • Rod Schwartz

      response to Gail–all defs have validity

      Thanks Gail for your comment–and good luck on your fund-raise

      I am grateful for your galloping through the range of socially-oriented entrepreneurial organisations–term chosen to be uncontroversial!!

      The range is breath-taking and gets even moreso as one travels around the world

      Your distinction on the developed vs developing models is instructive and perhaps explain the fault line in the debate

      In any event, grateful for your comments and insights

      regards, rod

  • Carlos Gasca

    Definitions

    I have struggled with a solely nonprofit motive definition where nonprofits run businesses to become self-sustaining. This approach seems like a very limiting thought pattern. I like to think of social enterprise as the white cells in the economic blood stream, fighting the disease of greed, power and corruption that is eating up our planet. Sometimes there may be a return, sometimes achieving returns is not possible. But working towards a livable planet is necessary and invaluable.

    Thanks for the discussion!

    • Rod Schwartz

      Definitions

      Carlos–thanks for your comment

      I share your struggle, obviously!

      Also, i find social entrepreneurs whose objectives change

      What made sense as a charity, or not-for-profit may seem less appealing as they contemplate retirement or college fees

      Like your metaphor of the white blood cells–thanks

      regards, rod

      One point

    • Qazi Nazrul Huque

      Definitions

      Social business is business in its purest and original form. Has any business ever said that making profit is its objective? Every business claims that its mission is to benefit society. Theoretically, an economic system based on free market and competition has the potential to ensure just and maximum use of society’s resources. But macroeconomics has its inherent weaknesses: trade-offs between employment and inflation, between growth and distribution etc. So all concerned (government, economists, businesses etc.) prescribe maintenance of high demand in market to ensure high employment and growth. This is maintaining a culture of acquisition and consumption at the expense of the resources of the earth and its environment (and also our health and social relationships). We humans have become instruments of ‘growth’ and are made monsters with insatiable hunger only to keep the ‘level’ of ‘demand’ high!

      Social business can bring us back from these disasters. If the objective of a business is society’s wellbeing, then every business will pursue a social objective, not simply profit. Profit is only to maintain the health of the business. Competition plays a very critical role in social business: it maintains efficiency of economic organizations (efficiency in the use of resources or factors of production). So social business is business in its purest form – free from the perversions of the free market. If you are practical enough to admit failures of the so called ‘socialist’ economies in different countries of the world, you must admit that we cannot do away with free market and competition; what we need is right tracking it, and this is what social business can do.

  • chris macrae

    year 34 of entreprenurial revolution

    let me declare when I am coming from so you can also evaluate a possible solution; 34 years ago in December 1976 Issue of The Economist my dad http://www.worldeconomist.net revealed macroeconomists had caused a system problem. And since keynes has stated: increasingly economics rules the world that is news we all ought to be free to debate -especially youth who are constrained or freed by what elders exponentially compound. From his understanding of adam smith stuff that spun during the 3rd quarter of the 20th Century had destroyed the principles of adam smith’s free market constructs so that sustainbility exponentials were no longer valued – the exact opposite of the reason why adam Smith had developed his constructs. Dad’s survey entreprneurial revolution issued the exciting and urgent challenge – lets rediscover microeconomics system that values whole truth of free markets before the generation to 2025 integrates local societies into globalisation. This integration challenge was one foreseen by mathemticians including Einstein who worked with Gandhi and von neumann who worked with computers – both cases members of my family tree have spent a very long time experiencing.

    There is little doubt that the infant nation of Bangladesh has since 1976 developod an unique to the world system design which in my dad’s language would be the most purposeful small government a developing nation can get, and in dr yunus’ language is now called social business. A term he started to differentiate after skoll had invited him to be global social entrepreneur but he found that the average social entrepreneur did not prioritise making a sustainable business model transparent

    Now there are many people who would like to study the exct system design that bangladesh’s grassroots networks have replicted in racing towards its own millennium gols. Mathemticians know that a definition of a system is something with some key rules tht cant be changed unleess you want the system to turn round and viciously collapse.

    Scots would very much like to be able to study systems that meet Bangldeshi rules which when you look at them are the exact counterpoint to the least sustainable maths in the world – how much does the most powerful side extract from everyone else every quarter. In this sense dr yunus is proposing the exact opposite maths to Orwell.

    About 500 of us met in scotlnd on july 4 – our solution is to start 2 journals with social business in the nme: one will be refereed to strict yunus and adam smith stndards; the other will ask those who provide papers to describe transprently how the impct maesures of their case work

    • Rod Schwartz

      year 34 of entreprenurial revolution

      Thanks for your comment–and the candid discussion of the background

      I think what has come out of your Scottish meeting sounds fascinating

      Please let me know, at rod@clearlyso.com, what happens to your two journals

      good luck in studying these systems

      regards, rod

  • David James

    So many responses, so little time!

    Rod, you have obviously touched on a keystone issue – and it is of vital importance. Hope you will have a chance to summarize the discourse and solve the problem – and then update Wikipedia!

    My brief comments:

    1) Limiting ‘social business’ just to NFPs would be a poor strategic move. Because…

    2) Social business/enterprise is an attitude. It is a philosophical approach to business. It is about conducting business with a clear focus on social impact/social benefits.

    This entails absorbing costs (for example, paying staff fairly, parental leave; support for sickness etc) and extending benefits (being very clear that the products and services on offer have a positive social impact, and what that intended social impact is.)

    One day, every business will be/should be a social business. Just as every business should be a enviro-friendly business. Whether the business is a NFP, or For Profit, is not the issue, not the variable, not at all.

    End.

    • Rod Schwartz

      So many responses, so little time!

      Dear David

      I think this has hit a chord

      It has alot to do with diversity of opinions or narrowness

      and I quite agree with you–all businesses should be social businesses

      That day is, however, some ways off

      Thanks again for your comment

      rod

    • Rod Schwartz

      So many responses, so little time!

      Dear David

      I think this has hit a chord

      It has alot to do with diversity of opinions or narrowness

      and I quite agree with you–all businesses should be social businesses

      That day is, however, some ways off

      Thanks again for your comment

      rod

  • Rory Finch

    Egg and chicken…

    Dear Rod,

    First of all, good work on starting up this thread, and for patiently posting so many replies…

    Next, as noted in one of the other posts, Yunus leaves the door open for other forms of social businesses to develop. If you listen to the speeches and keynote addresses that he gives, he constantly emphasises the fact that his is only one definition of social business, and that other forms should be developed. Therefore the criticism is, to a limited extent, unjustified. On the other hand, the possibility that growth of the social entrepreneurial sector could be curtailed through over-rigid definitions is very real. I think in this case Yunus’ idea can be used as a benchmark… And that’s why his work is so important, he has set down his mark, and provides a point around which orientation can be garnered.

    As David James pointed out above "One day, every business will be/should be a social business." He’s right in a way, but the point is that every business is already somehow social, in that that are part of the fabric of society, the difference is that the vast majority of businesses don’t have any sense of reflexivity/awareness about what impact their profit-motivated operations have… And that is what the concept of social business (in all its guises) is of such importance. Over time there will be a shift in the institutional forms which operate in the market, particularly over the next 50 years as population increases and resources become scarcer (although a sharp rise in natioalism and a World War III are also distinct possibilities, I choose to be optimistic and think that there will be a humane, cosmopolitan response). This pressure will accelerate change, and in this environment, rigid ideas such as Yunus’ will become increasingly important as focal points of thought and action. On the other side, creativity and innovation will be equally important… But these are two sides of the same coin, and one cannot happen without or before the other, that’s just life… Rules are there to be broken (and refashiooned…)

    As for the Wikipedia thing, go change it yourself, that’s the point!

    Keep up the good work,

    Rory

    • Rod Schwartz

      Egg and chicken…

      Dear Rory

      Thanks for your reply and kind words

      Very much appreciate your insights–a couple of comments

      I agree that Yunus has put forward a definition

      I also agree that it is a marker of sorts

      His book, however, which I have read, does not offer the flexibility you suggest–it is clear and unambiguous

      It was when I felt this rigidity might damage the sector that I chose to respond

      As for your last point, I am fully aware that one can just change wikipedia–which we aim to do–hopefully in consultation with others–but you must agree it would have been stupid to change the wikipedia page before writing the post! :-)

      Furthermore, all businesses are, as you and David rightly say, social to some extent, otherwise they would not exist–models are essential to move the whole economy in that direction

      Finally, I appreciate your noticing on the replies

      I try to reply to them all

      I think that if people bother to reply to my posts its the least I can do out of politeness and desire for a debate–I try to do this whenever I post onto social edge and to some extent on my own blog which is at http://www.clearlyso.com/sbblog/

      best, rod

      • Rory Finch

        Egg and chicken…

        "His book, however, which I have read, does not offer the flexibility you suggest–it is clear and unambiguous

        It was when I felt this rigidity might damage the sector that I chose to respond"

        Maybe he’s even smarter than we think… ;-)

        • Rod Schwartz

          Egg and chicken…

          Rory

          No doubt

          he is very smart indeed

          rod

  • Laurinda

    What’s in a definition?

    Hi Rod

    Many decades ago when I first got involved in the SE start-up arena, it was with an organisation called Jobnet, the first eletronic human resources, training and job matching web based network (this was still in the days of BBS’s) and when most organisations didn’t really had computers never mind people having them on their desks … looking back this was my first SE.

    One thing Jobnet taught me was the principle that TITLES are FREE!

    What’s in a definition? Rather we turned our focus to what do you know and what can you do? (I.e. deliver – my practical engineering mind at play)… the job title came free after that. I.e. want to be known as a manager? Fine, what do you manage? want to be know as a senior designer? Good. What serious designs have you produced? … it took time to educate businesses, but eventually many of our then partners and clients saw the light …The over exposure and importance attached to job titles was ludicrous … but a tradeable commodity – it often resulted in higher outputs = higher ROIs. client was happy – and employee was happy ( for us it defined BS bafles brains) … but it got us thinking … and since then I have looked at definitions with a different eye. But that is me!

    Now, nearly 30 years later … we still in many ways where we were in those days. the question of for-profit versus not-for-profit … NGO versus business, SEs versus Social Businesses, etc … all looking for that magic definition and differentiation pill. Spending to much time and limited resources on "definitions"

    Now reality check:

    What is really happening?

    Here’s some new kids on the block and boy did they shake-up the trees … both the for-profit and the not-for-profit world. In one hand the business sector being money/profit driven views these upstarts as a dangerous competitor that can eat at their piece of the cake (after all the cake is only so big) … on the other hand the NGO sector views these same upstarts as … competition for grant and funding … (Again the cake is only so big) … we have checkmate!

    So what do those bright sparks do? They create a diversion … give thousands of different labels (like a multicolour smartie box) … then when you look for the white smartie you get lost in the kaleidoscope of colours.

    And which one is the white smartie?

    How about the emerging Fourth Sector Organisation? The for-benefit sector?

    Now … it makes you think doesn’t it?

    Regards

    Laurinda Seabra

    Empowerment Gateway

    http://www.empowerment-gateway.com … let there be dragons! :-) )

    • Rod Schwartz

      What’s in a definition?

      Dear Laurinda

      Dragons?? White Smarties?? now I am truly mystified!

      Thanks as ever for your insight and comment

      You are right about titles, and a good analogy, I guess

      I suspect we spend so much time on this stuff, despite all of us (myself included!!) decribing it as a great waste of time, for a few reasons:

      1) people care–it would seem; somehow this is not just about social businesses or social enterprises, but our world views

      2) the stakes FEEL big, but they are actually quite small, at least today, in this sector. Talk to any academic about how hostile things get when they matter to almost nobody–or members o a religious sect, with respect to a similar sect. this is captured with classicaly insightful brilliance in Monty Python’s "Life of Brian" in the battle pitched between two essentially indistinguishable groups of "terrorists"

      3) it may matter to people’s personal, private or commercial interests–I confessed it did to ours at ClearlySo

      One place where we do part company–I do not see the size of cake/pie as fixed. This too, of course, depends on definitions…………

      :-)

      regards, rod

      • Rod Schwartz

        ….and to meet some social businesses

        Lastly, if anyone is still viewing this conversation, any social business or social enterprise from anywhere in the world is invited to our 5th annual social business conference in London on 13 October. Discounted tickets available. For more info go to:

        http://www.clearlyso.com/ev…d=9&conversationId=3799

        • Isabel Maxwell

          ….and to meet some social businesses

          Hi Rod, thanks v much for all this interesting discussion. Sorry am late to this ‘party’ but was away in Europe on personal matters. I worked with Yunus as Senior Adviser at Grameen America for 18 months and became very familiar with much of Yunus’ activity and philosophy and read his books of course. He is a very remarkable person who has achieved huge benefits for millions of poor people all over the world through the expansion of micro-lending/business and he has clearly not stopped for a moment – as he continued on to the creation of Social Businesses at scale – for example, with Danone [yoghurt] – I would agree with your assessment of "rigidity", but I would actually class it more as cultural – a huge avenue to be explored – and very particularly when it comes to fund-raising! But I personally am grateful for the blurring of the non-profit to the for profit world as for far too long, it seemed that Charity did not have the same rules of transparency and performance that apply in the world of business – and thankfully, that is changing hugely now as the days are largely gone when people just plunked checks down and gave no more thought to how their money was being managed or where it was actually been used!

          Alas, got to run, but thanks again for this discussion.

          Isabel Maxwell – p.s. I managed and ran, and am still active Boar Member, of Israel Venture Network – its Social Entrepreneur Program, now in its 7th year. http://www.israelventurenetwork.org (and this program is morphing too – - to Social Entreprise – - meaning we are trying to mentor and fund and engage with Social Ventures that themselves already/or can have, have a revenue side to them (to encourage them to be self-sustaining!)

          • Rod Schwartz

            ….and to meet some social businesses

            Dear Isabel

            Thanks for your kind words and your comments

            better late than never–and in this spirit, my reply to you

            It is good to gain your perspective, as you know Yunus personally

            Alas, although I have heard him speak I have never had the pleasure of meeting him

            I enjoyed your insight into this being a difference based upon cultural aspects–I am inclined to agree and would be delighted to explore this

            Lastly, thank you for sharing your Board membership of the IVN

            I had a look at the link, intriguing

            Any of the social enterprises in the IVN are free to join ClearlySo for free

            They just need to go onto the site and join–they will be vetted only to be sure they are social businesses or enterprises

            Lastly, we are having our 5th annual conference of social entrepreneurs in London on 13th October

            Any members of the IVN may come at a discounted rate–this has been offered to all continental European social entrepreneurs

            They can follow the links below

            http://www.clearlyso.com/ev…=9&conversationId=10206

            regards, rod

          • Dr. Duncan MacLean Earle

            ….definitions matter in teaching and representation

            Rod,

            I have followed this long chain, and have followed Social Edge for a few years now, as someone who both practices and teaches social entrepreneurial, triple bottom line sorts of activities, consults on a number of them, and is involved as a founder in two, and most recently am a student of yet another, having to do with gaining equitable land rights in Ghana (Medeem). I rarely stick my nose into the fray. But I was perplexed by the fire wall Yunus had erected against the conjoining of social good and any ROI, when it seems to me the challenge of the hour to figure ways to channel investments that have been burned in the traditional financial avenues into something that has a social and environmental dimension, such that the need to provide return does not somehow erode the values that guide the enterprise. Certainly some of what i am now engaged in, with huge environmental and social implications in the Congo would never have been possible under that constraint, any more than under an NGO format. I am currently forming a center to explore the very conjunction that Yunus would have us declare untenable, and in my work with Medeem the principles struggle to stay clear in their definitions, to not be appropriated by "social washing" (they do not make profits but incubate local businesses that do). So while for many above a rose is a rose, for me as a teacher and a consultant, names, definitions, limitations and boundaries between what one sort of entity and another are of critical importance, and so for that matter is Wikipedia, because my students will be reading it regularly. I hope this is a subject that was discussed in your recent conference, and I am anxious to hear what consensus if any arises. Like it or not, when you teach college students about this they want the canon.

            Best to you

            Duncan

          • Rod Schwartz

            ….definitions matter in teaching and representation

            Dear Duncan

            Forgive my delay in replying–I check these older posts only rarely

            I am glad you broke with practice and replied–you should do so more often!

            Yunus’ firewall is silly and counterproductive, as you say

            He seems to be declaring to the world that anything which requires some external investment, is deemed not to be a social business, if the investment requires any return

            This is madness and an unecessary and undesireable attempt to impose his model for a social business on all others–very silly and sad

            Normally people cannot wait to give us the URL of their business on the Edge

            please write with yours–or better yet, list it directly onto ClearlySo–you can do so for free at http://www.clearlyso.com/join.jsf

            Finally, we did not debate this at our conference

            These onferences are about what the social entrepreneur needs to know to become successful

            Aimless, but interesting, philosophical debates seem to be well covered at other conferences but we try to avoid them

            Happy New Year!

            rod

  • Akhmad Arsya

    Accounting Definition

    Hi Rod,

    Great discussion. I’ve read a lot of "word" definitions about SocEnt. What I never actually read, is more of an accounting definition. It doesn’t need to be a complicated one. Only as simple as this:

    Pure Business Enterprise:

    Revenue – Expense = Net Profit for Investor

    Social Enterprise:

    Revenue – Expense = ?

    I wonder, what happen to the remaining amount (lets call it Social Net Profit) on a Social Enterprise?

    How do we repay the benevolence of an investor for such enterprise?

  • TANJA WECHSLER

    LEGAL MODEL FOR SOCIAL BUSINESS

    I’m interested in forming a social business corporation (in NYC, USA) with the purpose of furthering humanity, primary by attempting to reform media.Here are some thoughts/questions I had about it;

    Does anyone have the forms of a certificate of incorporation and by laws for a Social Business corporation?

    I also wonder weather donors/investors would be stock holders who could not get dividends or not get dividends in excess of their investments, or whether they might be treated as "donors" who would not receive a tax deduction; or whether such donors/investors might be described by a different "label".

    I’m considering the possibility of a new format where the investor/ donor would make loans repayable only out of profits; the loans might be payable for a limited period of years after which they would be deemed canceled, perhaps giving the lender a bad debt deduction.

    This is an idea floated by my lawyer husband.

    He has also raised the possibility that any solicitation might run afoul of SEC regulations.

    Solicitations might be limited to so called "qualified investors", but this would cause the solicitations to be limited to wealthy investors. Has the

    SEC issue been addressed to your knowledge?

    Thank you!

  • Sharad Pant

    Social enterprise/business

    Dear members,

    Social enterprise/business has different definitions and concept in deferent perspective. Its change according to the place and situation, you can’t able to make any confirmed one line definition of social enterprise.

    Yap, the aim of social enterprise may be same to allover i.e. “Empowerment & Development of community/individuals with sustainable business enterprise model". Social enterprise tends the people to stand on their own feet in an opposite the activities based on charitable viewpoint/base make them handicapped and dependable on aid.

    With best regards.

    Sharad Pant

    Director

    Human & Environment Care Association ( HECA)

    INDIA

    Sharad Pant

      

  • james perry

    Definitions

    Hi Rod, i could not agree with you more. Younis’ book is superb, but it is sad that his definition is one which, i believe, will keep the great volumes of privately invested capital from deploying in the ‘impact’ space. If we do not allow some financial return for capital that we deploy, then it simply won’t come. The sooner we can get beyond this debate, and into the much more interesting one of how to ensure that social mission is ‘locked in’ and preserved the better.

  • Gregor Schueler

    The purpose of definitions

    Dear Rod,

    thanks for starting this lively discussion.

    I’d like to say three things.

    a) You asked why Prof. Yunus definition had to be so narrow and ‘exclusive’. Well what is the point of definitions if not to exact descriptions of a concept, that make it possible to use a term accuratly? An inclusive definition is an oxymoron, as its value lies in its ability to create precise lables. I don’t think a term ‘Social Business’ that includes all varieties of of the spectrum from CSR to revenue based charity would be very useful because noone would know what you’re talking about when you use it. This is why a definition is useful and neccessary.

    b) My reading of Prof. Yunus book is not that he is trying to exclude anyone from anything. His definiton allows for all sorts of social engagement by businesses. Certainly, what he calls social enterprises, or businesses with the infamous double bottom line, have their merrits and he acknowledges them. However, he chose to develop a different concept, as part of which the social mission is the primary objective. Its not meant to limit anyone from following whatever path they see fit, but it had to be distinguished from other endeavors merging social and business motives. The term Social Enterprise has been around for a long time as you have also mentionend, therefore he decided (or so I imagine) to call his concept ‘Social Business’. Its narrow definition is useful because it allows everyone to know what the debate is about when that term is used.

    c) As to the 0% dividend approach. Social Businesses don’t attempt to create an alternative to regular investments that carry market rates of return. Rather, I believe, its appeal is to those billions currently sank into charities and NGO’s. For a philantropist it is much more appealing to make an investment that leads to social impact AND he gets his initial investment back, but (by definition ;) ) he is not interested in financial return. Prof. Yunus has seen his idea of microfinace go the way of commercialization. It was taken over by for profit companies that institutionalized the loan sharks he was trying to replace. By prescribing the zero dividend principle in his definition he is trying to avoid the same happening to Social Business. He wants to help the BoP not exploit it.

    As he writes in his book, he is afraid that in a situation of crisis the profit motivation will always overpower the social mission in mixed mission enterprises.

    Prof. Yunus therefore suggested;

    Social Business: Social Mission is the focus, no dividend.

    Social Business type II: Social mission is focus, but the business is owned by those it aims to benefit, therefore dividends go directly to them and are thus a benefit themselves.

    Social enterprise: Enterprise that have both a social and a profit mission. Their balance may differ, but generally the social mission is the focus.

    Everything else are just socially conscious business or CSR initiatives.

    Then of course there are non-profits and charities.

    To summarize, it is useful to have separate definitions because they sharpen the debate. This doesn’t mean that anyone is limited from anything, just that it is possible to label different approaches without confusion.

    Thats how I see it, anyway.

    Cheers

    Gregor