A Social Business is a sustainable enterprise whose main purpose is not the generation of profit, but rather the resolution of a social or environmental problem. The possible profits are reinvested in the activity of the enterprise in order to expand the payload and improve the offered product or service.
Social Business is an enterprise which combines social and environmental aims typical of the Public Sector and of the organisations of the Third sector with the efficiency and the economic sustainability of a tradition enterprise.
The resources invested in Social Business, differently from those ones employed in generous or helpful projects, go on producing social and environmental benefits thanks to the self-sustainability of Social Business and they can be retrieved by the investor.
Professor Muhammad Yunus, the Bangladeshi economist Nobel Peace Prize 2006, wrote seven principals, which every Social Business has to follow:
- The purpose of the enterprise is defeat poverty, or find a solution to the problems (for exemple in the sphere of education, of healthcare, of the access to technology, of environment), which threaten people and society, but not maximising-profit;
- It is financially and economically sustainable;
- Investors retrieve just the invested assets. No share of profits is distributed after the recovery of the invested amount;
- When the invested assets are given back, profit produced by the enterprise stay in its domestic and it is used to finance the expansion and the improvement;
- The enterprise is environmentally sustainable and it makes an effort to respect the environment;
- The workers have salaries at market levels and better working condition;
- “Do it with joy!”.
There are two different types of Social Business:
- A business whose activity strives to resolve directly a particular social or environmental problem.
- A business whose activity does not strive to resolve directly a particular social or environmental problem, but whose profit totally benefits the poor and the disadvantaged.