Yunus on Social Business Enterprise

microfinance.bmpIn its recent article “Saving the World One Cup of Yogurt At A Time” Fortune Magazine brought to prime time Nobel Peace Prize winner, Muhammad Yunus' recent innovations on what he calls social business enterprises or “companies [that] incorporate nonprofit models into their bottom line operations, seeking not just revenue but social returns, and returning the profits to communities."

Yunus, the founder Grameen Bank, the father of microlending and arguably one of the original social entrepreneurs, argues that the fact that people live in poverty all around the world, including in the United States, is not a sign that capitalism doesn’t work, but that it is interpreted (or, in fact, practiced) too narrowly.

This focus on a "double bottom line" has been quietly present in social change work of the past several decades, like green efforts were present in the late 20th century. What it means and how to do it cannot be easily captured in a sound byte. Creating such a business is complicated, very creative and highly innovative. The article does a nice job capturing the practical elements of how a yogurt factory in Bangledesh, jointly created by Grameen and the Danone Group, will be a social business enterprise that improves nutrition and the larger community in the following ways:

- The yogurt would be fortified to curb malnutrition
- The yogurt would be priced to be affordable (7 cents per cup)
-Danone takes out only its initial cost of capital ($500,000) after three years
-Revenues, after this return of capital, would be reinvested
-The factory will buy milk from Grameen microborrowers (Yunus’ first act)
-The factory will employ 15-20 women
-Grameen microvendors will sell the yogurt door to door, bringing income to another 1600 people within a 20-mile radius
- Factory will be environmentally friendly (biodegradable cups made from cornstarch, solar panels for electricity, and rainwater collection)
-Grows a new market for Danone

According to the article, CEO of Danone, Franck Riboud, says “…the strength is that it is a business [not charity], and if it is a business, it is sustainable.” He said that the social benefits may be reported on Danone’s bottom line, and may influence stock pickers screening for social impact.

Actually the strength is that Yunus could see what was possible, and could connect with a corporate CEO willing to innovate. Imagine what we can expect if and when philanthropy establishes market functions that can systematically catalyze these connections.

Carla E. Dearing

Posted at 6:05 AM, Feb 26, 2007 in Cross-Sectoral Strategies | Economic Development | Microfinance | Social Entreprenuers | Permalink | Comment