Building Social Business: The New Kind of Capitalism That Serves Humanity's Most Pressing Needs

INTRODUCTIONMuhammad Yunus has spent a lifetime working to help the poor. He is the founding father of microfinance and has been compared to Mahatma Gandhi and Bill Gates. Decades before micro lending was popular among development economists, Yunus began making small, interest-free loans to poor rural women in Bangladesh. He believed that what keeps the poor poor isn't a lack of skill or education or work ethic, but merely access to financial intermediation. In 2006 Yunus and Grameen Bank won the Nobel Peace Prize for the success of this philosophy, and despite its criticisms and recent controversies microfinance remains a trusted method of bottom-up poverty alleviation.In recent years Dr. Yunus has moved beyond just lending to the poor; his new goal is to eliminate poverty entirely, and his method is to spread the practice of social business, a self-sustaining, "zero-loss, zero-dividend" business model that applies not only to microfinance but to any good or service provided to the poor. Eschewing traditional for-profit and non-profit models, Building Social Business explains how to create a self-sufficient business that "serves humanity's most pressing needs. "The book is written for the layperson and shows a gifted communicator at work, simultaneously informing, entertaining, and instructing. Chapters 3 and 5 offer a step -bystep game plan for a socially-minded entrepreneur to start his or her own social business. Build a business around something you're passionate about, Yunus encourages, but tackle an obtainable goal. Look at emulating successful projects in new markets, or find a way to apply your for-profit career skills to social business. Perhaps somewhat surprisingly, Yunus encourages luring the most creative, determined workers with competitive salaries and benefits; if the financial rewards are no different, Yunus believes most people will take the job that works to solve social problems. The author also lays out the legal and financial framework for social businesses. Because they aren't recognized as a separate business category, social business founders must choose between nonprofit status, which offers tax exemptions in most nations but is strictly regulated, or for-profit status. Yunus waits with eager determination for governments to organize new categories for social businesses.Though primarily a call to action, Building Social Business also advances a strong normative stance against profit and ascribes an overly narrow role to entrepreneurship in improving human conditions. As this review will show, neither argument rests on sound theoretical foundations, and supporting evidence for his arguments is sorely lacking. It will take many more years for social businesses to prove long-term success at solving social problems.Much of Building Social Business repeats the ideas in his 2008 book, Creating a World Without Poverty, which in turn expanded on his 2006 Nobel lecture. In this earlier book, Yunus defines a "social business" and describes what he sees as the first example of it, Grameen Danone, a joint venture between Grameen Bank and the French yogurt company Groupe Danone. What distinguishes Building Social Business is the step-bystep guideline for entrepreneurs to create their own social businesses, as well as its report on two more years of Grameen Bank's joint venture social businesses; five of the nine chapters, in fact, are descriptions of Grameen' s current and impending social business partnerships.As described in the first chapter, a social business is one whose goal is to solve a social problem - to alleviate poverty or malnutrition, deliver sanitary water to rural villages, or provide some other service (affordable clothing, education, electricity, healthcare) that would otherwise be unavailable. Essentially, a social business seeks to correct a market failure - through private, philanthropic enterprise rather than government intervention. Unlike a nonprofit organization, though, a social business should be self-sustaining, rather than reliant on donations. …