Yunus Social Business

A. The main facts about the activities of the company.

Yunus Social Business (YSB) was founded by Nobel Peace Prize laureate Prof. Muhammad Yunus. It is a social business accelerator that incubates and finances local entrepreneurs to help build solutions from the ground up. It finances promising social businesses and provides post‐investment support, in order to create and empower social businesses that address and solve social problems around the world. But what are social businesses in particular? Social businesses, a term introduced by Yunus, are created and designed to address social issues, but also financially self‐sustainable because all profits are reinvested in the business to promote growth and increase social impact. Whereas traditional investors invest for their own benefits, social investors invest to benefit others.

"Social business is a powerful concept at the intersection of the social and business realms. The objective is to apply the professionalism and efficiency of the business world to solving the world’s most pressing social problems. And to do so in a self­sustaining way, providing for choice and personal responsibility for those who benefit from it." ­ Ulrich Villis

Concretely, the company screens and selects social businesses, builds local capacity and provides technical assistance in each country through its Accelerator Program which trains entrepreneurs to scale their social businesses. To high potential social entrepreneurs emerging out of the Accelerator Program, YSB provides financing and post­investment support. At the end of the Accelerator Program, entrepreneurs pitch their ideas to the YSB Investment Committee and selected social businesses may receive seed capital from its Social Business Fund in the respective country. And when these businesses become successful, the social business pays back the initial investment. That way, the same dollar can be recycled to support more social businesses.

Yunus Social Business is driven by enthusiastic international consulting, finance and development professionals. YSB is active in seven countries: Haiti, Albania, Brazil, Tunisia, Togo and Germany (HQ), where local country teams source, coach and mentor entrepreneurs.

B. The Ethical challenges this company is addressing.

The proliferation of global crises has driven demand for innovative social and environmental action able to respond to the new challenges posed by these so‐called ‘wicked problems’. Major challenges include: climate change and environmental degradation, inequality and poverty, lack of access to basic healthcare, clean water and energy, mass migration, and international terrorism. Therefore, the social, economic and environmental crises provide new challenges and opportunities to Yunus Social Business.

By helping to connect social investors with social businesses, YSB addresses the world’s most pressing problems, such as nutrition, energy, environment, education and health. YSB applies business approaches to the world of social development. They identify promising entrepreneurs who possess a deeply rooted desire to create impact within their communities through their social business. Such social businesses generate demand for the local providers, create local employments and offer affordable products so even the poorest are able to live healthier lives.

One example of YSB’s engagements is The Haiti Forest Initiative, whose main objectives are to engage the local community in re‐foresting Haiti, provide sustainable livelihoods to farmers across Haiti, create job opportunities and create an affordable and clean fuel source to reduce dependency on charcoal. To take
another example, YSB also formed a joint venture in Costa Rica with other companies to produce food and thereby combat malnutrition targeting children.

Evidently, the scope of both social and environmental challenges that YSB addresses is limitless. Although a main focus lies on the economic success of social businesses, YSB invests in people, their dreams, and in their abilities. Along with local entrepreneurs, the company desires to create a sustainable impact within their communities. As a result, YSB manages to combine capitalism with social progress, which we find truly inspiring.

C. What makes you believe this company is really ethical and why you trust it?

The main reason we believe this company is really ethical is because its whole purpose is to promote social business instead of achieving financial wealth. This means there is no incentive to act unethically for the sake of more profits.

Muhammad Yunus, its founder, also stands for integrity and humanity. He has been awarded numerous honors, such as the Nobel Peace Prize or the Presidential Medal of Freedom. This makes us confident that Yunus genuinely believes in his ideas and succeeds in implementing them.

Furthermore, there is no negative press about YSB. Everything that is communicated about its vision and practices is rather positive. And as their reports show, their accomplishments are quite impressive.

Another argument for the organization’s good intentions is that it helps social businesses to operate independently. This means YSB expects those businesses to become successful in the long‐run and make real contributions to society or the environment. YSB focuses its activities on a few countries. They seem to support only businesses they truly believe in and overall prefer quality to quantity.

The only "critical" aspect is that YSB has to reject various projects as they don’t expect they will succeed in the long‐run. But this is not their fault. The reality is that donors and philanthropic lenders cannot donate infinite amounts of money. The fund has a limited size and thus, not everyone can be supported.

D.The possible challenges facing the company in the future and how you think this company may improve.

As mentioned above, the idea of social business is an innovative framework introduced by Muhammad Yunus. In the future, social business will become increasingly important. But nowadays, the majority of people do not have a clear idea about this kind of business, yet. That is why as a social business, for the upcoming years, YSB has to inform more and more customers about their business.

YSB can improve his advertising in the future to make customers understand how important it is to help local entrepreneurs managing their business rather than just donating money. According to Muhammad Yunus: "A charity dollar has only one life; a social business dollar can be invested over and over again”. The goal of this advertising would not just be more money, because, as Yunus put it, “business that makes nothing but money is a bad business". Advertising, in the form of campaigns, social media and other interactive websites, would be a mean to inform, to connect people better and to ask for help and support.

The company can also create partnerships with other organizations and companies to support its activities around the world. In fact, partnerships are a symbol of confidence, effectiveness and transparency that reflect positive values. Moreover, partnerships can also be used to collect funds. Currently, $5.7million has been deployed to social businesses. But this amount has to increase since there will be more and more social entrepreneurs in the future.

YSB serves as a link between donors and local people. But perhaps in the future, YSB can connect directly donors with local entrepreneurs. In fact, if donors and entrepreneurs met directly, human relations could be formed more easily and it could have more impact on the possible future support. Donors could understand people’s dreams and see their abilities better.

In order to help the local business, it is crucial that YSB generates sustainable demand to recreate local employment. Since the beginning, more than 800 jobs were created and sustained ‐ a number that has to be maintained or increased. Also, YSB currently supports more than 200 entrepreneurs in seven countries. This means there is still huge potential to increase their reach further to other countries and improve social business there.

Finally, in each action and each project, it is important for YSB to convey enthusiasm since it is a major key to make people feel confident and interested. Their professional expertise has to be accentuated as well, in order to prove to donors that investments in the company’s projects are secure.