social business

Social Business

A social business is defined as a business whose purpose is to solve social problems in a financially sustainable way.

Social businesses function in most ways like for-profit businesses, yet since the social impact is the primary purpose of this business, all profits have to be reinvested into the business (i.e. no dividends are paid out to the owners) or are used to start new social business to increase the impact of the organization. 

A famous example of a social business is the Grameen Bank in Bangladesh, which each year gives out loans to the poor that amount to approximately one billion US dollars. Currently, the social business economy is still limited, but nevertheless it is becoming a stakeholder in its own right alongside for-profit businesses, cooperatives, the state, civil society and NGO’s.