The Business of Social Change
Imagine a stockholder meeting in which the investors are demanding higher returns and a more nimble response to changing market realities. Except in this scenario, the returns they want are measured by the number of lives improved, a decrease in the number of poor people in their market, or the increased quality of the environment around them. That exact scenario is happening across the globe, spurred by a business plan designed by Nobel Laureate Muhammad Yunus.
In his new book, Creating a World without Poverty, Yunus gives a compelling account of the successful launches of social businesses. These businesses, while structured the same as traditional businesses, have two significant difference: all profits are reinvested into the business and used to advance the company's mission, and the mission is to provide a product or service that improves the lives and opportunities of poor people.
Franck Riboud, CEO of Group Danone first learned of this concept over lunch with Muhammad Yunus in October 2005. Almost immediately, plans were in place to create the first ever purposely designed social business, Grameen-Danone. Tasked with a mission to improve the nutrition of poor children in Bangladesh, today it is a thriving business, providing jobs to local entrepreneurs who supply the raw materials, work in the factories, and deliver fresh yogurt to stores. And, the product they supply is an inexpensive, tasty, highly nutritious product loved by Bangladeshi children. All profits are reinvested into the company with the purpose of expanding to more villages.
Yunus has also applied his social business model to healthcare, through Grameen Health Care Services, which will set up eye care hospitals throughout rural Bangladesh. The first eye care hospital is scheduled to open next March and is expected to serve 50,000 people annually. We hope these success stories will inspire you, as they did us, to take a closer look at social business.
In the coming days, we will be launching a blog, where you can discuss social business with others in the microfinance, business, education and nonprofit industries. We also encourage you to visit the Creating a World Without Poverty section of our Web site, where you can read reviews, listen to and watch media appearances, buy the book, or share your thoughts with Muhammad Yunus.
Social Business Model Can be Applied Throughout the World
Yunus' concept has already inspired Grameen Foundation to launch Grameen-Jameel Microfinance Limited and Grameen Capital India, social businesses that fight poverty in the Arab World and India, respectively. Their stories are very different, but the concept is still the same-use a traditional business model to fulfill a social mission.
Grameen Capital India Limited Launches
India's rapidly expanding microfinance industry got a much-needed boost with the launch of Grameen Capital India (GCI) Limited on January 14. A collaboration of Grameen Foundation, IFMR Trust and Citicorp Finance (India), GCI will help Indian microfinance institutions (MFIs) tap local capital markets for funding. Fewer than 10 percent of the 75 million households in India that could benefit from microfinance have access to services, and a lack of capital is the major factor in the supply and demand imbalance.
Grameen Capital India is the first purposely-designed social business company to promote microfinance as an attractive "asset class" by enabling access to the capital markets. This will help microfinance institutions (MFIs) access lower-cost funds through appropriate financial structures while integrating them into the formal financial markets in India.
In Creating a World Without Poverty, Professor Muhammad Yunus noted the problems facing MFIs, saying "there is plenty of money in any country to lend money to the poor. It is all a question of mobilizing it and making it available to the poor." He pointed to GCI as a unique "social business" that will facilitate access to local capital markets for Indian MFIs .
Grameen Foundation has been supporting microfinance in India for more than five years, and we believe Grameen Capital India is another step in helping the poor in India lift themselves out of poverty by giving MFIs the tools for accessing the sophisticated financing they need to grow and reach more of India's poor.
MIX Global 100 Rank GF Microfinance Partners for Excellence
Grameen Foundation is proud to congratulate its microfinance partners for ranking amongst Forbes Magazine's Top 50 and MIX Global 100 Microfinance Institutions.
Grameen Koota founder and CEO Vinatha Reddy accepts the Pioneer in Microfinance award.
Forbes Magazine's first-ever list of the World's Top 50 Microfinance Institutions selected from a field of 641 micro-credit providers ranked Grameen Foundation partners FONDEP as #5, ACSI as #6 and Grameen Koota as #19 using scale, efficiency, portfolio risk, and profitability as assessment tools. ACSI and Grameen Koota were honored by GF last year, with ACSI earning the Excellence award and Grameen Koota recognized with the Pioneer in Microfinance award.
Other GF partners and guaranteed growth partners included in the list were:
- Foundation Zakoura: 27
- DBACD: 28
- Kashf Foundation: 34
- enda inter-arabe: 36
- SKS: 44
- Pro Mujer Peru: 46
The MIX Global 100 of top microfinance institutes in the world was selected from the evaluation of 820 microfinance institutions across the globe using profitability, transparency, efficiency and outreach as assessment tools. Grameen Foundation Growth Guarantee Partner Foundation Zakoura received the #1 ranking. Three Grameen Foundation partners ranked in the top 25. Grameen Foundation partners ESAF was ranked as #8, SHARE as #21 and Kashf as #22. GF honored SHARE in 2000 with the Excellence award and Kashf in 2002 with its Pioneer in Microfinance award. Other GF partners and guaranteed growth partners included in the list were:
- enda inter-arabe: 30
- CARD NGO: 32
- FONDEP: 52
- Pro Mujer Bolivia: 57
- SAT: 59
- SKS: 64
- NWTF: 66
- EDPYME Cofianza: 67
- Al Tadamun: 74
- ProMujer Peru: 76
- LAPO: 82
We are constantly striving to fight global poverty through our partnerships with microfinance institutions by connecting them to the capital and innovative business tools they need to grow. This recognition by Forbes and the Mix underscores our partners' commitment to serving their clients efficiently and effectively while increasing their outreach and sustainability.