"A charity dollar has only one life, but a Social Business dollar can be recycled many times" - Professor Muhammad Yunus

  • Posted by Marina Vatav
  • May 20, 2013 5:29 PM EDT

In Haiti, where it is said that the biggest industry is the industry of non-profits, due to their large presence and influence, Yunus Social Business (YSB) came with a new vision for development: growth through social business, an alternative for classic philanthropy and non-profit concepts.

The social business concept, as defined by its creator, Professor Muhammad Yunus, Nobel Peace Prize Laureate, is a business that addresses social or environmental needs, in a financially sustainable way. It reinvests all profits to advance social or environmental goals. Investors may recoup their initial investment only, but no dividends are paid. Apart from these specifics, Social Businesses operate as regular traditional businesses.

"It's a hybrid model between a business and non-profit," said Ipena Lucien, Senior Social Business Consultant at YSB.

Since Yunus Social Business opened its office in Haiti in 2011, it invested in six different social businesses. The Fund supports businesses that are part of one of the following sectors: Education and Vocational Training, Agriculture and Environment, or Nutrition.

Any business can apply for Yunus Social Business funds, as long as it agrees to operate as a social business, have a great social impact, and use all profits to address social needs.

"Social business entrepreneurs are very specific kind of people. They would need to have the business mind, but they also need to be extremely dedicated to their communities and the society in general," said Clementine Lalande, Head of Investments Haiti, YSB.

"It was extremely interesting to see that there is a movement. There are people that are matching those two criteria. Not everyone is, obviously, but we found really exciting profiles of groups or organizations that are really appealed by this social business concept."

So far the fund invested a total of one million dollars in 6 social businesses. Some of them are:

Entrepreneurial training center Etre Ayisyen - A business skills training center for Haitian youth in Port-au-Prince. Etre Ayisyen's goal is to train job creators of tomorrow on financial literacy, business development and planning, professional and personal development. Yunus Social Business invested $80K in Etre Ayisyen that has educated, so far, more than 450 working professionals and aspiring entrepreneurs.

Sesa, jatropha plantation in St. Marc. The jatropha is processed into bio fuel oil, protein meal and briquettes that sell in Haiti. Yunus Social Business is investing $240K in Sesa. It aims to address the lack of clean and competitive domestic sources of energy and protein. Its operations will reduce the level of erosion, due to deforestation, in the area. It would employ a total of 200 people in the cultivation and sales domain.

Poulailler de Léogane, Broiler Farm and Schools - A poultry farm with a production capacity of 7,000 chickens. Léogane will have its own slaughterhouse; the farm will serve not only its home market, but also other areas such as Port-au-Prince, Jacmel, and Petit-Goave. Yunus Social Business Fund is investing $335K in Léogane. The poultry farm itself will create about 20 jobs. The profit of the poultry farm will subsidize the budgets of 4 schools, allowing over 600 children to receive better quality education.

"We don't finance initiatives, we finance businesses. Those investments are typically in the range of $200,000-$300,000 and they are typically a combination between debt and equity," said Ipena Lucien.

"It can be either entrepreneurs, they might be already operating or not, but they have to own the idea, or it can be an organization from the civil society that want to develop their own social business."

It's newest Social Business in Haiti is the Haiti Forest Project, which Yunus Social Business is carrying out in partnership with Virgin Unite, Clinton Foundation, and the Government of Haiti, which promised to make available ten thousand hectares of land for reforestation.

Doing business in Haiti, like anywhere else may not always be smooth. Some of the challenges the YSB encountered while operating in Haiti were the slow and uneasy registration process, and lack of Human Resources for senior positions.

In an interview by Emily Parker published in the Wall Street Journal (2008) Professor Yunus said:
"Social business is 'cause-driven' rather than profit-driven -- yet it isn’t a charity. Shareholders are entitled to recoup their investment, and a social business must recover its full costs, or more, even as it concentrates on creating products or services that benefit the poor." In philanthropy, says Yunus, the "dollar [or euro] has only one life, you can use it once. But a social business dollar has endless life: it’s recycled. And you build institutions… You bring creativity into it. You bring innovations into it. You bring continuity into it.”

Originally from Bangladesh, Professor Muhammad Yunus and his Grameen Bank won the 2006 Nobel Prize for Peace for fighting poverty by lending small amounts of money to the poor for income-generating activities.

Co-founded by Peace Nobel Laureate Professor Yunus, Yunus Social Business (YSB) initiates and manages incubator funds for Social Businesses in several countries. While the incubators search, coach and select Social Businesses, the funds provide loans and equity after a thorough due diligence process.