Opportunities at the intersection of Social sector and Business

The world is currently experiencing a fundamental shift in the way we live. The only people who can feel this change occur are some billion people around the world who live on less than $2 a day – the poorest of the poor or more commonly referred to as the Base of the Pyramid (BOP).

Bill Drayton, founder of Ashoka

This profound transformational change is being led by global citizen sector – driven by social enterprises and social entrepreneurs – fast reaching a critical mass accelerated by the dynamics being played out by social media. 

Clearly, the problems of the world are not the domain of the conventional business system. To serve the needs of this humungous base, the citizen sector has taken up the role of a change agent gaining a lot of traction in the past couple of decades with productivity surpassing more than double that of the business sector.

Until now, citizen or social sector had largely remained static due to zero competition and easy money by the governments. But collision of number of forces like spread of democracy, need for innovation and better educated and interconnected society have flipped it into a competitive entrepreneurial stage which has taken the businesses by surprise. And for the first time, those billion lives have a shot at lifting themselves out of poverty.

 A social enterprise operates by supporting individual social entrepreneurs both financially and sometimes professionally so that those entrepreneurs can act as change agents to devise innovative solutions to society’s most pressing social problems like poverty, deforestation, water scarcity and access to health care.

Organizations like Ashoka, founded by Bill Drayton, The Skoll Foundation, founded by the founder of e -bay, Jeff Skoll, and Grameen Bank, founded by Nobel Peace prize winner Mohd. Younis, are the long established leading examples of the power of citizens and social groups. They didn’t wait for the governments to bring change but took the mantle upon themselves and proved that poor need dignity, not dependence.

To quote a phrase made famous by the World Bank’s extreme efficiency at giving out billion dollar loans – ‘The world doesn’t need a billion dollars in one place, but a $1000 in a million places’, is a true demonstration of the power of social business.

A social business is self-sustaining that makes money but the owners and investors are not in it just for profits only. Mohd. Younis, argues that whenever he sees a problem, he designs a business to solve that problem. And because of that attitude, a number of social businesses have emerged through the Grameen Bank in tie ups with Danone, to make fortified yogurts, with BASF to make mosquito nets, with Adidas to make super-low priced shoes and with numerous other international companies. And these multi-nationals are not looking at profits but have seen it as opportunity to do their part in the area of their own respective social responsibility efforts. We can see a world of 2 businesses emerge – one to make money and the other to solve problems.

 Apart from some of the more well known social enterprises that are increasingly connecting to the people at the lowest denominator, a number of new start ups like Kiva and Root Capital, based in USA, and Kashf Foundation, based in Pakistan, have mastered the art of creating programs with truly radical business models enabling large scale change by creating quality of life for the poor. All these three organizations, though relatively small, provide mirco-finance loans as little as $25 to people in countries in Africa and Asia. Each of those organizations has dispersed about $100 million dollars until now.

 Kiva is the world’s first online lending platform connecting directly the lenders and entrepreneurs around the globe. Vittana, is another such organization providing education loans to students in impoverished countries. Typical examples would be coffee farmers in Kenya who after procuring a loan from Root Capital have upgraded their processing equipment and Starbucks Coffee has become their buyer at premium rates. Or an illiterate poor woman in Pakistan, after taking a loan of $60 from Kashf to start her own business of cycle accessories, now after few years not only earns $500 a month but also employs 15 other women in her neighborhood.

There are thousands of such transformative examples taking place in these people’s lives. Or looking at the other side to the lenders – Nathan lives in California and has taken out loans as little as $20 to $500 through Kiva. He has invested in about 70 people or entrepreneurial businesses in African countries. In the process, he not only makes money but is also is becoming the ‘ultimate game-changer’ in philanthropy.

 The Social sector is truly becoming as entrepreneurial and as competitive as business. It is the trend that will have a lot of impact creating entirely new hybrid institutions of business and social arena in cohort.

Sustainable development goals can best be achieved by markets – but profits are also imperative in developing a social enterprise. This is where the younger change-focused minds are excited at – the intersection of business and solving problems. This is the fundamental pattern change taking place where virtually every one has a chance to be a change-maker. Bill Drayton refers to it as ‘bringing the two halves together’. It is where McDonalds meets micro-finance, because if it can be done once then it can be done a billion times.

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