Take Grameen Bank, founded by Muhammad Yunus, the father of micro-credit, an economic theory to help end poverty. It took three decades for his bank to gain worldwide recognition as a viable economic enterprise providing teeny business loans and financial services to poor entrepreneurs in developing countries. Grameen has a 98 percent audited repayment rate, way higher than regular collateralized loans. Yunus’ work won him the Nobel Peace Prize.
Now he has another idea: social-business enterprise. In this model, companies fold nonprofit businesses into their for-profit operations, earning social returns as well as plowing revenue back into communities.
Danone, the company that produces Dannon and Stonyfield yogurts, looks like the first large-scale social-business practitioner. Building a business based on selling fortified yogurt at 7 cents a cup in Bangladesh, Danone plans to take out only its initial capital cost ($500,000 after three years) and reinvest the rest. The factory will rely on Grameen micro-borrowers to buy cows to produce milk and carts to sell yogurt door to door. The plan also includes the use of biodegradable cups.
“I don’t want to make charity,” says Danone chief executive Franck Riboud. “The strength is that it is a business, and if it is a business, it is sustainable.”
A more traditional social enterprise, completely nonprofit, already has a small toehold in journalism with the reinvention of The St. Petersburg Times, a successful nonprofit educational institute. Since 1975, it has grown into the largest-circulation newspaper in Florida.
Bottom line: Leaders push boundaries. What “next big idea” appeals to you?
—Adapted from “Saving the World One Cup of Yogurt at a Time,” Sheridan Prasso, Fortune, and “Public Interest: A modest proposal to save the newspaper trade,” Anya Kamenetz, Fast Company.