A social business is a for-profit business focused on meeting a social objective rather than a payout to shareholders. It is a concept pioneered by economist and Nobel Peace Prize winner Muhammad Yunus, while trying to solve social issues caused by poverty in Bangladesh. Many entrepreneurs have the desire to make the world a better place. Social businesses can provide an opportunity for them to do so. A social business may be created to fulfill a specific need for the poor (for example for better health care, for nutritious food or for affordable products and services). It also may be any for profit business which is owned by poor people, thereby meeting a social need. In a social business owners and investors do not seek personal gain and do not take profits. They may choose to be repaid their investment over time; however without interest or adjustments for inflation. Social businesses could be created to solve many real-world problems caused by poverty in communities all over the world.
The pursuit of self-sustaining revenue differentiates a social business from traditional nonprofits that rely on continued donations to fund their social mission. In the world today, there are times when charity is absolutely necessary (for example, natural disasters such as the destruction caused by hurricanes in Haiti and Puerto Rico). In these situations charity is vital to meet immediate needs for food, shelter, pure water etc. There are other times where a social business may be a better option. A social business can accept donations, especially in its early years for start-up capital. However, when a social business becomes self-sustaining, it can continue solving social needs without a continual need to solicit donations. A social business empowers the poor to live a life of dignity and self-respect. It may provide them with goods and services at a price they can afford. Or it may provide them with an opportunity to work with integrity for a fair wage. The poor will be able to earn more, spend more, and save more to the benefit of everyone, rich and poor alike.