- 3 min
Social Business, towards socially useful entrepreneurship
To foster fairer access to wealth creation, the Grameen Crédit Agricole Foundation is calling for a more responsible capitalism supportive of a new “social contract”
A practical observation
Harnessing its experience as a pioneering investor in social businesses, and drawing on a quantified review, the Grameen Crédit Agricole Foundation observes that social entrepreneurship in most cases proves rapidly beneficial to society but takes much longer to reach financial breakeven.
The objective of social business companies is to solve a social issue while seeking to generate profit. The business model is conventional in its financial aspect but extremely different because its key goal is to be of use to society. Profitability is simply a way to achieve that goal on a lasting basis. Social business creates value not through its ability to respond to a market need, where possible with a competitive advantage, but to pursue its social remit in the shape of the socially useful project informing its creation.
One White Paper, seven proposals
In its white paper, the Grameen Crédit Agricole Foundation has formed seven concrete proposals to make social business more effective. From the identification of success factors to the structuring of the social performance of projects, the Foundation demonstrates a singular economic approach.
1. Create the status of a company with a “socially useful contract”
For the Grameen Crédit Agricole Foundation, a social business cannot exist without a contract engaging the social objectives of projects.
2. Assess social usefulness so as to include it in the income statement of the social business
The assessment would consist in identifying and estimating the company’s social and environmental impacts so that they can be transcribed as units of account.
3. Foster on a tax basis the transition of organisations to companies with a socially useful contract
Social businesses need to call on hybrid financing (donation and debt arrangements) because the particularly low margins of their business models generally do not suffice to cover investment costs.
4. Create public-private partnerships in rural areas for access to essential goods
A social business based in a rural environment is eminently qualified to relay public action and qualify for an adapted form of PPP.
5. Disseminate low-tech patents on an open source basis
Open-source low-tech patents (rights free) are key to the development of local and modest economies in emerging countries.
6. Develop deconsolidating financial arrangements in agriculture value chains
Developing a relationship of trust through contracts serves to strengthen and structure the agriculture value chain.
7. Rely on local correspondents
The Foundation recommends relying locally on an investor sitting on the board of directors. The presence of this last will facilitate operations and governance.
“The words ‘social’ and ‘business’ would appear to be fundamentally opposed. In the former economic paradigm, where individualism reigned supreme and led to widespread precarity, they signalled a contraction, a paradox – an idealistic whim. And yet their singular coming together stands as a pathway towards a revamped, redefined and more responsible capitalism and a proactively inclusive economy.” Eric Campos, Delegate General of the Grameen Crédit Agricole Foundation
Click here to download the White Paper http://gca-foundation.org/moteur-de-recherche
The Foundation's social business key figures at end-December 2017:
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