Social business can create a world without poverty…
…according to Bill Gates.
Social businesses are set up like investment accounts where the money is returned over time and the interest is paid in social dividends. Social businesses are created in the traditional capitalist business model, except the investors & owners of the company know they will never receive dividends or profits on their earnings. All of this money is used in the community.
For Bill Gates this concept is already second nature. He calls it “creative capitalism“. Gates says that while capitalism is “responsible for the great innovations that have improved the lives of billions … to harness this power so it benefits everyone, we need to refine the system.” His refining of the system means converting to social business.
Gates thinks social business will work because money is not the only driving force for individuals in the world to work. This is a breath of fresh air for me, as I have been in many debates with for-profit employees that believe the only way for the sector to be good and to keep people is to pay them more money.
Although Gates is not talking about the nonprofit sector when he speaks of social business the need for individuals to do good is the same. His need to do good and to do it without getting paid for it are both pros of social business. But Gates markets social business as a way to produce better care for social injustices than what the nonprofit sector is already providing. Gates believes that the nonprofit sector is inadequately providing these services and his model, which is based on the “obviously successful” capitalist model will work much better.
The concept of social business is yet another example of someone from outside the nonprofit sector thinking they can do it better. And although I agree with Gates when he says that nonprofits need to take on more business-like models, I do not think creating another sector, is the answer.
Gates sites two organizations, Grameen Bank and Groupe Danone (Dannon), that have collaborated to see success in improving the diets of rural children in Bangladesh. The efforts by the two social businesses have been successful, but I can’t help but ask myself if these two companies could have done the same thing as nonprofits, or even done better if they involved already running nonprofits. Doesn’t the nonprofit tax exemption mean doing more at a lower price? Doesn’t using an already established nonprofit help companies work with individuals that know how to work with the community?
I do realize the nonprofit sector is in a twist right now, leaning between business practices and keeping the strong values of the sector, and public trust of these organizations are down. But is the answer to create another sector that runs out of business the answer? Can these two sectors live in harmony with one another? Bill Gates doesn’t think so, what do you think?