A social entrepreneur is more than just a person with a new, clever idea. A social entrepreneur is a catalyst, a motivator, a manager, a fundraiser, a role model and a decision-maker.
But above all, a social entrepreneur, like any leader, is accountable for results — to colleagues, to clients, to communities, to investors and, of course, to donors.
Yet, few social entrepreneurs have delivered the kind of results that earn a Nobel Peace Prize. Muhammad Yunus and Grameen Bank, which he founded to implement his theories on microcredit, claimed that distinction in 2006.
The Nobel Committee’s citation tells the story:
“Muhammad Yunus has shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh, but also in many other countries. Loans to poor people without any financial security had appeared to be an impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.”
How revolutionary has Yunus been? You only need to look at the figures for Grameen Bank — 8.3 million borrowers, 2,500 branches, 22,000 staff, more than $1.1 billion loaned out in 2011 with 96 percent repayment of loans. But the most salient fact is this: 95 percent of this big bank is owned by its borrowers, mostly poor women.
The bank is what he calls a social business — “a company dedicated entirely to achieve a social goal. In social business, the investor gets his or her investment money back over time, but never receives a dividend beyond that amount.”
Yunus defines social business differently than social enterprises that promise social impact and a financial return.
“Some people ask me why can’t you run businesses with some profit and some social benefit ‘doing well by doing good,’ as it is popularly described,” he said. “Of course, it can be done. I am never against it. But I am trying go to the ultimate point where you don’t make any profit for yourself at all. This is easy to identify, easy to handle in day-to-day decision making.
“When you mix profit and social benefit it gets complicated for the CEO. His thinking process gets clouded. He does not see clearly. More often this CEO will make a decision in favor of profit, and exaggerate the social benefit. Owners will go along with it. Social business gives a clear unambiguous mandate to the management. There is no balancing act involved. If you can agree to take a ‘small’ profit, you can also persuade yourself to take zero profit.”
Donors played an important role in supporting Grameen Bank’s early growth. And donations still support Grameen banks in new locations — as it takes usually three to five years for a new bank to become self-sufficient.
Microfinance as an industry has suffered from misplaced expectations and the issues that emerge as for-profit players have become involved, as well as research that casts doubt on its overall ability to lift vast numbers out of poverty. But in spite of recent controversy, * Yunus’ innovation has been the driving force behind the evolution of microfinance to look at a range of financial products for the poor, and behind the growth of the impact-investing sector.
As a social entrepreneur, his vision has brought not only achievement, but the spread of new economic ideas around the world. And the Nobel Peace Prize winner continues to dream big:
“If we are looking for one single action which will enable the poor to overcome their poverty, I would focus on credit … Credit is a human right that should be treated as a human right. If credit can be accepted as a human right, then all other human rights will be easier to establish. In the future the question will not be, ‘Are people credit-worthy,’ but rather, ‘Are banks people-worthy?’
“… We got rid of colonialism, we got rid of slavery and we got rid of apartheid. Everyone thought each one of them was impossible. Let’s take the next impossible (task), do it with joy and get it finished with, and create a world free from poverty. Let us create the world of our choice.”
* Wikipedia reports: “In March 2011, the Bangladesh government fired Professor Yunus from his position at Grameen Bank, citing legal violations and an age limit on his position.” The bank and Yunus himself have appealed a high court decision affirming the removal, claiming Yunus’ removal was politically motivated. In 2012, he became chancellor of Glasgow Caledonian University in Scotland.
— Author and writer Steven Crandell helps integrate story and strategy for organizations, with nonprofit foundations a particular focus. “Thinking Philanthropy” aims to provide practical, thought-provoking ideas about giving. This article was cross-posted on Tumblr. Steven can be contacted at stevencrandell@noozhawk.com, or follow him on Twitter: @stevencrandell. Click here for previous columns. The opinions expressed are his own.