The Rise of Social Enterprise & Parent Jam

The Rise of Social Enterprise & Parent Jam

The concept of a social business is what inspired me to set up Parent Jam. I hope this will inspire you to think about how you can enrich your own and other peoples lives by supporting and engaging in social businesses.

What is a social business?

The social business concept we are building Parent Jam around is the one pioneered by Muhammad Yunus. In Muhammad’s book ‘Building Social Business‘ he tells an inspiring story about the great success social businesses can have to the well being of humanity through real life case studies.

He describes a social business as having the following distinct principles:

  • It is dedicated to solving a social, economic or environmental problem
  • Unlike a charity a social business is self-sustaining, does not rely on charity or funding and can be profit making
  • Unlike conventional businesses a social business does not pay dividends beyond returning the original amount invested and it reinvests to further its social mission and/or explore new social businesses
  • Social businesses pay fair and competitive wages as well as provide above-standard working conditions

The crucial difference with a social business is that because profit maximisation is replaced with a social mission as the goal there is never a dilemma or confusion about the company’s or employees’ purpose. Where conventional businesses do try to do both, for example reinvesting a percentage of profits to a charitable cause, Muhammad argues that there is no clear goal or common purpose which means when the going gets tough, profit making will be prioritised over a social mission.

How did it come about?

The social business concept evolved out of Muhammad’s mission to combat poverty in Bangladesh in the 1970s where he lived and worked. He believed that “poverty is not created by poor people. It is created by the system we have built” and made it his mission, one small step at a time to help the poorest people free themselves from unfair credit arrangements with local moneylenders, simply by providing them with small ‘micro’ loans on ethical and practical terms which enabled them to pay back the loans.

Over time Muhammad showed that loans on fair terms were being repaid with at very high rates. In doing so he proved that it was a viable business model to lend to the poor which was contrary to the beliefs of commercial banks and money lenders. He embarked on a journey to set up a bank for the poor and called it Grameen Bank or “”village bank” in Bengali, and as at December 2015 the bank had over 8.8 million village borrowers from all over Bangladesh.

What recent examples are there of social businesses?

Grameen Bank has since partnered with many well-known global companies to implement social businesses. The first partnership was with Danone, its mission was to combat malnutrition amongst children in Bangladesh by producing yoghurt that is enriched with micro-nutrients that are missing from their diet and affordable to the poor.

Grameen Adidas is another example of a joint venture set up as a social business with the aim to produce affordable shoes for the poor to prevent parasitic diseases that can be transmitted by walking barefoot.

Both ventures measure success against how far they have achieved its social mission, so for Grameen Danone it is the number of children lifted out of malnutrition each year rather than the profits generated.

Unfortunately, the global legal and financial frameworks still separate the rules governing business rates and tax reliefs between the two conventional types of organisations, the profit seeking and not-for-profit or charity.  This inflexibility means the system is not set up to accommodate or even promote the concept of a social business, but some countries are introducing other types of special companies to start bridging this gap.

For example, here in the UK Community Investment Companies (CIC) have been available since 2005. Although the CIC framework allows profit maximisation through means like dividends it has become a popular way for businesses to set up if they have a social mission. However, CICs are regulated in a similar way to charities, and do not receive the tax or business rate reliefs that charities do. Nevertheless, CICs are helping people think differently about business and engaging local people to enrich community life. A good example of a CIC is the Deptford Cinema CIC which is a not for profit community led project bringing affordable creative cinema to the Lewisham borough. But unlike a social business it relies on donations and volunteers to sustain itself and without the added benefited of reliefs if it were a charity. But the hope is if we can build momentum to set up social businesses the rules will follow to promote this innovative concept that benefits all the parties involved.

What next…

Muhammad has developed an innovative business concept that he describes as “a new form of capitalism”.  He has proven that social businesses can be implemented by individuals or well established global corporates alike.  We simply just need to think differently about the way we set up businesses and embrace the idea that we can create self-sustaining social businesses which can contribute to economic growth at the same time improving the well being of others.

You can’t appreciate what he has accomplished over the past 30 years until you read his story…I highly recommend you put one of his books on your reading list now!

…Parent Jam

Feeling inspired I started to think about how I could build a social business around people and decided a good place to start would be with my greatest and newest passion…becoming a parent.

I was very fortunate to live close to my family and gather a great network of mums through my antenatal class to provide support and encouragement. This made a world of difference in the early months of motherhood when I was just finding my feet and adjusting to living off of very little sleep! Without these two aspects the first few months in particular would have been even more challenging and stressful.  Unsurprisingly when I speak with other new parents that didn’t have these support networks they confirm how beneficial it would have been to have family nearby and/or a group local parents to support them.

It was clear to me that many parents were missing out on this connectivity so I set about creating an affordable and more innovative way of connecting and empowering expecting parents on their pre-and post-natal journey and called it Parent Jam.

Parent Jam has since evolved with a mission to empower the whole community to share their collective knowledge, skills and experience with each other through creative pop-up events hosted in local venues that support our mission. With the philosophy that we can all be teachers and students, we hope you will join us in bringing fun and something new to community life!

#KeepJamming #ParentJam

Note that his post was originally posted on the Parent Jam blog here. It fitted perfectly with Reaching Aspiration’s principles, so we have reposted it for you to enjoy.

Parent Jam

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