Entrepreneurial solutions to address social and ecological Issues

The main purpose of social businesses is not to maximise profits. Instead, they are fully dedicated to serving a social and/or environmental cause. However, social businesses face many challenges themselves. Especially in their early growth phase, they struggle to obtain adequate funding: Commercial banks don’t offer many opportunities as they shy away from early-stage or supposedly risky business models; microfinance companies do not present a viable alternative either due to their excessive interest rates. This is precisely where Yunus Social Business (YSB) comes in.

YSB invests in emerging social businesses with promising concepts across areas such as safe water, waste recycling, healthcare, education, food and clean energy. Beyond finance, YSB offers the enterprises technical know-how and hands-on business support in order to facilitate sustained growth.

The knodel foundation supports YSB’s “Philanthropic Evergreen Fund” which provides long-term, low-interest loans to social enterprises across East Africa and in countries such as Brazil, Colombia and India. As these companies repay, the donations are reinvested into new social businesses, creating multiple impact over and over again. Through this model, YSB has already financed 62 social businesses and supported over 2,000 social business entrepreneurs.

One example of a successful project from YSB’s portfolio is the Instituto Muda in São Paulo, Brazil: Every day, the city generates 20,000 tons of waste. However, only 5 percent of residential buildings offer public recycling services; the vast majority of waste goes to landfills. To counteract pollution and at the same time create new income opportunities, Instituto Muda collects waste from high-income residential buildings for a fee and distributes the waste materials to recycling cooperatives across the city. This provides employment for low-income families, formerly homeless individuals and rehabilitated drug addicts at the cooperatives.

As part of its engagement, YSB has provided Instituto Muda with upfront capital for scaling-up its operations. In addition to its financial investment, YSB also introduced the social enterprise to mentors in marketing and logistics, helped build a pipeline of corporate clients and supported its strategic financial planning. Since YSB’s involvement through the “Philanthropic Evergreen Fund”, the number of apartment complexes visited by Instituto Muda has increased five-fold, and more than 800 new jobs have been created. Moreover, the social business has contributed a crucial part towards pollution prevention by reducing and eliminating waste.

By teaming up with Yunus Social Business, the knodel foundation is able to support many more like-minded initiatives, harnessing the power of business to fight poverty and address the climate crisis.