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Microfinance has at times been labeled as one of the greater international development solutions of the 21st century.  The idea underlying it is quite simple - people in developing countries, stuck at the bottom of the economic ladder, can change their life and become self-sustained with loans as small as several hundred dollars.  On an aggregate country level, this generates growth by moving people out of extreme poverty.  Over the past few years, a number of microfinance banks and organizations have sprung up around the world, driven partly by the global attention generated by Muhammad Yunus and his Nobel Prize.  These institutions are becoming an alternative to big banks, unwilling or unable to give loans to “the little guy” who often lacks collateral. I myself have...

There is a growing interest in a new kind of business that is now being referred to as a "social business" or "social enterprise" (I am going to use the former terminology.) I'd like to explain and unpackage this idea a bit and contrast different definitions/perspectives.The key difference between a social business and a traditional business is that a social business explicitly sets expectations with investors (usually in its bylaws) that it will simultaneously pursue two objectives -- (1) specific positive social impacts/"returns"; and (2) financial returns. Generally, social businesses "warn" investors that the financial returns may be negatively impacted by the social objectives and therefore they seek investors who understand and support these dual objectives when they make their...

Muhammad Yunus, 2006 Nobel Peace Prize recipient, has recently released his second book, Creating a World Without Poverty. The centerpiece of this book is Yunus proposal for a new kind of institution called a "social business" which is a for-profit business which has as its top objective a social objective/mission. Yunus makes a passionate argument for the benefit and role of social businesses in helping us move extreme poverty to museums.Read full book...