April 5, 2011 | Read Time: 2 minutes
Organizations that run social-purpose businesses necessarily have to make choices between their social missions and financial return, Muhammad A. (Rumee) Ali, an official at BRAC, told participants at the Skoll World Forum on Social Entrepreneurship.
The anti-poverty group, which was founded in Bangladesh almost 40 years ago and now works throughout South Asia and Africa, didn’t set out to start businesses, he said. Instead they grew out of the organization’s microfinance work.
Early on, the charity made loans to farmers to allow them to buy cows, as a way to increase their families’ income. But because the farmers could only sell the milk in their small, often isolated villages, the loans led to an oversupply of milk and pushed prices down, making it difficult for the farmers to repay their loans.
“So we set up almost 100 chilling stations all over the country, and we started processing the milk,” said Mr. Ali, who noted that BRAC’s dairy business is the second largest in Bangladesh.
Not Just a Business Decision
Mr. Ali said that understanding the criteria that BRAC uses to make decisions about its social enterprises took some time after he joined the organization in 2007, after a 30-year career in banking.
When he started, one of his first tasks was to conduct a review of BRAC’s 18 businesses. Mr. Ali recommended that the organization shut down 16 chilling stations that were operating at 10 percent capacity or less.
“I was told we can’t do that, because they’re in very poor areas, and the poor depend on these chilling stations,” he told the audience. “It’s their only source of income.”
It was discussions like that that helped him understand what it meant to run a social enterprise, said Mr. Ali. “Decisions are not taken on the basis of commercial interests alone. “
