Profits are reinvested in the social business

Reinvest your profitsSocial businesses reinvest their profits, which is the fifth of the ten key principles of social business.

Considering that social businesses do not allow dividends to be drawn, they instead use their profits to reinvest in their organisation.

This means the profits can be used to focus on addressing the social issues the organisation has been set-up to solve, rather than used for shareholder wealth maximisation.

There are a number of ways these profits can be used, for example to extend product lines or to enter new markets.

Profits provide a way of gaining additional investment for starting new projects or ventures to address your social objectives. This reduces the time needed on looking for investment, either via financial institutions or of course through the conventional approach for charities of donations and grants!

Like with all of the 10 principles of social business, this should not be a difficult concept to grasp, however the challenge is changing the habits and behaviours of charities and commercial businesses in order to embrace the approach of social business.


Mike.

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