Ask Amrita Sondhi—social entrepreneur, certified yoga instructor, bestselling author, and fashion designer—to define business success, and she will speak of profit and return, but not in a traditional sense.
Her motivation to create a profitable, sustainable business is not so much driven by personal gain—it stems more from a desire to solve large-scale social problems.
This month she launches Movement Global Clothing, a sustainable fibre-wear business, which in turn will support the Pamoja Foundation, a Canadian organization dedicated to creating sustainable financial strategies to aid impoverished people in Kenya.
Sondhi's reversible clothing designs are made with sustainable fibers, such as bamboo and soy. A portion of the proceeds from the sales of her clothing line will funnel to the Pamoja Foundation, which is in the process of developing a community bank in Mwate village, in a coastal province of Kenya.
"Our goal is to have the people from this village produce the soy and make the clothing in factories owned and operated by those that finance their businesses through micro-credit," says Sondhi.
Microcredit is a controversial financial innovation that was first popularized in Bangladesh by Economics Professor Muhammad Yunus, who was awarded the Nobel Peace Prize in 2006 for his efforts to improve the lot of Bangladesh's poor. During the Bangladesh famine of 1974, Yunus was inspired to provide a small loan to a group of impoverished families, without requiring collateral.
The success of this led him to believe that if he were to make micro-loans available to a wide population of poor entrepreneurs, the rate of poverty in Bangladesh would diminish. In 1976, he created a community microfinance institution called the Grameen Bank, which lends nominal amounts of money to small groups of people, often women. The loans are repaid in tiny weekly installments, and if a client can't make the payments, other terms are worked out.
Although critics of the Grameen movement describe micro-credit as "a privatization of public safety net programs," the banks expanded across Bangladesh and gained widespread enthusiasm among government officials in both developed and developing countries.
Gina Neff, Professor of Communication at the University of Washington, says micro-credit "is better at being a solution for economic problems than a solution for poverty." Neff cautions social entrepreneurs in North America against backing a Grameen model, which implies that credit is the way to solve poverty.
"We need to be cautious about which problems credit can solve. It can't solve all the problems of the poor. My fear is that we are asking people that are the most vulnerable to incur debt. Grameen skips a step by supporting the employment of one particular person rather than applying redevelopment strategies."
However, Neff appreciates the benefits of grassroots, community driven microfinance initiatives. "If you look at the expansion of microfinance in urban communities in the United States, you really can see the best aspects of what micro-credit can do. These settings really do help build and strengthen the kind of social capital needed to revitalize communities." Rustum Southwell, social entrepreneur and executive director of the Black Business Initiative (BBI), agrees with Neff that microfinance initiatives must evolve to ensure long-term sustainable solutions.
The BBI began in 1995 as a province-wide community economic development program committed to fostering the growth of businesses owned by members of Nova Scotia's black community. In the past ten years, the organization has grown in scope to accommodate a more complex corporate structure that allows for a multifunctional business initiative.
Southwell says that when BBI started out it helped people develop their business skills and provided micro-financing to black entrepreneurs. Then five years ago, "we realized a need to get to the next stage, to enable good companies to grow into million dollar corporations."
"We are in the process of incorporating a company that will address the needs of specific business opportunities," says Southwell. "As part of a social enterprise experiment, we are creating "limited by guarantees" companies, which will enable all profits to be reinvested back into the community."
Both Sondhi and Southwell are inspired to create sustainable social changes in their communities by harnessing their entrepreneurial skills. And in Sondhi's case, an overseas community will benefit as well.
"My sole motivation for everything I do is to support the Pamoja Foundation," says Sondhi.
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