7 PRINCIPLES OF SOCIAL BUSINESSESS IN BOSNIA AND HERZEGOVINA

In developing a methodology of social businesses, Mozaik Foundation was guided by three key priorities:

1. Clearly and undoubtedly define distinctions between conventional and social businesses;
2. No limitations related to setting-up, functioning and development of social business and no interference in any aspect of its constitution and business activities;
3. Not to disturb the balance on the market, i.e. ensure the fair-play for all companies, regardless of whether it is social or conventional business.

After a brief introduction to different approaches in defining social businesses, as the most adequate ones proved to be “7 Principles of Social Businesses” by Nobel Laureate, professor Muhammad Yunus, who is considered to be one of the founders of social entrepreneurship concept.
Taking into consideration diversities of economic and social circumstances in this part of the Europe, in comparison to Bangladesh, which is the country of origin of these principles, and also taking into consideration final theoretical and practical discoveries, related to other parts of the world, EU and Bosnia and Herzegovina region, Mozaik Foundation adjusted mentioned principles to the circumstances in Bosnia and Herzegovina.
We hope that these principles will be the framework for all future interventions within the legislation and taxes, which will inevitably be defined in B&H.

1: Primary Purpose

The purpose or the objective of social business is to reduce poverty or to attend to individual and company challenges concerning education, health care, culture, art, environment, minorities, social issues, etc. Its purpose is not to maximize profit for the individual but to achieve social impact.

2: Economic selfsustainability

Social businesses are real businesses and they do not depend on donations. They consistently produce goods and/or services and through that ensure their financial and economic sustainability.

3: Investors get their investment back

Impact investors and other investors invest in social businesses to create impact and obtain a modest financial return on investment. From the difference between revenues and cost social businesses secure impact and return on investment for investors.

4: Profit distribution

After all costs have been paid and necessary reinvestments made, a minimum of 51% of profit is utilized for common good (impact creation).

5: Environmental Protection

Operations of social businesses are environmentally friendly.

6: Workforce

Social businesses pay their employees within the industry average while workers enjoy equal or higher working standards.

7: Fairness

Social entrepreneurs do business honestly and in fairness. In the event of company liquidation, all donated assets are passed on to another social business, a nonprofit organization, or a municipality that will use the assets to benefit the public interest. In case all or some of the assets arrived from impact investors, they can claim them back prior to company liquidation.