Creating Social Capital
Inspired by the work of Nobel Peace Laureate and banker to the poor Professor Muhammad Yunus, CI unveils the California Institute for Social Business.
By Lori Putnam
The Yunus revolution of providing microcredit to the poor began with 42 Bangladeshi villagers chained to poverty as a result of $27 owed to a local moneylender. With lending practices that included high interest rates and the requirement that villagers sell their wares at prices determined by the lender, these struggling entrepreneurs were left with only pennies a day to eke out their survival.
Enter Professor Muhammad Yunus. Born in what was then East Bengal, the Fulbright scholar returned to his native country following the birth of modern Bangladesh. He was inspired to help build a prosperous future for the fledgling country, and in 1972 joined the Economics Department at Chittagong University. Two years later Bangladesh was plagued by a horrific famine that left Yunus questioning his ability to make a difference.
“We’re not interested in your past, we’re interested in your future”
Yunus recounts in his New York Times bestselling book, Creating a World Without Poverty: Social Business and the Future of Capitalism, the challenges of teaching economics against the backdrop of such suffering. “This was not the Bangladesh which I’d hoped to play a role in building,” he writes. “I found it increasingly difficult to teach elegant theories of economics and the supposedly perfect workings of the free market in the university classroom while needless death was ravaging Bangladesh.”
So he went searching for someone he could help, if only for one day. And that is when he was introduced to the predatory lending practices found in the villages adjacent to Chittagong University. “I couldn’t believe people suffered so much for so little,” he said. In that moment Yunus decided to pay the villagers’ debt of $27. And in that one action, he started the foundation for what would become the Grameen Bank and a new social movement providing small loans to the poor regardless of their past, or nonexistent, credit history.
At first borrowers were incredulous, but Yunus reassured them that “…we’re not interested in your past, we’re interested in your future.” Today Grameen, which means “village” in the Bangla language, lends $100 million a month to 8 billion borrowers in loans that average less than $200. Some 97 percent of the borrowers are women, and now Grameen has expanded to American cities including New York and San Francisco. In 2006, Yunus was awarded the Nobel Peace Prize in recognition of the worldwide impact he has made in empowering the poor through social enterprise and received the Presidential Medal of Freedom from President Barack Obama in 2009.
Defining Social Business
Yunus tells his audience that he dreams of the day when children will have to visit museums to see the ravages of poverty. Until then, he continues to spread his word of empowerment of the human spirit through social business. His recent trip to the U.S. included a much-anticipated visit to the CSU Channel Islands campus where he helped launch the first-ever California Institute for Social Business in the MVS School of Business and Economics and participated in the University’s sixth annual Campus Reading Celebration.
Vice President for University Advancement Julia Wilson had worked at the Grameen Foundation prior to her appointment at CI and served as a connection between Yunus and the University. Working in collaboration with administrators and faculty, Wilson helped facilitate discussions on defining social business and how it could be supported on campus through a new institute. When asked to define social business, Wilson explained: “You start a business with the intent of making social change. The intent is to have a business that is sustainable, and where everybody gets paid. However, the profits are put back into growing the business rather than providing stocks or dividends to individuals.”
In addition to spearheading curricula focused on social business issues, the new Institute will also support faculty research and a possible social business plan competition. “We expect most of the social business plans will have a local focus,” added Wilson. “We want our students to understand global social issues, but we also want to encourage them to look within our own region and find ways to solve issues here.”
A Once in a Lifetime Opportunity
CI students had multiple opportunities to hear Yunus speak during his visit in February. He attended a showcase of CI student service learning projects in the Broome Library, followed by the Campus Reading Celebration which allowed students to have copies of their books signed by the author.
The day’s public celebration concluded with a community reception and the launch of the Institute at the Thousand Oaks Civic Arts Plaza. As part of the celebration, President Richard R. Rush announced the presentation of the first Yunus Social Innovation Medal to Steven M. Hilton, CEO and president of the Conrad N. Hilton Foundation. “Under his leadership the Hilton Foundation has provided over $800 million to the most unfortunate and disadvantaged around the world,” said President Rush. “In the words of Steve’s grandfather, Conrad Hilton, ‘There’s a natural law that obliges you and me to relieve the sufferings of the distressed and the destitute.’ Steve has lived up to that obligation and we are proud to invite him to accept this medal.” Yunus presented Hilton the medal on stage.
“Students were inspired and excited by the Yunus visit. You don’t get too many opportunities in a lifetime to meet or be in the same room with a Nobel Peace Prize laureate,” commented Assistant Professor of Sociology Dennis Downey. Downey is part of the interdisciplinary team of faculty working on the formation of the Institute.
Ashish Vaidya, Dean of Faculty, describes Yunus as “a leader who can translate vision into practical action”— a vision which has been responsible for helping 6.6 million families escape poverty. Looking ahead to the expansion of the Institute, which has already received seed money from Citibank Foundation, Vaidya emphasizes it will take a concerted effort among faculty, staff, and students as well as the community. CI alumni are also welcomed to learn more about how they may get involved.
As Yunus gently pointed out in his question and answer session with CI students, the key is to just do something. “It’s one thing to have the idea,” he said with a kind smile, “but now we have to go do it.”