Warren Buffett versus Muhammad Yunus

Warren Buffett proposed the Giving Pledge, a campaign to encourage the wealthiest rich to commit to giving most of their wealth to philanthropic causes. These benevolent entrepreneurs first maximize their business profit, and then donate their earned wealth to the poor. Muhammad Yunus proposed an alternative social business approach: the owner of social businesses maximizes the poor's welfare under the constraint of no persistent gain or loss. This paper finds that a social-business owner can do better than a benevolent entrepreneur only when the poor's wealth is not very low, a background not consistent with what Yunus considered.