http://www.ssireview.org/articles/ Strategies, Tools, and Ideas for Nonprofits, Foundations, and Socially Responsible Businesses en katiejh@stanford.edu Copyright 2008 2008-05-29T15:00:01-08:00 http://www.ssireview.org/articles/entry/from_the_ground_up/ http://www.ssireview.org/articles/entry/from_the_ground_up/ The Western Ghats, a mountain range running 1,000 miles down the western coast of India, is one of the world’s natural treasures. With rain forests, dry forests, swamps, and rivers, the range is home to 1,600 flowering plants found nowhere else on the planet, as well as to scores of endangered animals, including tigers and elephants. No less important, millions of people live in the Ghats, and many of their livelihoods are intertwined with the region’s natural bounty. But in 1993, when botanist Kamal Bawa received a World Wildlife Fund grant to help the Soligas, an indigenous tribe living in the Ghats and dependent on forest products, he found a region devastated by deforestation and misuse. In the developed world, fragile ecosystems often enjoy ample research describing them, organizations attempting to preserve them, and policies protecting them. But all Bawa saw in the Ghats was a patchwork of government protections that amounted to little more than a conservation Band-Aid. Most of the existing research was irrelevant to the Ghats’ problems or didn’t link to government policies. NGOs tried to help, but they invariably overlooked the social and economic aspects of conservation. Meanwhile, the Ghats faced pressures from mining, dam building,… Environment, Social Entrepreneurship 2008-07-28T14:00:00-08:00 http://www.ssireview.org/articles/entry/microloan_sharks/ http://www.ssireview.org/articles/entry/microloan_sharks/ Banco Compartamos, the largest microfinance institution in Mexico, is the acknowledged poster child for commercial microfinance institutions (MFIs). From its inception in 1990 until 2000, Compartamos operated as a not-for-profit nongovernmental organization (NGO), receiving $4.3 million from international development agencies and private Mexican donors. In 2000, the organization was reaching 60,000 borrowers— mainly poor women in rural areas. To tap commercial funds for even faster growth, the NGO and other investors converted it to a for-profit business. By the end of 2006, the corporation was serving some 616,000 borrowers—a tenfold increase. The corporation went public in 2007. For its initial public offering (IPO), Compartamos’ owners sold about 30 percent of their shares to new investors, raising a total of $450 million for the original investors—not bad for an initial total investment of $6 million. Following the IPO, the corporation was valued at more than $1.5 billion. That comes out to an internal rate of return to investors of roughly 100 percent a year, compounded over eight years, reports the Consultative Group to Assist the Poor (CGAP).1 Many observers hailed the Compartamos IPO as an unalloyed success. “The financial markets have shown the true value created by high-performance, double bottom line–oriented… Economic Development, Social Entrepreneurship 2008-07-13T14:00:01-08:00 http://www.ssireview.org/articles/entry/shes_crafty/ http://www.ssireview.org/articles/entry/shes_crafty/ From 1933 to 1947, Dr. Jayanti Mitrasen Mahimtura was among the legions of Indians who joined in her country’s struggle for independence from Great Britain. She took time off from medical school, did jail time twice for acts of civil disobedience, and wore only khadi, the hand-spun cloth that Mahatma Gandhi used as a symbol of India’s self-sufficiency. Today, Mahimtura’s granddaughter, Priya Haji, is a rising star in the fair trade movement. Haji’s company, World of Good, connects artisans—mostly women—in poor countries with trendy consumers in the West. The company first ferrets out handmade items from far-flung villages across Asia, Africa, and South America. It then cleverly displays the wares in affluent urban stores throughout the United States. Though Haji, the CEO, declines to release sales figures, she says gross revenues have doubled every year since 2004, when she started the company with two classmates from the University of California, Berkeley’s Haas School of Business. Boutiques selling ethnic crafts like earrings, scarves, and bowls are ubiquitous in gentrifying neighborhoods. But Haji thinks bigger: Her company works with 150 organizations in 34 countries to source enough wares to stock mainstream retailers such as Whole Foods, Wegmans,… Economic Development, Nonprofit Management, Social Entrepreneurship 2008-07-06T14:00:00-08:00 http://www.ssireview.org/articles/entry/taking_stock_of_venture_philanthropy/ http://www.ssireview.org/articles/entry/taking_stock_of_venture_philanthropy/ In 2000, the San Mateo County library system piloted a program called Raising A Reader in 12 Northern California child care centers. The program taught low-income parents a daily routine of cuddling and reading to their young children. With its low-cost method for preparing children for kindergarten, Raising A Reader expanded to 175 communities across 33 states by 2008. Sixteen independent evaluations showed that the program fostered parent-child bonding and children’s cognitive development, and Fast Company awarded the organization its Social Capitalist Award three times. Behind Raising A Reader’s success and rapid expansion was the Center for Venture Philanthropy, a division of the Peninsula Community Foundation (now the Silicon Valley Community Foundation). One of the pioneers of venture philanthropy, the Center for Venture Philanthropy applied venture capital’s tools for incubating new businesses to social change organizations. The center has launched five social venture funds since its inception. For each fund, the community foundation taps into its vast network of local investors to raise money. Investors, in turn, work directly with the center staff and nonprofit clients to understand and address community and nonprofit issues. To fund and expand Raising A Reader, the center first worked with the organization’s leaders to… Nonprofit Management, Social Entrepreneurship, Philanthropy & Responsible Investing 2008-06-22T14:00:00-08:00 http://www.ssireview.org/articles/entry/15_minutes_with_martin_eakes/ http://www.ssireview.org/articles/entry/15_minutes_with_martin_eakes/ When Martin Eakes was a teenager growing up in a poor, rural community outside of Greensboro, N.C., his best friend, who was an African American, was shot and killed in a playground near Eakes’ home. On that day, Eakes vowed to live his life for the two of them. Eakes went on to graduate from Yale Law School, but instead of taking a lucrative position at a high-powered New York law firm, he returned to North Carolina to devote his energy and talents to improving the lives of the poor. In 1980, Eakes started Self-Help as a way to help the poor help themselves. His first loan was for $1,700, to help seven laid-off textile workers start a community bakery. From those modest beginnings, Self-Help has grown into a financial powerhouse. At its core is a credit union that takes in deposits and lends out money to low-income people who want to buy homes or start businesses, and to nonprofit organizations. Self-Help also repurchases home loans made by large banks to low-income buyers. The 501(c)(3) community development financial institution now has more than $1 billion in assets. Self-Help isn’t the only organization lending to low-income home buyers. In the last… Economic Development, Social Entrepreneurship, Government 2008-06-15T14:00:00-08:00 http://www.ssireview.org/articles/entry/reimagining_microfinance/ http://www.ssireview.org/articles/entry/reimagining_microfinance/ Despite the fact that most microfinance institutions (MFIs) were established to reduce poverty, many are starting to look like traditional financial institutions. To expand their outreach and loan portfolios, they tap into commercial and quasi-commercial sources of finance, which require them to demonstrate consistent profitability to their investors. When the Mexican MFI Banco Compartamos went public in 2007, for example, its existing shareholders earned returns of approximately 100 percent compounded annually over an eight-year period. This trend toward commercialization has led critics to ask whether MFIs will continue to serve the world’s poorest people. They point out that many profit-minded MFIs have either raised their interest rates or failed to lower them when reductions in costs allowed them to do so. They note that some MFIs have cut back on social service programs, infrastructure, and staff training to reduce costs and increase short-term profitability. They show that a growing number of MFIs are not tracking their social impact even though they have the tools to do so. At the same time, other critics worry that MFIs are not commercial enough. They say that MFIs’ commitment to social justice keeps these organizations from becoming profitable. Lack of profitability in turn prevents… Economic Development, Social Entrepreneurship, Philanthropy & Responsible Investing 2008-06-08T14:00:00-08:00 http://www.ssireview.org/articles/entry/review_out_of_poverty/ http://www.ssireview.org/articles/entry/review_out_of_poverty/ OUT OF POVERTY: What Works When Traditional Approaches Fail Paul Polak 240 pages (Berrett-Koehler, 2008) Until now, the social enterprise bookshelf contained mostly two types of books—studies of what works, and studies of what’s broken. David Bornstein’s How to Change the World, which chronicles the inspiring work of Ashoka Fellows, best represents the first type. The writings of Jeffrey Sachs, Hernando De Soto, and William Easterly fall into the second group, though each of these economists has a markedly different perspective on what’s broken and what should be done. Paul Polak is helping to create a third genre by writing one of the first how-to social enterprise books: Out of Poverty, which draws on Polak’s 25 years of using entrepreneurial approaches to increase the income of the rural poor in Asia and Africa. Polak has long believed that to have a major impact, global poverty alleviation efforts must focus on small-plot farmers. A recent World Bank report backs him up, noting that “three of every four poor people in developing countries live in rural areas … and most depend on agriculture for their livelihoods.” As Polak states in the book, “most of these extremely poor people … can earn much… Economic Development, Social Entrepreneurship 2008-05-29T14:00:01-08:00 http://www.ssireview.org/articles/entry/review_creating_a_world_without_poverty/ http://www.ssireview.org/articles/entry/review_creating_a_world_without_poverty/ CREATING A WORLD WITHOUT POVERTY: Social Business and the Future of Capitalism Muhammad Yunus 288 pages (PublicAffairs, 2008) The title of Muhammad Yunus’ new book, Creating a World Without Poverty, gives a sense of his vision’s sweep, but only hints at his ambition. He wants not only to end global poverty and related problems such as gender discrimination, social exclusion, and lack of access to health care and education, but also to eliminate environmental degradation and extreme inequality. In short, Yunus wants to create a more just society for all. Yunus presents his ideas for solving the world’s social problems as he outlines how Bangladesh can develop more successfully; updates the history of the Grameen Bank, for which most readers will know him; offers his thoughts on the potential of technology to help end poverty; and details his ideas on international norms and governance. But his main tool for alleviating the world’s ills is social business, which he defines as financially sustainable but non-dividend- paying enterprises established to solve social and environmental problems. These enterprises are controlled by shareholders (either donors or the poor), and donors get their initial investment back, though any additional profits created by the enterprise are… Economic Development, Social Entrepreneurship, Philanthropy & Responsible Investing 2008-05-29T14:00:00-08:00 http://www.ssireview.org/articles/entry/the_bop_beckons/ http://www.ssireview.org/articles/entry/the_bop_beckons/ How do you go about delivering reliable energy to poor, off-the-grid villages in India? If you’re an established energy company, you don’t. Enter Decentralised Energy Systems (DESI Power), a young, India-based power company that built a biomass gasification plant that runs on inexpensive agricultural residues such as ipomoea, a weed plentiful throughout the Indian countryside. DESI’s power plant in the village of Baharbari provides a cheap, clean source of electricity that the village uses to meet local microenterprises’ and agricultural laborers’ needs, such as pumping water and charging batteries. Indeed, the driving idea behind DESI Power is to make a profit from designs that fall outside the standard power generation model, and in doing so to create worthwhile jobs and economic growth in places that the government has all but forgotten. DESI does make a profit: The company generates a 10 percent return on its investment by building, owning, and operating the power plants before eventually turning them over to local power producers. But DESI Power is the exception. Though there is literally a world of opportunities for firms to meet basic demand for housing, water, energy, medical insurance, legal and financial services, and much more… Economic Development, Social Entrepreneurship, Philanthropy & Responsible Investing 2008-05-18T16:32:00-08:00 http://www.ssireview.org/articles/entry/baked_goods/ http://www.ssireview.org/articles/entry/baked_goods/ In 1994, Patricia “Trish” Karter and two partners founded Dancing Deer Baking Company as an all-natural Boston bakery that sold cakes to upscale local restaurants and cafes. Today, the company sells more than half a million units of cookies, cakes, brownies, and mixes through national supermarkets, retail stores, and the Internet. Dancing Deer will generate $15 million in revenue for the fiscal year ending June 2008 and hopes to pass $50 million in sales by 2012. Increasing sales means increasing social impact for this double bottom line business. Dancing Deer is located in and hires many of its 85 employees from Roxbury, a low-income Boston neighborhood. Many of its employees are low-to-moderate income, minority, and female. Because Dancing Deer believes in motivating its employees and cultivating female business ownership, employees own a 10 percent equity stake in the business. In addition, Dancing Deer donates a portion of its proceeds to One Family Inc., an organization created by the Paul and Phyllis Fireman Charitable Foundation to end family homelessness in Massachusetts. Since the philanthropic partnership began in 2001, Dancing Deer has contributed $200,000, says Toni Wiley, One Family’s executive director. “We look… Social Entrepreneurship, Corporate Social Responsiblity 2008-04-20T06:00:00-08:00