Increasingly, successful entrepreneurs are utilizing their for-profit expertise for non-profit causes. They dedicate their time and business acumen to vet, fund, and execute projects that catalyze social change.
“The job of a social entrepreneur is to recognize when a part of society is stuck and to provide new ways to get it unstuck,” believes the Ashoka Foundation (www.ashoka.org). “He or she finds what is not working and solves the problem by changing the system, spreading the solution and persuading entire societies to take new leaps.” Ashoka is a global organization that searches the world for social entrepreneurs and invests in them through stipends and professional services, thus enabling them to focus full time on their ideas for leading social change in education and youth development,
health care, environment, human rights, access to technology, and economic development. The Ashoka philosophy is, “The most powerful force for change in the world is a new idea in the hands of a leading social entrepreneur.”
Throughout history, one can find examples of large-scale change initiated by motivated individuals or organizations. Ashoka Foundation refers to them in apt terms—Changemakers. The Grameen Bank (GB) project in Bangladesh is one. It was initiated by Muhammad Yunus to provide credit to the poorest in rural Bangladesh, without any need for collateral. Today it has proven to be a cost-effective weapon to fight poverty and a catalyst in the overall development of socio-economic conditions of the poor who were once unable to shed their poverty because they were considered too poor to receive loans. Statistics quoted on www.grameen-info.org put Grameen Bank’s strength at some 3.7 million borrowers, 96 percent of whom are women. Through 1,267 branches, GB provides services in more than 68 percent of the total villages in Bangladesh.
In recent years, the Indian-American community has sprung many of its own social entrepreneurs. Rajiv Vinnakota is one such changemaker. This Princeton graduate threw away a cushy job at Mercer Management Consulting and decided to commit himself to the cause of education in inner-city communities.
Vinnakota comes from a family of educators—his mother was a 2nd-grade teacher, and his father a professor. “I have always been interested in education and working with children,” he says, and even with a double major in molecular biology and international affairs, he still wanted to do something related to education. Eric Adler and he set up a free boarding charter school called SEED (Schools for Educational Evolution and Development) for inner-city children in Washington, D.C.
“Since Washington D.C. falls under the jurisdiction of the federal government, we went to the Congress, and I talked to a lot of people to get an amendment passed for the D.C. charter (for the D.C. education funding law) so that there would be an exception that allows boarding schools to receive more money. And we were able to get that amendment passed,” says Vinnakota. As a result of this amendment the school will continue to get money as part of the education budget.
Currently, the school has 305 students in grades 7-12, whose challenging circumstances might otherwise prevent them from fulfilling their academic and social potential. The SEED school was established by the SEED Foundation (www.seedfoundation.com) of which Vinnakota is chairman and CEO.
At TiEcon 2005
In recognition of the growing commitment to social change among Silicon Valley’s entrepreneurs, The Indus Entrepreneurs (TiE; www.tiesv.org) Silicon Valley presented a keynote panel, “Social Entrepreneurship: How to Change the World,” moderated by Vinod Khosla, general partner of Kleiner Perkins Caufield & Byers, at TiEcon 2005, in Santa Clara, Calif., on May 13.
Among the panelists, Victoria Hale, founder and CEO of Institute for OneWorld Health (www.oneworldhealth.org), asserted that “intervention in health can be successful.” Disappointed by the profit motive in the pharmaceutical industry, she founded a nonprofit pharmaceutical company whose decisions would be based on global need rather than financial opportunity. Institute for OneWorld Health develops safe, effective, and affordable new medicines for those most in need.
Addressing the 3,000 conference attendees, panelist S. Aravind, director of Aravind Eye Hospitals (www.aravind.org) in Madurai, Theni, Tirunelveli, Coimbatore, and Pondicherry, presented an overview of an eye care system that delivers high-quality care regardless of the economic status of the patient. He noted that 5 percent of all cataract surgeries in India are performed in Aravind Eye Hospitals.
On the same panel at this premier conference on entrepreneurship was M. Udaia Kumar, founder of Share Microfin Limited (www.sharemicrofin.com). Share Microfin followed the Grameen Bank example by providing micro-credit to rural women entrepreneurs in Andhra Pradesh. Kumar commented that people mistakenly think of only the loan recipients as beneficiaries, but in fact micro-credit is a win-win situation for all: “The commercial banks are beneficiaries because they lend us money at market rates. The loan recipients are beneficiaries. The staff of Share Microfin are also beneficiaries because we are paid salaries.”
A spirited discussion about public health, micro-finance, eye care, women’s empowerment, literacy, and the environment followed. “Social entrepreneurs are very much like regular entrepreneurs, they are just addressing different issues,” Khosla observed in his concluding remarks. “Social entrepreneurs put sustainable processes in place. It’s about capital efficiency. It’s about entrepreneurial energy.”
Catalyst for Change
Others share this sentiment about channeling the innovative entrepreneurial spirit for social change. “When I think of a social entrepreneur,” says Vinnakota, “I think of a couple of things. No. 1 is someone who takes a look at a problem in an innovative way that has not been done before. No. 2 is a person that can take that idea and is able to, through his/her abilities, skills, talents, actually be able to get it done. So the first is kind of strategic insight, and the second is execution, to actually be able to get it done. The third is someone who holds to a high enough ethical standard to be viewed as a leader.”
“I compare social entrepreneurship to VC funding,” says Kumar Malavalli, who donated to ICC and is currently trustee of American India Foundation (AIF; www.aifoundation.org) and ICC. “When you start a company you have seed funding, which is given by an entrepreneur. In a social entrepreneurship, the social entrepreneur provides that funding and solid base. … Organizations like AIF and ICC will be able to expand the horizon beyond what an individual can do, but to be able to reach that stage, they need seed money, which is what I provided.”
Why are we seeing so many community-oriented ventures starting up now?
“When people came in the 1960s and 1970s, they were more focused on putting roots down, making a career, and gaining acceptance in the community,” says Talat Hasan, AIF and ICC trustee. “Only when that is taken care of, is there time to turn around and think of giving back. That is what is happening now. This is not just happening within the Indian community, but also other communities. The only difference may be that since Indians were better educated when they arrived, it may seem like things were done in a more compressed time frame.”
Hasan spent 27 years as a professional, in which duration she successfully started and ran more than one company. “All along, during my career as a scientist, and later as CEO, I had been involved with several organizations like Maitri, IBPW, and so on. This time I decided to do it full time,” she says. She now volunteers full time as the chairperson of ICC, where her duties draw on her background of running companies. “I do a lot of financial planning. Right now I am working on negotiating financing for our (ICC’s) new building, hiring architects, contractors … Other times I am working with potential donors, down to making tea for guests, and talking to kids and seniors,” she says cheerily.
Similarly, Malavalli admits that when he first came to the United States to obtain funding for his new company, he had no idea of the entrepreneurial success that awaited him. “But while I was doing that, at the back of my mind I had it that if I ever became financially successful, I would like to give back to society, both to my home country and also to my present home country, since it is very much responsible for where I am today,” he says. With that in mind, he got involved in various activities at AIF and ICC.
Malavalli identifies education and healthcare as two of the most important areas that need financial resources and developmental aid from social entrepreneurs. “Education is my primary goal because with education we can eradicate poverty and also give people power to manage their own destiny. That is very important.” Malavalli also lists some other important criteria that guide his decision on where to put his donations: it has to be a non-religious, non-sectarian, and non-partisan organization.
How big does a venture have to be in order to qualify as a social entrepreneurship venture? What about the many nonprofits that are sprouting all over the country, with a focus on projects in India and the Indian-American community? Are they social entrepreneurships? Absolutely, concur Hasan, Malavalli, Anil Godhwani, and Lata Krishnan, president of AIF.
“Each time an entrepreneur focuses on social causes, he or she is engaged in social entrepreneurship, as long as the purpose of the organization is a cause, and not personal profit,” says Godhwani.
Both smaller nonprofits and larger social entrepreneurship ventures are successful, says Krishnan. However, in larger organizations like AIF that are run by professional people doing it full time, “we have the ability to scale projects and make them sustainable. Also, we have whole teams and staff in India working and running projects on a day-to-day basis,” she explains.
“If you don’t have money, you can be a volunteer,” says Malavalli. “Your donation can be through your time. Money is one thing, but money alone will not do it. You need to have volunteers, money, organization, people, behind the organization. Only then can the donation you give be used effectively. Whether you give money or time, it is all appreciated.”
“Social entrepreneurship is not all about money or wealth,” says Hasan. “Look at the volunteers in ICC. Not all put large sums of money. They give time, energy, talent … Lot of organizations are doing well on a shoestring budget. Money helps to scale things, but people can be social entrepreneurs with very modest means. What you need is sustained passion.”
Nitya Ramanan is the assistant editor of India Currents.