Want to end poverty? There is a lot of work to be accomplished. According to GiveWell.org, over 2.5 billion people live on just $2 per day -- more than one-third of all humanity. The vast majority of the population of the African continent is included in those statistics. For some perspective, the United States has roughly 307,000,000 citizens. Given those statistics, the amount of people living on $2 per day is equivalent to nine United States' of Americas. That is a lot of people in poverty -- too many -- that need the help of first world institutions (like business) to empower them. So what has humanity been doing to create lasting solutions to the issue of pervasive poverty?
For starters, the social enterprise movement is alive, well, and rapidly achieving important stakeholder support such as Secretary of State Hillary Clinton's decision to co-sponsor a conference on Social Capital Markets next year. Ashoka is an organization that creates Fellowship opportunities for social entrepreneurs who are "possessed, really possessed by an idea" (in the words of Ashoka Founder Bill Drayton), leveraging an international network of successful Ashoka Fellow social entrepreneurs in order to support and magnify the efforts of social entrepreneurs working both in the United States and abroad. Echoing Green offers similar Fellowship opportunities for social entrepreneurs to excel with businesses that aim to contribute to fixing social challenges like hunger and poverty. Both of these institutions enable social entrepreneurs to integrate cause into businesses that work meaningfully to give opportunity to the billions who, apparently, lack it.
For young adults both American and international, the Unreasonable Institute incubates and trains young social entrepreneurs in a 10-week program to succeed with cause-integrated businesses that can scale to reach at least 1 million people. StartingBloc has emerged as a leader in the social enterprise field, inspiring and activating social entrepreneurs aged 29 and younger to develop their world-changing ambitions to fruition, creating a powerful international Fellows network for social entrepreneurs who have founded cause-integrated companies. And HUB, co-working spaces for social entrepreneurs, have emerged everywhere from Brussels to Sao Paolo to Los Angeles to create work spaces for cause entrepreneurs to conduct their work. These organizations exist and are flourishing; promising testaments to humanity's ability to alleviate poverty worldwide through business.
In the microfinance world, Kiva is a leading institution that has now lent over $174 million to third-world entrepreneurs to grow and scale their businesses. InVenture Fund has innovated from the model of microfinance, developing a micro-venture-capital business model that invests in and nurtures developing world businesses.
As the movements of social enterprise and cause-integrated business mature, a new funding model is proving that scaling innovations for poverty alleviation in the developing world can be both possible and profitable. Enter Acumen Fund, which sees cause-integrated business as "capable of bringing affordable, life-changing products and services to parts of the world where markets have failed."
The company was founded under the principle that the best way to create lasting solutions to poverty is through empowering business. Thomas Friedman has articulated this point well in the context of the African continent: "Africa needs many things, but most of all it needs capitalists who can start and run legal companies. More Bill Gateses, fewer foundations. People grow out of poverty when they create small businesses that employ their neighbors. Nothing else lasts."
Acumen Fund accomplishes its vision of empowering businesses in the developing world through "patient capital". Acumen Fund defines patient capital as a debt or equity investment in an early-stage enterprise improving the quality of life of the poor that extends the time horizon of investment, exercises greater tolerance for risk, and additionally provides management support to help grow the enterprise. Importantly, their chief objective in investing in businesses with patient capital is to maximize social rather than financial returns on investment. The organization has reached over 36 million people in Africa, India and Pakistan.
Cause-integrated business all over the world is benefiting from a groundswell of consumer support, which I covered in my article on "citizen consumers." Later this week tune in as I show you innovative cause-integrated businesses both working to end poverty in the developing world and showing big corporations in the first world that it's possible to turn a profit while turning our world in the direction of a better tomorrow.
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Josh Tetrick: Crowdfunding: How Social Entrepreneurs Are Turning Small Donations Into Big Bucks
It was the subject of a seminal paper presented to President Clinton in 1996 and was first deployed in 1999 to source a development initiative and leverage a microfinance bank in Russia.
Described as People-Centered Economic, it was published online in synopsis in 1997 and can be found in web archives going back to 2002.
http://en.wikipedia.org/wiki/Inclusive_capitalism#People-Centered_Economic_Development
Thank you for sharing that perspective on people centered economic development! I looked at your link and note the term "inclusive capitalism" is part of the larger movement to reframe capitalism as an economic system that is now leveraging its strengths to benefit broader swaths of the population and answer to real human and ecosystem needs.
The Unreasonable Institute in my opinion is such a positive example of the possibility of both entrepreneurship and social enterprise, because the success of your organization has proved both powerful immediate. I think your organization's success speaks to the inflamed passions people have to answer to the call of the social entrepreneurs movement. I look forward to meeting you someday.
I would like to see the growth of local community enterprises, local production and ultimately the dream of Gandhi - autonomous self sufficient communities. just begun work on this.
I like how you think! Social enterprise is tapping into a broader consumer desire for products that tie in cause with their purchases - where individuals can now do good at the checkout counter, and participate in improving their society through their everyday purchases.
The typical Fortune 500 company donates approximately 1% of its after-tax profits to causes. I believe that number can and ought to be much higher. I don't mean to say that business ought to leave behind its emphasis on pursuit of profit - I believe that the profit motivator drives innovations that improve society - look at Google, or Ford, or Boeing! But it's time that people look at capitalism through a lens of the broader ecosystem, because issues of poverty and climate change are rapidly converging on humanity and serious, system-level action and change is required.
Social entrepreneurship is business's delivery of that system level change at the level of business, along with cause marketing, more integrated CSR efforts and more cause integration at all levels of business (supply chain, product, ideation, etc.).
You make an interesting point. Micro credit is not without its drawbacks, and these need to be evaluated in depth by interested individuals who care about the development of this space - or by those who express skepticism. It is important that these checks on the system occur in order for cross-the-board improvements to be made.
That being said - the world is in my opinion far better off after the introduction and success of micro-finance, not least for the birth of a business movement that is changing the face of trade and the consumer experience - in a good way.