WorldCity Business Magazine

(2) Social Entrepreneurship: a new take on an old theme

by Mary Dempsey

Business entrepreneurs are applying risk-taking ideas to social problems around the world

Allen Andersson doesnt look the part of a multimillionaire businessman. He frequently turns up at his K Street office in Washington, D.C., in shirtsleeves and a Boston Red Sox baseball cap. When its cold, he sports a worn leather bomber jacket. But then, there are a lot of things that set him apart from the traditional suit-and-tie executive.

Andersson is a venture capitalist who has done well with science and technology investments. He is also a social entrepreneur, one of a breed of business executives who combine visionary ideas with realistic solutions. In the case of Andersson, chairman of Paperboy Ventures, the vision
is focused on Central America. He applies business solutions to social problems through the Riecken Foundation, a nonprofit he founded with his wife, Susan Riecken, to build public lending libraries in Central America.

I really think that all of us, to the extent of our resources, should do all the good in the world that we can, Andersson said. To some, that means giving 100 percent to raising our families well. To others, that means turning a billion idle dollars into projects that will changes ten million lives. I really like the social entrepreneur model. People who really want to get things done just go out and do it, he added.

After this years World Economic Forum, New York Times columnist Nicholas Kristof referred to social entrepreneurs as the 21st-century answer to the student protestors of the 1960s, saying they were among the most interesting people who turned up at the gathering in Davos, Switzerland. U.S. News & World Report has described them as innovators who are part Richard Branson, part Mother Teresa. One of the planets best-known social entrepreneurs is Grameen Banks Muhammad Yunus, who won a Nobel Peace Prize in 2006 for pioneering microfinance in developing countries.

Social entrepreneurs are not content to give a fish or teach how to fish, Bill Drayton, the founder of social entrepreneurship incubator Ashoka, has famously said. They will not rest until they have revolutionized the fishing industry.

There are many reasons for the emergence of social entrepreneurship. For one thing, there is more wealth in the world. Forbes magazines annual report calculated that there were 946 billionaires globally in 2007. At the same time, the corporate sector is pragmatic. A better world means a better environment in which to do business. If governments arent solving problems of social injustice and inequity, businesses will.

Its not traditional philanthropy, its looking at how to do things differently, said Alan Carsrud, executive director of the Eugenio Pino & Family Global Entrepreneurship Center at Florida International University. Youve got a lot of entrepreneurs who are intellectually active in their 40s, 50s, 60s and 70s. They want to give back but they dont want to passively write checks. They look at charitable organizations and see that theyre not operated in an administratively
efficient way. So they take it on themselves to build organizations with sustainability beyond whatever endowment they have, he added.

The social entrepreneur movement is most vibrant in the United States, where tax incentives encourage such initiatives. Increasingly, however, Europe is seeing more entrepreneurial philanthropy. And even in Latin America, where corporate philanthropy is far from entrenched, youre beginning to see a pop-up of social entrepreneurship, said Carsrud. Costa Ricas University for Peace offers courses on the subject.

Ecologic is one such Latin American enterprise. William Foote, an investment banker in the region more than a decade ago, found himself writing about how rural Mexico was affected by the peso crisis. In reaction, he launched Ecologic to provide loans to small and medium-sized initiatives involved in sustainable agriculture. The company now operates in nine Latin America countries and three Africa nations. The Skoll Foundation, founded by former eBay President Jeff Skoll to invest in social entrepreneurs, says Ecologic has a 98 percent repayment rate.

After studying abroad, Paraguayan Martin Burt returned home to start Fundacon Paraguaya, a microcredit program that has created more than 19,000 jobs. In Peru, meanwhile, industrial engineer and consultant Albina Ruiz founded Ciudad Saludable, a 20-city network of garbage-processing and recycling enterprises.

Applying business acumen

Much like the world in which entrepreneurs move, social entrepreneurship is fast-changing. Nearly unheard of a decade ago, it first was viewed as an alternative to government. Increasingly, social entrepreneurs and their initiatives are looking for ways to partner with government, to merge business savvy with government resources. Its all about leverage.

After all, social entrepreneurship does not simply mean that an innovative business executive wants to attack a social problem. It also means business solutions and rigor are being applied to the solution.

Anderssons library-building initiative in rural Honduras and Guatemala is a good example. The Riecken Foundation was designed to run like a results-oriented business. Libraries are built in clusters of six in Honduras, clusters of three in Guatemala. That results in economies of scale during procurement of construction materials and technological equipment for the libraries. At the same time, as with Anderssons venture capital firm, efficiency levels are monitored and measured.

The foundation does not view itself as a donor to the 61 communities where it has built libraries so far, investing an estimated $10 million over the past eight years. Rather, it sees itself as a partner in an operation where everyone brings something to the table. Villages seeking Riecken libraries must provide the land and secure funding to cover key expenses, including the monthly Internet fee and the librarians salaries. In exchange, the foundation handles the construction, supplies books and computers and spearheads training for the libraries programming, which includes story hours and youth leadership activities such as debate teams.

Andersson believes free access to information available through Riecken libraries equipped with books and Internet service and a plethora of community programming results in better educated workers and consumers. And that is good for business.

There is certainly no shortage of social and economic problems requiring tough-minded business solutions, so many see the rise in social entrepreneurship as a welcome new development.

Entrepreneurs tend to see connections that more traditional people dont. They tend to look at the world differently. They have different mind maps, said Carsrud at FIU. The result is that when they see a problem, they want to solve it. Thats just how they are.

Mary Dempsey was editor of WORLDCITY Business from July 2005 to February 2007. She moved to Washington, D.C., last March and, in October, joined the Riecken Foundation as director of communications. She can be reached at mdempsey@riecken.org.