Getting Better At Doing Good

By EMILY MITCHELL

Rodrigo, you are crazy. Poor people can never use computers." That is what friends and business associates in Rio de Janiero said to Rodrigo Baggio five years ago when he told them about his dream to bring technology into the city's sprawling slums, called favelas. He didn't listen. Now Baggio, 30, operates 117 computer schools in the slums of 13 Brazilian states through his Committee for the Democratization of Information Technology (CDI). Most of the 32,000 young people who have completed classes either have jobs or are starting their own businesses. Without Baggio's inspired idea, most of them would have faced a bleak life. On the heels of his enormous success, Baggio is aiming to start something of a digital nation. This year he plans to connect all his computer schools on the Internet. "Many times a youth in one favela never visits another one even in the same state," he says. "The Internet is the digital bridge."

Baggio is making a huge difference to Brazil's future, one kid at a time. It would not have been possible without a jump start by Ashoka: Innovators for the Public, a nonprofit international venture-capital foundation based in Arlington, Va. Ashoka has provided financial and professional backing for more than 1,000 social entrepreneurs in 34 countries who, like Baggio, are using business techniques and expertise to help people help themselves. A three-year stipend from Ashoka and its global fellowship of executives, mentors and consultants enabled Baggio to enlarge CDI beyond Rio. He hopes someday to enlarge it beyond Brazil. Says Baggio: "We believe we can adapt it to other poor countries."

"The job of the entrepreneur," explains Ashoka's founder and chairman William Drayton, a Yale Law School graduate, "is to see where society is stuck and to find a new way around it." In Drayton's view, there is no difference between those who use their skills in business and those who use them in the pursuit of social goals. More and more people agree. As economic, social and political pressures blur the boundaries between the for-profit and not-for-profit worlds, a new breed of do-gooder is emerging, one that uses techniques and tools honed in the workplace to tackle social problems. In most cases, they start small. But taken together, they are changing the way nonprofit enterprises are conceived and run and bringing a new dynamism and drive to the business of doing good.

Their efforts are being recognized by left-of-center politicians who realize that government coffers are not bottomless and tax-and-spend policies are taboo. Britain's Prime Minister Tony Blair has declared that his government embraces the idea of social entrepreneurs, describing them as "people who bring to social problems the same enterprise and imagination business entrepreneurs bring to wealth creation."

Blair's enthusiasm is shared by altruist Michael Young, Lord Young of Dartington, 84. He opened the School for Social Entrepreneurs in London two years ago and claims it is "for the high-minded and hardheaded." The school requires no academic background, and students' ages range from the 20s to the 70s with the majority of the 40 men and women graduates it has turned out so far in their 40s. It offers eight weeks of seminars to build skills in fund raising, marketing and accounting; students gain practical experience and test their ideas by working on a real project.

Michael Knight was one of the first 23 students to enroll. His goal: to bolster the credit union he had rescued in 1994 in a depressed local government-run housing project in Speke, a suburb of Liverpool. Even though the project is located near the city's busy airport and close to thriving auto and pharmaceutical industries, its tenants haven't shared in the prosperity. Many are unemployed. The last bank branch in Speke closed two years ago, and local residents who wanted money for a vacation or new household appliances often borrowed from licensed moneylenders at interest rates of up to 50%.

Knight had worked for a community-development office, but living in a poor area, he says, "you've got no one to assist you with your dream." In London, he was put in touch with managers of credit unions around Britain, and he brainstormed with other students and began analyzing loan profiles and working out a promotion scheme targeted at workers in nearby businesses. "We don't sell it as a poor man's bank," he says. "We say it doesn't make any economic sense to shop anywhere else." Over the past 48 months, Knight has increased the credit union's membership from 300 to 2,000, attracting members from nearby Jaguar and Eli Lilly plants. "The effect on the community has been empowering," he says. "It's the pound sterling in people's pockets--the Speke pound."

In the U.S., the teaching of social-entrepreneurial skills has become a staple at major business schools, and the results are starting to show. In 1994 six Stanford Graduate School of Business alumni launched a nonprofit called Start Up, dedicated to giving a helping hand to would-be entrepreneurs in the hardscrabble California neighborhood known as East Palo Alto. The city of 24,000 is cheek by jowl with the largest concentration of high-tech wealth in the world, but Silicon Valley's incredible success has completely passed it by, leaving the urban problems of poverty and drugs and one of the nation's highest murder rates. In a bid to reach the poor and unemployed, Start Up, now beginning its sixth year, gives 12-week sessions on how to run a small business. It also provides an array of technical assistance, consulting and legal services and mentoring to those who enroll. Says co-founder Greg Sands, 33, a venture capitalist: "We're part of a generation that has come to believe more and more in market-based solutions to society's ills."

The Start Up founders use their social networks to plug in people like Laverne Bryant, 38, who wanted to open an espresso-catering service. A Start Up board member arranged a job at a combination bakery and coffee shop, where she received hands-on experience. "If it weren't for the people at Start Up, I would have given up," says the mother of five, who works for an HMO. She didn't. Bryant now provides catering services and is preparing to open a coffee house on East Palo Alto's University Avenue--a first for her neighborhood.

Silicon Valley is a fertile source for the new social entrepreneurialism. Young, high-flying businesses are often eager to do good, but have no idea how to begin. They need a matchmaker like Gib Myers of Menlo Park, Calif. While toiling for the venture capital Mayfield Fund, he watched novices transform themselves overnight into multimillion-dollar firms. He decided to enrich them in other ways, and two years ago, he formed the Entrepreneurs' Foundation to use profits from successful new businesses to fund entrepreneurial service organizations. Says Myers: "A lot of these companies say, 'We want to do something for the schools,' or 'We want to do something environmental.' We set it up."

The Entrepreneurs' Foundation approaches good works as a service-supply industry. Client-company officials choose a cause they want to support, and the foundation puts together a service plan for the firm and its employees that reflects the corporate culture. The foundation raises endowment money in the form of stock options from young companies, most of them prepublic start-ups. In its first two years, the foundation signed up 60 firms; seven have since gone public, putting some $9 million into the foundation's coffers. Through its efforts, companies like Argonaut Technologies, Sylantro Systems and Silicon Light Machines have cleaned beaches, renovated dilapidated houses, organized blood drives and toy drives, and painted rooms at a shelter. The foundation introduced a Berkeley, Calif., company, KnowMed Systems, to a disadvantaged elementary school a few blocks away, and employees go there weekly to help children with reading, writing and math. "We want this to be a standard of the Bay Area," says Myers. "We want to change the culture of the entrepreneurial sector."

At the seven-year-old Initiative on Social Enterprise at Harvard Business School, cultural change is the essence of the curriculum. A graduate program helps give those who want to do good works the kind of organizational, profitmaking and management skills they need to thrive. "The for-profit economy is driven by a bottom line, and the nonprofit is driven by a different one," says Allen Grossman, formerly CEO of Outward Bound, who helps teach a course on entrepreneurship in the social sector. "Hooray for the difference, but we have to be flexible and borrow as much from both as is appropriate."

From June to December last year, three Harvard graduate students worked on plans for Boston's Mayor Thomas Menino to consolidate a dozen disparate city-run services into the Office of Business Development. Their research led them to recommend a holistic approach called the "balanced scorecard." Used by companies like Mobil and Cigna Insurance, this approach ties performance directly to a strategic plan, offering incentives and rewards to employees who meet their goals. Says Hannah Wu, one of the trio: "It's a way to bring social-enterprise thinking as well as everything we're learning about management techniques together in one place."

The dual bottom line was the challenge for Lisa Schorr when she signed on with Pine Street Inn as director of business-enterprise development. PSI, New England's largest nonprofit for the homeless, provides shelters and services for 11,000 people a day, many of them considered hard-core unemployable. A program that offered job training and supplied used clothing to the homeless had inadequate funding. Schorr, who had just received her M.B.A. from Harvard, came up with a plan to expand PSI's work and make it financially self-sufficient. "The idea," she says, "was to kill two birds with one stone."

Looking at Pine Street from a manager's point of view, Schorr saw an underutilized resource. PSI had no means of sorting all the clothing, and half of it was being sold off cheaply in bulk. The program was costing the organization $200,000 a year more than it got under a contract with the commonwealth. Her analysis showed that by training Pine Street's men and women to sort the clothing by size and type, the donations could be more efficiently distributed and provide high-quality merchandise for the agency's two thrift shops. Since the summer of 1998, some 50 people have completed a six-month training program at Pine Street's sprawling warehouse in Boston's Jamaica Plain, handling about 5,000 lbs. of clothing a day. For the first time, the operation is becoming self-sustaining, and, says Schorr, "we are now funding a training program that we might otherwise have had to close." It's a better way of doing good, and for social entrepreneurs, that is the real bottom line.

With reporting by Rachele Kanigel/East Palo Alto and Elizabeth Lea/London