Investments in People

Monday, June 9, 2008

The next few years could see a shift in emphasis in the non-profit world ? at least, if the work of organisations supporting entrepreneurs is an indication of the direction the sector is taking. ?Philanthropy is one of those wonderfully antique words that we will stop using in 10 to 15 years,? says Bill Drayton, who founded Ashoka and pioneered the idea of identifying and investing in entrepreneurs. ?The business/social boundaries are simply collapsing.?

As models such as venture philanthropy, microfinance and social entrepreneurship are embraced by non-profit organisations, and corporations start to focus on social issues, the barriers between the business and non-profit sectors continue to erode.

Leading the way, when it comes to breaking down these barriers, is an expanding cohort of non-profit organisations whose mission is to support for-profit entrepreneurs. In Afghanistan, for example, Arzu Rugs helps women generate income by sourcing and selling their rugs, providing employment for about 700 female weavers in the country?s villages.

In the US, Count Me In, which was founded in 1999, also focuses on female activities, providing loans and other resources to businesses owned by women. ?It?s a long-term approach to poverty alleviation ? creating businesses that create jobs,? says Nell Merino, founder of Count Me In.

Aid to Artisans, a 30-year-old non-profit organisation, helps craftspeople in developing countries gain access to new markets for their products and establish sustainable business models. Those it supports now sell to outlets such as Neiman Marcus, Saks Fifth Avenue, Pottery Barn and Crate & Barrel, as well as to smaller boutiques.

First, the organisation helps artisans develop products that will appeal to western consumers. ?Design is really key because you need a good product to develop a viable business,? says David O?Connor, chief executive of Aid to Artisans. ?We also do a lot of skills training in areas such as production and marketing. Then we link producers with buyers.?

As well as funding individuals, many of the non-profit organisations targeting entrepreneurs aim not only to help those entrepreneurs expand their business but also to have a wider impact.

Ashoka seeks out entrepreneurs (it calls them ?Fellows?) with big ideas. By making a financial investment in them and giving them access to its network of other Fellows, as well as to experts in areas such as marketing and accounting, Ashoka believes it can help both the individuals it supports and the communities they serve. Moreover, these entrepreneurs can serve as role models to others. ?They have to get local people in thousands of communities to say ?this idea is better?, and introduce the idea of being a changemaker to the community,? explains Drayton. ?Then you have a highly contagious process ? and that?s the most important thing social entrepreneurs do.?

A similar philosophy lies behind the work of Acumen Fund. Acumen takes the philanthropic funds it receives from organisations such as and the Bill & Melinda Gates Foundation, as well as from wealthy individuals, and looks for entrepreneurs serving poor markets.

In India, for example, it supports Drishtee, an internet kiosk franchise business. The kiosks enable farmers to check commodities prices online and give villagers access to services such as health insurance via the internet. As well as taking an equity stake in the business, Acumen also funds individual loans to entrepreneurs who want to buy the start-up kit they need to open a kiosk.

Another organisation that supports entrepreneurs is Endeavor, which identifies what it calls ?high impact? entrepreneurs in emerging markets such as Argentina, Mexico, Uruguay, South Africa, India, Egypt and Jordan.

However, rather than raising capital or granting funding, it mentors entrepreneurs in areas such as financing, marketing and leadership development. In Brazil, for example, it helped Tecsis, a technology company, come up with a programme for expansion into international markets, which created more than 1,000 local jobs.

By supporting the right entrepreneurs, the organisation gets a bigger bang for its buck. ?In 2006, Endeavor?s worldwide budget was $6.87m and Endeavor entrepreneurs generated revenues of $1.9bn,? says Elmira Bayrasli, the organisation?s head of partnership policy and outreach. ?That?s a pretty good return on investment.?

Continue reading “Ashoka, Acumen and Endeavor: Investments in People

Source: Financial Times (link opens in a new window)