Social Entrepreneurs Seek New Investments to Reach a ’Tipping Point’

Tuesday, April 1, 2008

On Oxford University’s 900-year-old campus, the new field of social entrepreneurship – which blends business techniques and social goals – this week grappled with its need for more money to finance growth.

Nonprofit leaders, scholars, business people, and policy makers from 40 countries gathered at the Skoll World Forum on Social Entrepreneurship at the Said Business School here.

“There’s still a shortage of funds, and the funds that are there are still very hard for social entrepreneurs to get,” said Martin Fisher, chief executive officer of KickStart, a nonprofit organization in Nairobi that sells water pumps to poor farmers in Africa. “Every social entrepreneur I’ve met is spending far too much of their time working to raise money.”

Instead, he argued, they should be working to develop “the next big thing, the next equivalent to microfinance.”

Through the work of social entrepreneurs around the world, he said, microfinance has reached a point where millions of dollars – both philanthropic and for-profit – are pouring into lending projects, enabling loans to more than 110 million of the world’s poorest people.

But, “we have to remember very clearly that it’s taken microfinance 30 years and hundreds of millions of dollars of consistent investment to reach the place where it is today,” said Mr. Fisher. “So to get to a tipping point, any of the new innovations are going to take a large amount of time and a large amount of money.”

The daunting size of the problems social entrepreneurs are tackling makes rapid growth imperative, said Roshaneh Zafar, president of the Kashf Foundation, a nonprofit organization in Lahore, Pakistan, that makes small loans and other financial products available to poor women.

“It’s about transforming systems and policies, and that’s why scale becomes important,” said Ms. Zafar. “But how big is big enough? When I think of my own institution and of our plan to grow to 1 million clients by 2010, that’s only 8 percent of the poor people in Pakistan.”

’Necessary Resources’

The difficulty that organizations face finding the money they need to grow – particularly as more foundation money goes to start-ups – could pose a long-term threat to the nascent field, said John Elkington, founder of SustainAbility, a company in London that provides consulting and research on corporate responsibility.

“I wonder whether we are possibly in danger of creating a thousand flowers blooming without necessarily having the resources to take them to the necessary next step,” he said.

He pointed out that that’s how capitalism works. Periods of enormous investment in new companies – like the dot-com boom or the current growth in environment-conscious, clean-technology firms – are followed by drastic retrenchment.

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Source: The Chronicle of Philanthropy (link opens in a new window)