NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

As I waited for my bagel to toast yesterday, I noticed the latest Newsweek perched in the WRI magazine rack. Normally, I flip to the Perspectives page, then to the Last Word column, and I?m done. Not this time. The cover story, ?The Giving Back Awards,? piqued my interest and won out, mostly because of this nagging question: how would Newsweek feature social entrepreneurs, if at all?

When I saw eBay founder Pierre Omidyar’s name, a knowing smile crossed my face. Good–Newsweek had chosen an innovative philanthropist, one whose investments in sustainable business and microfinance are geared towards “help[ing] people tap into their own power.” From the article:

“Business can be a force for good,” [Omidyar] says. “You can make the world a better place and make money at the same time.”

Yes! Easier said than done, Pierre, but to see that quote in Newsweek really made my day.

After Omidyar, I flipped to an article about two recent Yale grads whose startup handicraft NGO, Mercardo Global, helps poor Guatemalan women raise money to send their children to school. It’s a familiar story–help poor artisans access global markets, where handicrafts fetch prices 3 to 4 times higher than local rates. Income from handicraft sales improves living standards. Unfortunately, the story’s been told before, with mixed results.

Mercado Global organizes artisan cooperatives in Guatemala and finds US markets for the cooperatives? products. 100% of the profits go back to the communities. The idea sounds good, but there’s nothing terribly innovative here. The US-based staff has high costs–salaries, overhead, marketing–that cut into the co-ops? profits. Efforts to scale the model will inevitably run into bottlenecks, since Mercado Global doesn?t train its cooperatives to expand or help start new ones.

If Mercado Global’s model is flawed, what’s the alternative? A good place to start is PEOPLink, another NGO. PEOPLink guides artisan cooperatives in 42 countries to participate in e-commerce, helping the artisans do it themselves. They offer an out-of-the-box catalog solution that gets cooperatives hooked into the global marketplace quickly and seamlessly.

While Mercado Global’s artisans depend on the US-based staff to ?find markets,? PEOPLink trains artisans to do it themselves. In the end, which is more world-changing, and sustainable? Here’s a hint–top-down models similar to Mercado Global have failed in the past, while PEOPLink recently celebrated its 10-year anniversary.