Should social entrepreneurs adopt the language and practices of business?

The debate is here:

http://whatmatters.mckinseydigital.com/the_debate_zone/should-social-entrepreneurs-adopt-the-language-and-practices-of-business

One thing I found interesting is how Bunker Roy mentioned the National Rural Employment Guarantee Act. I didn’t know it was the result of grassroots activism. It has undoubtedly been beneficial to the rural people, but it is so much less effective than a more “market-based” solution, but has ironically spurred the creation of a VC funded company (A Little World) that has helped create bank accounts for rural villagers, which will arguably do more good in the long run than the act itself.

Apparently there is a condition to the act which does not allow workers to work with certain types of tools, so they are not able to work on anything infrastructure related.  There are tons of people who are being paid by the government, but the jobs they are being asked to do don’t always fill a need – like cutting bushes in one case.

However, this nationwide scheme triggered an entrepreneurial idea called A Little World.  To get the employment funds to the workers, the government paired with “banking correspondents” which are non-profit organizations that deliver the funds to the rural villages. In an effort to keep this process corruption-free, the government requires a technology-based system.  A company called A Little World (which I wrote a case on) created the rural bank-in-a-box, which is essentially a cell phone, fingerprint reader and printer that creates real bank accounts for the villagers and allows them to receive funds.  Because A Little World used the language of business in their talks with external VC investors and banks, they are able to fund this project.  Thanks to the government program, they are able to reach a lot of people with their technology. Now the technology solution can be used to transfer money from the village out in a corruption-free way, which is helping lay the foundation of financial literacy in rural India.

I think that’s proof – passion, commitment and business savvy are ALL important.

WiHood Bracelets Make Computer Education Portable

This post originally appeared on Ashoka Tech.

Across the globe, the computers used in underfunded schools share similar characteristics.  Outdated hardware grumbles to a start each morning to serve classrooms crowded with children.  Slow processors and limited storage space confine the possibilities for learning computer skills and using the Internet.  The students in these classrooms have never dreamt of owning their own PCs and cannot fathom the world on the other side of an Internet connection – they have enough on their minds at home.

Yet in many of these places, the speed of the Internet connection is ample for mainstream computing purposes and children are eager and excited to learn.  WiHood, a name originating in the phrase, The World is Your Neighbor, offers a virtual personal PC that overcomes the physical barriers to digital learning by making clever use of cloud computing and modified USB drives.

The WiHood USB bracelet holds open source versions of Microsoft-compatible software packages, an email client, RSS reader, games and a child-safe web blocker.  The bracelets plug into any computer and allow users to see their very own familiar desktop and access their files stored in the cloud at WiHood’s servers.  The portable, personal device bypasses computing and storage bottlenecks, ensures the safety of personal documents and gives students familiarity and ownership in their digital learning. As is sometimes the case in social enterprises, the value of the product is hard to pin down – between the software, the pride in owning something, the power of information, the safety of hosting documents online and the fashion statement, it covers a lot of ground.

Founded in Norway in 2007 and the United States in early 2008, WiHood aims to, “provide the possibility for a future of opportunities.”  The WiHood bracelet and service are available all over the world and usable at any internet-enabled PC and have thus far been sold in the United States, Europe and Africa.  The service was designed to work on 10-year-old PCs to maximize the educational return on scarce and outdated computer resources.  By storing all files online, the service works as fast as the internet connection will allow, making use of the lastest available technology while bypassing the computing bottleneck of slow processors that plague inner-city and rural schools.

Last year, WiHood connected the 465 students at Chelelemunk All Girls Boarding School in Kenya with their own WiHood PC accounts and continues to work with aid organizations and NGOs with reach in needy areas.

Currently in alpha testing and coming soon to its user community, WiHood Mobile will be the iPad equivalent for digitally developing areas.  The service will allow users with WiHood accounts to access their own unique phone number through their desktop and send or receive SMSs and phone calls through their accounts.  Instead of needing a PC and a phone, users simply need WiHood, the more durable, portable and wearable iPad.

Founder and CEO Thomas Anglero is no stranger to the technology industry.  One of the first pioneers of Voice over IP, Mr. Anglero is familiar with the ability of the Internet and technology-equipped education to connect and educate people around the world.  Mr. Anglero’s background includes work as a Senior Advisor to the executive team at Telenor AS, (the first mobile operator to offer services in Bangladesh as Grameen Telecom in a partnership with the Grameen Bank) and as CEO of Truly Global Inc. and CEO of Free World Dialup.

In a personal interview about the development and future of WiHood, Mr. Anglero said, “There’s a human element to everything.  The bracelets are made of silicon and non-toxic ink, so they are relatively harmless to the environment.  The service itself maximizes the use out of assets without creating additional waste and as a company, we prefer to hire local people to conclude projects so they benefit from the extra income and we don’t spend the money and waste in traveling there.”

By creating an easy and portable solution for anyone without their own PC, WiHood aims to enable an easier computing experience, thus facilitating computer use and helping to bridge the digital divide by engaging students in learning.  WiHood bracelets are available on Amazon.com, its global distributor.

Active Investing & the Shift to Profit

At last week’s EVPA (European Venture Philanthropy Association) Conference, Pieter Oostlander, Managing Director of Noaber, discussed how active investing can multiply investment impact.

Noaber is an internationally charitable group which operates as a venture philanthropist under the Noaber Foundation label and a (social) venturer under the Noaber Ventures name. For venturing, the group deploys two separate funds. Hochst Investments Ltd is a venture capital fund that aims for a financial return only, whilst George Avenue LLP is a social venture capital fund that focuses on a a blended return (combination of a social and financial return).

Pieter shared the story of an organization that came to Noaber with a grant request for building a software program to use in schools for special needs students. Traditional foundations would have given the grant for the software. However, Noaber noticed that the software could and should benefit many other schools beyond the reach of the grant-seeking organization. Instead of simply funding the request, they connected the organization to partners and developed and sold the software. Now, the revenue is enough to return money to investors and provide funds for maintenance, which would otherwise be funded through additional grants. Noaber have also identified new applications and markets for the software. By offering connections, assistance and advice, they multiplied the impact of their investment.

I couldn’t hep but get excited about the idea of NGOs-turned-social-enterprises and this new wave of philanthropic investment. When a few friends and I started what was to become Reach the World – Chicago in 2004, we were at university. We knew we wanted to create a web-based, but dynamic educational program for kids that would connect them to a more global education. We didn’t know a lot else – we were juniors in college. We met with professors at Kellogg and Northwestern and took in advice from many sources. For a brief period, we were adopted by the Kellogg Social Enterprise Incubator, but promptly booted out when they decided to reserve the honor only for masters students. During this time, we settled upon the nonprofit business model and incorporated as Tradewinds Educational Resources. Days after graduation, we drove to New York City and met with Heather Halstead, founder and Executive Director of Reach the World. A few weeks later, we were the Chicago branch of Reach the World.

After a successful 6 years, RTW-C is exploring ways to move toward a profitable approach. If we had been advised early on to structure it as a social business from the start, we could have created a better program, faster, with the ability to pay a full time director from the get-go. Significant impact has been achieved, but I believe the shift toward profitable enterprise will bring a range of new opportunities and increased impact.

The social landscape is changing and with the growth of active investing, its horizons are growing exponentially. It’s an exciting time to be in the social business world.

To NGOs in the West: Monetize or Discorporate*

Do we need NGOs in the Western World? Has the third sector become unnecessarily inflated with low-value businesses?

I wonder if the amount of spare cash, tax write-offs, interest in charity dinners and running marathons, have removed the impetus to create innovative, sustainable business models. If people living under (for all intents and purposes) non-corrupt governments, in areas with perfectly good infrastructure, ample social services, financial inclusion and able, skilled people, cannot find a way to monetize their business, perhaps there is a problem with the management or the business. I’m not saying these organizations don’t do important and useful things, just that they shouldn’t need to rely on unsustainable business models and because they do, they distort healthy competitive forces.

Theoretically, organizations die off when they receive less funds. If they are not doing a good job, people won’t fund them, but is that really how it works? Sometimes, grant funding helps regulate this, but often it is media coverage and deep-pocketed friends that sustain these organizations. The sustainability of the business is not determined by the users of the product, but by other people’s perception of its benefit.

I think it is time to convert these existing social organizations into social businesses that sustain themselves. People are willing to pay if the product is right.

NGOs do very important work in parts of the developing world. Sometimes NGOs act where companies can’t and governments haven’t. The intricate ecosystem of partnerships relies on this form of business – at least for now. In my humble opinion, we should support inclusive, sustainable businesses providing needed solutions all over the world. Surely we can run our over-nourished selves silly at marathons without charging our friends and then all go out for some fair trade, organic coffee. (Let’s leave the fair trade debate for now).

*Discorporate – from Stranger in a Strange Land. Essentially means to die and then be eaten by others in their appreciation for you.

In 2004, I co-founded the Chicago branch of the nonprofit Reach the World and love it dearly, though this I still believe.