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Tuesday, Dec. 13, 2011
Kiva.org is the fruit of a philosopher who asked a practical question: what could I do to help very poor people improve their lives? Matt Flannery visited Africa and discovered that a very small amount of money could help people in big ways, and that people in existing communities of trust would ensure that a loan was repaid. With some friends and family members, Matt started making a few loans. Kiva.org is now one of the most visible micro-lending institutions in America. Matt visited Santa Clara on November 9, and told stories of how this came about.
Every time I hear news about the big banks, the ones too big to fail, I get a bit more cynical. The enormous salaries to men whose banks’ bad behavior brought the American economy to its knees, credit default swaps so complex their inventors could not understand them, secret loans made by the feds to banks, government bailouts used to fund lobbyists to fend of regulation...these stories prompt in me a question: is the whole banking industry a parasite on society? The occupy movement does have a point here.
Starting a bank was the farthest thing from Matt Flannery’s mind, but he found, as I have, that one cannot foster human flourishing for poor people without providing them access to some capital. Matt was a computer programmer at TiVo with a Masters degree in philosophy, so he came to banking through a nonconventional path. He didn’t get into this line of work to make money, but rather, to alleviate poverty. Perhaps it was the ethicist in him that perceived economic options where others saw nothing but risky loans. In the Ugandans he met he found people alive with hopes and dreams, and he activated his networks back in America to partner with them. To accommodate the compassion of micro-loaners like you and me, he created a website to share the stories of people who needed credit, and Kiva.org was born.
This form of economics has nothing to do with the predatory or parasitic practices that foster cynicism. Instead, it’s based on mutuality through the international sharing of stories. Micro-loaners here in America learn about the needs of the poor, working so hard -- but unable to escape the traps of poverty without credit--in poorer countries over there. By exchanging stories, Kiva.org fosters practical compassion. People do want to make a difference, and by making a micro-loan, they can. Kiva.org facilitates this exchange.
Matt clearly loves what he does, and he has apparently found his life’s work. He used his computer programming skills to help countless people. From another perspective, his is a very old solution. In response to interest rates of >40% during the late Middle Ages, members of my religious order, the Franciscans, devised and launched local credit unions to provide loans at a fraction of this rate. These were the forerunners of the modern banking system....and this from a religious order that takes its vow of poverty quite seriously!
Fostering practical justice means understanding the economic reality of people who are poor, and just might be able to make it out of their poverty trap with a loan. Cynicism of American banking may be warranted, and the occupy movement may decry greed, but understanding how well conceived economic interventions based on solidarity can make a huge difference in the lives of others seems highly appropriate for a Catholic university that prides itself on teaching conscience. It is my hope that the Global Social Benefit Fellowship can help some Santa Clara students learn this.
Keith Douglass Warner OFM is a Franciscan Friar and the CSTS director of education.
Watch the Video of Matt's Kiva talk from November 9th, here.
Posted by Keith Douglass Warner OFM |
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Tuesday, Dec. 6, 2011
On behalf of the Center, we wish happy and healthy holidays to all of our GSBI alums, Tech laureates, partners, mentors, advisory board members, supporters, and other friends.
Last year, we set an audacious goal to promote the use of science and technology to benefit the lives of 1 billion impoverished people around our planet by 2020. The Center sharpened its focus in 2011 on three social benefit programs that enable progress towards this vision: entrepreneurship, through our signature Global Social Benefit Incubator™; innovation, including the rapidly evolving frugal innovation initiative; and social capital. According to the United Nations, the global population reached 7 billion at the end of October this year. Fully 4 billion, or 57%, are living in poverty at the “base of the pyramid.” Andy Lieberman’s article in the San Jose Mercury News captures well the power and potential of social entrepreneurship and innovation to solve the pressing needs of the global poor.
Our sector focus on off-grid, sustainable energy continued, enabling a successful launch of our Energy Map, which has won praise from numerous impact investors, foundations, and development agencies for its deep and thorough characterization of technology solutions and business models to meet the needs of the 1.5 billion people living without electricity and nearly 3 billion using wood fires or unsafe traditional stoves for cooking. Based on practical knowledge from GSBI applicants, we’ve started to explore “contextual” factors, such as government policies, that facilitate or inhibit adoption of appropriate technology solutions and business model innovations for off-grid, sustainable energy, including speaking at the OECD’s Better Innovation Policies for Better Lives Forum. Because our knowledge continues to deepen, we plan to continue the energy sector focus, particularly relevant given the UN’s declaration of 2012 as the Year of Sustainable Energy for All.
Our amazing 2011 GSBI Class included 11 social enterprises focused on off-grid energy, the highest number and percentage ever. We also made significant progress towards gender equality with 8 women entrepreneurs of 18 total, again the highest number and percentage. In concert with the rapid emergence of social entrepreneurship in Africa, 6 of this year’s class serve communities there, with the remainder including Cambodia, Guatemala, Haiti, India, Mexico, the Philippines, Slovakia, and Thailand.
With the enormous caveat that there are many forms of social benefit and no universal metric for assessing impact, analysis revealed that our 140 GSBI alums have collectively impacted the lives of 74 million people. Our strategy to positively impact the lives of 1 billion by 2020 is simple: help more social entrepreneurs help more people.
GSBI program extensions in development include GSBI Online and the GSBI Network. GSBI Online could potentially train hundreds or thousands of social entrepreneurs all over the world through proven core modules of our program. The GSBI Network leverages the International Association of Jesuit Business Schools to foster the development of GSBI-like programs that help social entrepreneurs build sustainable and scalable ventures. Towards this end, we have hosted a first working group at Santa Clara and have executed Memoranda of Understanding with Ateneo de Manila in the Philippines; the CK Prahalad Centre in Chennai, India; ESADE in Spain; and XLRI in Jamshedpur, India.
We also introduced substantial “capacity development” training for the 2011 Tech laureates, helping them craft succinct elevator pitches, create 2-page innovation profiles useful for fundraising, and explore different sources of capital. We continue to manage the nominations, applications, and judging processes, and are pleased that the 2012 categories include Sustainable Energy and Young Innovators, the latter of particular interest given our blossoming partnership with The Spirit of Innovation Awards.
A common need for all social entrepreneurs and innovators is access to appropriate forms of capital. Compared to the well-developed VC ecosystem, impact capital is poorly coordinated, creating higher costs for both investors and entrepreneurs. Under the leadership of John Kohler, we launched our Coordinating Impact Capital report in July, and with an in-depth workshop hosted by World Bank in early November.
The newly funded Global Social Benefit Fellowship Program will afford high potential juniors from all disciplines a comprehensive practical social justice experience conceived in memory of Fr. Paul Locatelli.
Together, these programs provide the Santa Clara community unique opportunities to create a more just, humane, and sustainable world in accord with our Jesuit tradition. In 2012, our signature Global Social Benefit Incubator will enter its 10 th year. In many ways, it is the “center of the Center” and we hope that you’ll join us in celebrating the accomplishments of these incredible social entrepreneurs who are changing the world and creating significant impact. We invite you to consider a gift to the Center to help us accelerate progress towards positively impacting the lives of 1 billion by 2020.
Thane Kreiner is the Executive Director of the Center for Science, Technology, and Society at Santa Clara University
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Wednesday, Sep. 14, 2011
I didn’t expect that my favorite quote at last week’s SoCap conference would be from Mike Tyson, but that is what makes SoCap so great… a gathering of people who are not afraid to bring in new ways of thinking from any sector, even professional boxing. Tyson was not there in person, but Josh Suskewicz of Innosight quoted the infamous heavyweight to emphasize his point that ~90% of successful entrepreneurs have changed their strategy 4 times before settling on one that lets their venture succeed: “Everybody has a plan until they get punched in the face.”
My second favorite quote came from Lisa Kleissner of KL Felicitas Foundation, who was in attendance and spoke on an uplifting and thoughtful panel entitled, From Crisis to Building Something New Together. When asked about the best way to have impact, she said that “the best way to have impact is to fail…. Because if you fail it means you took action.”
I’ve had my fair share of figurative punches in the face, real failures, and sudden strategy shifts in my careers as a social entrepreneur and a supporter of social entrepreneurs. I believe I have made a small or not-so-small difference in the lives of quite a few people, but it has never been easy, and it has seldom gone according to plan. SoCap is refreshing because most of the attendees are also practitioners, and we talk openly about the gritty, messy reality of the space we work in. Three days were not enough to have a thoughtful conversation with all 1500+ attendees (even though everybody tried their best), but it was enough time to invigorate me to keep moving forward with our Center’s plans to expand the Global Social Benefit Incubator program offerings to be able to help more social entrepreneurs become investor-ready.
So, how does clean energy fit in to all this? While there was no official clean energy track at SoCap, there was a large grouping of both clean energy entrepreneurs and other organizations working to tackle the problems of 1.5 billion people without reliable access to an energy grid and the 3 billion people cooking on dirty, inefficient stoves. It is more evident than ever that these are problems that can be solved through market-based approaches because the new technologies and innovative business models being deployed give cleaner energy to BoP consumers for lower prices than what they are paying now for inferior solutions like kerosene lamps and disposable batteries.
Last month, at our GSBI clean energy forum, we worked with 11 clean energy entrepreneurs and a variety of experts to discuss what it will take to accelerate the growth of the social enterprises serving this sector. Our two-day session led us to envision an ecosystem accelerator that efficiently finds and deploys human and financial capital to enable new and existing social enterprises to be built for scale and to be brave enough to experiment with innovations in pricing, distribution, and legal structures to find successful models.
This is an ideal sector for the SoCap community to get excited about because it provides the impact investing community with real opportunities for making a difference while making a profit. Impact investors are often criticized for being too risk averse or for favoring profits over social impact. Successful ventures such as Toughstuff are showing that in the BoP energy market, there are investment opportunities with lower risk and profits that correlate directly to positive social and environmental impact.
Lesley Silverthorn of Angaza Design was one of at least 10 GSBI alumni I saw at SoCap looking to connect with funders and other entrepreneurs. Her company’s solar LED room light is far brighter than other comparably-priced lights on the market and was designed to illuminate an entire room for multiple members in a family to use effectively at the same time. At $60, it is not an entry-level product for East Africans, but something that they aspire to own once they see the pros and cons of the lower-cost products. She commented, "I actually got so much more out of SoCap by meeting fellow energy entrepreneurs, thought leaders, and investors than I got from just attending the organized panels and speakers. Now there is a large group of energy companies forming a 'SoCap Energy Alliance' to further our collaboration to achieve our goals of a world with access to clean, bright light and the ability to power small electronics." (Contact Lesley at lesleys@angazadesign.com for more information on the Energy Alliance.)
An ongoing concern for everyone involved in the sector is how to make even the lowest cost products affordable for people living on a few dollars a day, who have limited savings and little access to credit. A recurring notion has been posited that BoP products need to pay for themselves within a year to be able to gain widespread adoption. Many of the clean energy products we see meet this requirement, especially if other benefits like increased productivity are factored in. The most obvious solution to getting these products out is microloans, but that has been challenging because it puts all the risk on the consumer. Even if the lamp breaks, is stolen, or otherwise fails to meet their needs, borrowers are still liable for the costs of the product plus interest. In response, entrepreneurs are coming up with a plethora of new models to overcome this obstacle. Typically these models are based on a rent-to-own or other pay-as-you go scheme. This greatly reduces the risk for the consumers, and with the right mixture of technological and social mechanisms in place, entrepreneurs can mitigate their own risks. Husk Power Systems is succeeding with such a model by operating community power plants in remote regions of India. It is still too early to point out a company that has made this work at scale for household products, although Sunlabob is having good success in Laos with its solar lantern rental system. These and other learnings about affordability have been documented on the Energy Map, which we will continue to expand to incorporate best practices from new companies.
I was pleased to see several noteworthy organizations especially engaged in clean energy at SoCap. The UN Foundation deserves accolades for its proactive role, moderating three clean energy sessions which helped the entrepreneurs connect with each other and the broader ecosystem. Other big names that were notably present at the clean energy sessions include the World Bank Development Marketplace, National Geographic, and E+Co.
Where does this leave us? As I reflect on the GSBI Clean Energy forum and my take-aways from SoCap, I am confident that we are moving in the right direction, but we have a long road ahead and we should expect as many punches in the face as inspiring stories of success in enabling millions more people to benefit from clean energy.
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Wednesday, Jul. 20, 2011
In this Xconomy piece, our Executive Director, Thane Kreiner argues “yes”. Based on the work featured in our recently released report Coordinating Impact Capital, A New Approach to Investing in Small and Growing Businesses he argues that a more “venture capital” type approach to funding social entrepreneurs would increase efficiency for both the entrepreneur (whose time is best spent building their enterprise rather than fundraising) and the investors (who struggle with issues like investing in companies located half a world away).
The study, which the Center for Science, Technology, and Society undertook with generous support from the Aspen Network of Development Entrepreneurs, asked 45 impact investors over six months to share with us their investment methods, profit expectations, geographic focus, due-diligence practices, and other factors. Our goal was to unearth some knowledge that could catalyze a more coordinated, venture-capital-style system for social-venture startups.
To learn more about the study, Coordinating Impact Capital, A New Approach to Investing in Small and Growing Businesses attend the unveiling of the study: July 26 from 4 to 6:30 p.m. at Santa Clara University’s Arts & Sciences Building, Wiegand Room, 500 El Camino Real, Santa Clara, Calif. 95053. Register here
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