Change You Can Invest In: Social Entrepreneurship Small nonprofit groups headed by social entrepreneurs are tackling some of the world's biggest problems. Spurred by a spirit of innovation, the sector has grown to new heights. And both colleges and investors are noticing.

Change You Can Invest In: Social Entrepreneurship

Change You Can Invest In: Social Entrepreneurship

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To make it easier for public schools to teach music, David Wish started Little Kids Rock. Now the organization is active in 26 cities. Larry Abramson/NPR hide caption

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Larry Abramson/NPR

To make it easier for public schools to teach music, David Wish started Little Kids Rock. Now the organization is active in 26 cities.

Larry Abramson/NPR

The past decade or so has seen explosive growth in the number of social entrepreneurs -- innovators who take a business-like approach to solving social problems. NPR is profiling a number of these people this year.

NPR's Larry Abramson looks at how the movement has matured -- it's even becoming a full-fledged academic discipline.

On a recent evening, a few dozen people gathered at a Washington, D.C., restaurant to share food, drinks -- and ideas on how to attack some of the biggest problems on the planet, such as hunger in Africa and health care in India.

But this group isn't made up of big-time diplomats or bureaucrats. Many head small organizations they started themselves.

The attendees were brought together by Ashoka, an organization that has been helping entrepreneurs launch themselves for 30 years. Among the attendees is a man who hopes to join this exclusive club.

Advocating For Music In Schools

David Wish, in his 40s with salt-and-pepper hair, is not fighting hunger or disease. But he is just as passionate about addressing another problem: the disappearance of music education from public schools. His organization, Little Kids Rock, is active in 26 cities. It helps provide instruments and music instruction to kids, at no cost to the schools.

Wish is already a seasoned social entrepreneur, but he wants to become an Ashoka fellow. And it's not because of the cash award. Instead, he wants to be part of the network of fellows devoted to social innovation.

"Being in the presence of people who have devoted their life's work to that is really an inspiring thing," he says.

Ashoka has been nurturing social innovators for 30 years. People usually become fellows only after their organizations have proven their value and distinguished themselves in the nonprofit world. But as the sector has grown, new groups have begun stoking the fires on the supply side, teaching the value of social innovation to young people.

Incubating Ideas In The Classroom

According to one estimate, 500 professors are teaching courses on social entrepreneurship worldwide. On a recent day at the University of Maryland, students took their seats for the final class in a course called "Transformative Action: Effective Methods for Social Change."

Part of the business school's Center for Social Value Creation, it requires students to come up with a viable business idea by the end of the semester.

One student, John MacDonald, wears a yellow striped tie and a nervous smile for his group's presentation. The Leaf Academy is the group's idea for a charter school that would teach kids about the outdoors.

"Imagine a world where children play together outside," MacDonald tells his fellow students, "where they are given an opportunity to experience nature around us."

It's a nice idea, but would anyone fund it? To find out, the university has brought in two nonprofit venture capitalists, guys who help fund social ventures in the real world.

Steve Lynott, with an outfit called the 1901 Group, listens patiently to their ideas, and then responds.

"My big recommendation to you," he says, "is [to] narrow the aperture. Find a particular problem in schools that you want to look at. Right now it's just a bit too broad."

After class ends, the other venture capitalist in the room, Drew Bewick of Tree House Ventures, says that just like traditional businesses, many social startups stall because they don't see themselves as a business.

"I see a lot of them fail after a year, because they didn't think of that sustainable piece," he says. "They're almost afraid to describe it as a business model."

For New Nonprofits, New Donors

Some of the new growth in social entrepreneurship may be coming from donors themselves. Many people with money to give away don't want to hand it over to foundations, who then dole it out as they choose.

Chuck Harris is a former executive with Goldman Sachs who's now working with social entrepreneurs. He says that over the past decade, the wealthy began turning to independent thinkers with new approaches to social problems.

"You were starting to see first-generation philanthropists who didn't inherit the money had made it themselves," he says.

These donors follow their own pattern of giving. Harris says that many of them "hoped to find the same kind of support for their decision-making in philanthropy that is readily available in the for-profit investment world."

Harris felt the same frustration. So he left Goldman Sachs and founded his own nonprofit, SeaChange Capital Partners. Now he's helping other social innovators run their operations more like traditional businesses. Harris says his advice could include looking more like a corporation, with a board of directors.

That's a step many are reluctant to take. But many nonprofits fail without good oversight. Gary Snyder, with the watchdog group Nonprofit Imperative, says that because social enterprises rely heavily on trust, they're prone to fraud.

"Anybody close to the money is typically untrained and not monitored," he says.

Some observers say that social entrepreneurs' deep sense of mission can easily blind them to that and other risks.