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.
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Change You Can Invest In: Social Entrepreneurship

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Change You Can Invest In: Social Entrepreneurship

Change You Can Invest In: Social Entrepreneurship

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This is MORNING EDITION from NPR News. Good morning. I'm Renee Montagne.


And I'm Linda Wertheimer.

The last decade 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. Today, NPR's Larry Abramson looks at how the movement has matured and is even becoming an academic discipline.

LARRY ABRAMSON: The people gathered in this Washington, D.C. restaurant are attacking some of the biggest problems on the planet - hunger in Africa, health care in India. But they're not big time diplomats or bureaucrats. Many head small organizations they started themselves.

They've all been brought together by Ashoka, which has been helping entrepreneurs launch themselves for 30 years. Among them is a man who's hoping to join this exclusive club.

Mr. DAVID WISH (Little Kids Rock): My name is David Wish. The organization I'm with is Little Kids Rock.

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

He's already a seasoned social entrepreneur, but he wants to become an Ashoka fellow. And�it's not because of the cash award.

Mr. WISH: Because of the network of fellows, being in the presence of the people who have dedicated their life's work to that is really an inspiring thing.

ABRAMSON: People usually become Ashoka fellows only after their organizations have proven their value and distinguished themselves in the nonprofit world. But as this field has grown, new groups have been stoking the fires on the supply side, teaching the value of social innovation to young people.

Unidentified Woman: OK. So I just want to talk through kind of how today's going to run. The portfolios are graded...

ABRAMSON: According to one estimate, 500 professors worldwide are teaching courses on this subject. Here at�the University of Maryland, students�have enrolled in the business school's Center for Social Value Creation. At the end of the semester they have to come up with a viable business idea.

Mr. JOHN MACDONALD (Student): Imagine a world where children played together outside, when they were raised with sound morals and principles, when they're given an opportunity to learn and experience nature around us.

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

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.

Mr. STEVE LYNOTT (1901 Group): My big recommendation to you is narrow the aperture. Find a particular problem in schools that you want to look at. Right now it's just a bit too broad.

ABRAMSON: 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�fail because they don't see themselves as businesses.

Mr. DREW BEWICK (Tree House Ventures): I see a lot of them fail after a year, because they didn't think of that sustainable piece. They're almost afraid to describe it as a�business model. But if you're going to have a level of self-sufficiency, you've got to think that way.

ABRAMSON: 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 over the past decade the wealthy began turning to independent thinkers with new approaches to social problems.

Mr. CHUCK HARRIS (Former Goldman Sachs Executive): You were starting to see first generation philanthropists who didn't inherit the money, had made it themselves, didn't have patterns of giving, looked around and hoped to find the same kind of support for their decision-making and philanthropy that is readily available in the for-profit investment world.

ABRAMSON: Harris felt the same frustration, so he left Goldman Sachs and founded his own nonprofit, SeaChange Capital Partners. He's helping other social innovators run themselves more like traditional businesses. His advice could include looking more like a corporation, with a board of directors.

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

Mr. GARY SNYDER (Nonprofit Imperative): You get executives, you get bookkeepers, you get - anybody close to the money typically are untrained and not monitored.

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

Larry Abramson, NPR News, Washington.

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