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 The mission of the "Your Mark on the World Center" is to solve the world's biggest problems before 2045 by identifying and championing the work of experts who have created credible plans and programs to end them once and for all.
Crowdfunding for Social Good
Devin D. Thorpe
Devin Thorpe

Interview

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Is It Ethical To Lend To Working People At A 200% Interest Rate?

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

We’re all familiar with payday lenders who are providing loans to people who can least afford it at interest rates that shock the greediest of corporate bankers. Can a fintech company that lends at rates up to 200% annual percentage rates ever be considered ethical? In this piece, I’m going to share my conclusion.

To help me make this evaluation, I turned to Morgan Simon, a vocal advocate for using a social justice lens for impact investing. She is the author of Real Impact: The New Economics of Social Change and Managing Director of Candide Group. She framed the question for me:

In general, when we think about fintech, from microfinance in the global south to financial services for working class populations in the US, we think a lot about the question of fairness. It’s common for a social enterprise to focus on providing better rates to a customer compared to what they had access to. But better does not always mean fair. So, we always look at a company and try to assess–is the financing non-extractive, meaning the customer receives more value than the company?  Is the operating margin reasonable compared to the consumer value created? Does the product help build assets as opposed to focusing predominately on consumption? Each company and case is different, and hence it’s impossible to say that a certain range of APRs enables fairness. It’s important to take each company case-by-case and try to assess its particular impact.

She framed the question well but didn’t answer it for me.

Lendup is a fintech company based in San Francisco with offices in Richmond, Virginia that provides four tiers of consumer lending, with the stated objective of providing customers with a path to better financial health. At the bottom rung of their credit ladder, they provide loans of about $250 at an APR of 200%. The company, backed by Kleiner Perkins, among other well-regarded venture investors, now has 220 employees, has made 4 million loans totaling more than $1 billion. By their estimate, they’ve saved their customers $130 million. They have also provided 1.6 million free online courses about money management.

For this article, I visited with Sasha Orloff, CEO and Vijesh Iyer, COO, to learn what they do and how they justify lending at such rates. You can—and should—watch the entire interview in the video player at the top of the article.

Vijesh Iyer, Lendup COO

Iyer explained the Lendup vision, saying, “We believe there are two types of financial products: chutes and ladders. Ladders help people up; chutes push people down. One of our core values is that every product we offer at LendUp is a ladder, and our success is measured by the long-term financial well-being of our customers.”

That lending at 200% interest rates could be a ladder to greater financial health begs scrutiny.

Orloff, 40, was quick to put Lendup’s practices in greater context. “When you’re thinking about the payday lending industry you’re typically talking about 400 to 1,000% APR annualized rates. You’re paying the same rate day after day, week after week, month after month, year after year.”

Obviously, lending at half the rate or better than the competition is better for the customer, but it could still be a debt trap from which the customer might never escape.

The scale of the problem or opportunity, depending on your view of the situation, is staggering. Orloff points out that 56% of Americans don’t have access to traditional financial services. Payday loans are typically not reported to credit bureaus, which serves customers just fine when they default but is no help when they repay the loans according to the terms, leaving them stuck in financial purgatory.

No reader of this piece would want to borrow at 200% unless it were the best available option. Even then, we’d want to be sure that we wouldn’t be better off not borrowing the money.

Lendup takes the ladder concept seriously. Rather than go to a store-front with the employees working behind bullet-proof glass, customers borrow on their phones. They are encouraged to take financial literacy courses. As they make payments in a timely way, they move up Lendup’s ladder, earning the right to borrow more money at lower interest rates. At the top two tiers of service, the company reports credit results to all three major credit bureaus, potentially helping customers establish a credit score that would give them access to traditional credit products, Orloff explains.

Still, I worried what happens to customers that can’t repay their loans on time. Some payday lenders have been reputed to compound interest and fees monthly or even weekly, allowing an unpaid loan of a few hundred dollars to balloon out of control within a year. Does Lendup take the same approach to its slow-paying customers?

No. They assure me that the company never charges another fee. For their single payment loan customers, no late fees or interest accrue. Instead, the company works with the clients to ensure that customers are not stuck in a debt trap when they can’t pay.

Orloff says, “At the end of the day, we try to structure our products so that we make money when they pay us back not when they get further into trouble because we’re trying to lend people up.”

The problem has persisted despite the continued economic recovery, in part because so many people have been moving from salaried positions to hourly or even to the gig economy where people are paid only for the brief moments when they are working on a paid task. Uber and Lyft drivers, Upwork freelancers, Task Rabbit contractors and so many others now experience unprecedented volatility in their incomes.

Understanding how their model is designed to work, I set out to understand whether or not it does work. Orloff and Iyer were unwilling to provide data on the proportion of their customers who are able to climb to the top of their ladder and graduate. One can reasonably conclude the data isn’t encouraging.

They did share that a comparison of cohorts of their customers and non-customers showed that their customers improved their credit scores faster and farther than non-customers.

Credit scores matter. Iyer notes that a graduate of their program can save hundreds of thousands of dollars over a lifetime by earning a higher credit score.

A graduate of their program gains access to traditional credit cards with a grace period that allows them to borrow money for longer than just one payroll cycle at zero cost. Orloff says, “They’re going from paying 400 to 1,000% APR to a zero-dollar borrowing cost. To me, that’s one of the proudest most incredible things that we’ve accomplished here at Lendup.”

They don’t see Lendup as the solution to the problem. Iyer points out, “We’re talking about over 50 percent of the US population not having $400 to take care of themselves in an emergency.”

They see Lendup as part of a growing movement to give people better access to the financial services they need. The company collaborates with nonprofits to help address the systemic challenges that make being poor so expensive.

Orloff says, “If our system is working really well for 44% of the country and it’s not working really well for 56% of the country then something has to change.”

He adds, “The reason why I’m excited about this interview and other interviews is creating a broader awareness of this movement has started and that we need the support of a lot of different players from the press from the regulators from the financial markets.”

One of the nonprofits with which Lendup collaborates is The Aspen Institute. Joanna Smith Ramani, the associate director for the Institute’s financial security program, helps answer my fundamental question:

One of our goals at the Aspen Financial Security Program is to build and spotlight leadership that is committed to solving the financial challenges of working Americans. Sasha is a real innovator in the financial service and fintech industry around his commitment to solving not just the credit needs of low-wage earners, but also the overall financial health needs of families as well. We have been encouraged by LendUp’s eagerness to directly learn from their consumers, to iterate their products, and to engage in cross-sector discussions, even with critics and advocates, about how to not just make their product better, but also the industry better.

So, is it ethical to lend to people who are struggling financially at an APR of 200%? Yes. When the customer’s interests are put before corporate interests, lending at such high rates is ethical. But I’ll be watching.

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

Impact Investor: You Don’t Have To Give Up Returns To Do Good

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

One of the most controversial topics in impact investing is whether it is possible or fair to expect market returns on investments that do good. Gloria Nelund, chairman and CEO of TriLinc Global, says yes.

Nelund says her firm, which manages about $320 million, is designed to prove it. “The whole firm is really dedicated to creating and sponsoring funds that will prove to investors that they don’t have to give up investment returns to do good.”

TriLinc is a private investment fund that lends money to small businesses, including businesses in the developing world. To do business effectively in frontier and emerging markets, the firm partners with local experts.

Nelund explains, “We created a partner model where we went out and found the best private debt fund managers in the world in the countries where we wanted to invest and we developed a partnership with them where they would originate loans for us. We actually co-underwrite and co-structure all of the loans.”

Gloria Nelund, TriLinc Global

TriLinc typically funds the loans directly to the businesses; local partners do not act as intermediaries. Some of the loans are sufficiently large that TriLinc reaches out to other funds to complete the financing.

Nelund highlights a loan to Corporacion Prodesa, S.R.L., a manufacturer of affordable disposable diapers in Peru, as an example of the firm’s impact. The company’s founder, a Peruvian American who worked at Kimberly Clark identified hygiene problems associated with cloth diapers being used in Peru and utilized abandoned technology to produce diapers low and moderate-income families there could afford.

The company not only solves a social problem in the developing world but also provides jobs that raise the standard of living for the community.

Nelund says, “When they were really struggling at one point and we were working with them to try to restructure everything, his biggest concern was the people in the community losing their jobs because it was so important to them and their families.”

The loan of about $3 million represented about 2.1% of the funds’ assets, according to the 2015 10K filed with the SEC and has an interest rate of 15.5-15.6%. The firm’s loans have interest rates ranging from more than 8% to just less than 18%. The loans are made in Central and South America and in Africa.

Nelund explains the investment strategy. “We have a private debt strategy that makes loans to growth stage companies that meet certain environmental social and governance standards and who are committed to creating impact and then we provide loans to those companies so that they can grow and they can create more jobs and they can pay higher wages.”

While Nelund admits that some projects require non-investment capital—philanthropic or aid forms of capital—she sees market rate impact investing as the key to attracting sufficient capital to solve big problems. She says, “You should hold companies to the same [return] standard regardless of the impact they create.”

Matthew Weatherley-White, co-founder and managing director of The Caprock Group, who has invested in the funds, highlights two features of the TriLinc funds. First, he notes that retail investors have been invited to participate in the funds via public offerings—most impact investments are limited to accredited or institutional investors. The other point he highlights is the firm’s focus on doing things better. “This isn’t about perfect. It is about steadily raising the bar.”

Jeff Shafer, co-founder of CommonGood Capital, praises Tirlinc’s team and procedures for sourcing deals outside the US with an emphasis on impact. He adds, “Since investing today in the US is dominated by the left brain, market rate returns and proof of positive impact are critical to mobilizing large amounts of capital.”

Dr. Patricia Dinneen, senior advisor, EMPEA and chair of Impact Investing Council, agrees with Shafer’s analysis. Like Weatherley-White, Shafer and Nelund, she concludes that impact investing at market rates is possible. “TriLinc Global provides credible and convincing evidence that you can achieve both financial returns and social benefits.”

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

Key Job Skill for This Position: No Complaining About Rats and Roaches

“I look for a great communicator who can tell some of the most important stories in the world. Also, someone who won’t complain about staying in a $2-a-night room with rats and roaches,” New York Times columnist Nick Kristof summarized by email what he looks for in his annual “Win-a-Trip” contest.

Each year, Kristof of the New York Times holds a “Win-a-Trip” contest to find a student journalist to travel with him on a reporting trip. For 2017, he selected Aneri Pattani to accompany him to Liberia.

Pattani, 22, described her experience as a “one of the best” she’s had.

“Because I had the privilege of traveling with Nick, interviewing people and writing about my experiences for a global community of readers, I was able to chip away at my own ignorance and hopefully spread new knowledge to a few others, too.”

Nick Kristof and Aneri Pattani, courtesy of the New York Times

“Aneri was fabulous!” Kristof said.

“She’s a natural journalist who wrote compellingly about leprosy, African journalism and so much more–and her work is blessed with empathy and intelligence, even though she’s pecking away at full speed,” he explained.

Pattani, for her part, admits that the key lesson she learned in Liberia was “how little I know.”

She admitted feeling “guilty” when visiting a hospital that serves 75,000 people, knowing all the while that she had more medicine in her luggage–including some basic antibiotics and ibuprofen–than the entire hospital had.

She was inspired by Mae Azango, a Liberian journalist who wrote about female genital mutilation and was then forced into hiding.

That experience is exactly what Kristof hopes to accomplish with the “Win-a-Trip” program each year. “I want to help nurture the next generation of journalists who care about the issues that I consider important, and more broadly, I want to encourage young people to engage with issues of global health and poverty.”

For the sake of future applicants, I coaxed some advice out of Pattani. She noted that Kristof chooses all sorts of students, not just journalism students. Her primary advice, “Just be really authentic and explain why this is important to you in a personal way.”

See my past interviews with 2015 winner Austin Meyer and 2016 winner Cassidy McDonald.

As for this year’s winner, Kristof shared his final thoughts on Pattani’s performance: “She didn’t protest a room with rats!”

Aneri Pattani

Aneri Pattani

Pattani’s bio:

Twitter: @aneripattani

Aneri Pattani is a recent graduate of Northeastern University, where she studied journalism and Spanish. She spent part of the summer traveling with Nicholas Kristof to Liberia as the winner of his annual international reporting trip contest. After that, she spent 10 weeks working as a James Reston reporting fellow on the health/science desk of The New York Times. Her work has previously appeared in The Boston Globe, The Texas Tribune, CNBC and The Hartford Courant. When she’s not working, she enjoys learning new dance forms and cooking new types of food.

Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

How To Start Impact Investing With Just $50 And Five Minutes

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Fifty bucks and five minutes will make you an impact investor. I did it. So can you.

Swell Investing is a new impact investing platform created by social intrapreneur Dave Fanger, 40, of Pacific Life. The idea came, Fanger says, five years ago, thinking about how consumers were increasingly making buying decisions based on social impact and thought there ought to be a way for investors to do the same.

What he came up with incorporated the latest fintech tools for investing, commonly known as robo-advisors paired with impact data to make informed decisions about impact. The technology allows for accounts as small as $50 with annual fees of just 75 basis points or 37.5 cents on a $50 account.

The average account size is just $4,000, suggesting that most investors on the platform are small, some of who are starting with the minimum required investment.

Impact Investing:

Fanger says, “We define impact investing as identifying and investing in companies that are actively deriving revenue from the way that they are solving global and environmental challenges.”

That is distinct from traditional public securities investment strategies known as socially responsible investing, ESG or environmentally, socially and corporate governance investing strategies, that focus on a broader range of companies that are governed well and seek to mitigate their impact on the planet.

Swell Investing presenting puts its customers in their choice of six impact portfolios: green tech, renewable energy, clean water, zero waste, healthy living and disease eradication. The combined funds have about 300 companies, a small subset of the 4,000+ publicly traded companies in the U.S. markets.

The portfolios are intended to line up with one or more of the United Nations 17 Sustainable Development Goals focused on eradicating extreme poverty by 2030.

One key fact about impact investing is that it has traditionally been available only to wealthy investors. Swell Investing is part of a movement to make impact investing available to ordinary investors.

Mike Wynholds, CEO of Carbon Five, helped build out the product. “I think Swell Investing meets in the middle of two separate trends that are important people: low-cost investment advice (robo-advisors, etc) and being responsible stewards of our planet. Swell gives people a way to do something they have to do–saving money–while also doing something they want to do – saving the planet.”

Bryan Walker, partner and managing director at IDEO San Francisco, concurs. “Swell offers a solution for investors who want double impact: financial and social investing. Swell provides a new way for socially conscious consumers to invest without sacrificing the value of their investment.”

Fanger’s focus on impact investing grew out of his superpower: empathy. He says, “I had [type 1 diabetes] since age eight and just living through that and managing this disease has shown me that there’s more going on in life besides what you see on the surface with folks.”

Walker saw that in Fanger early on. “From our very first conversation, I was excited by his true personal passion around the idea.”

Still, Swell Investing is not a philanthropy or merely a corporate social responsibility initiative. Fanger is building this business to make money.

Fanger sees the companies the firm invests in growing and the interest in impact investing among ordinary investors along with it, allowing the firm to scale up assets under management.

IDEO’s Walker says human-centered design will contribute to the firm’s growth. “IDEO brought a human-centered design approach to Swell’s development, which means that design choices were informed by consumer feedback. The team today continues with this approach, engaging with investors to get their feedback on a weekly basis as Swell continues to grow and develop new features.”

Walker boasts that when IDEO’s engagement with Swell ended, he decided to personally invest in Swell because he believes in the company.

The technology is key. It allows for individual investors to hold in separate accounts tiny, fractional interests in companies like Tesla. Fanger also insists the company uses the latest in security to protect those assets.

The company is not yet profitable after launching late in the spring of 2017 and has twenty employees.

Carbon Five’s Wyhholds sees good things in Swell’s future.

“From what I can tell Swell is off to a great start. The key for both the viability of the business and the impact it will have on the world is scale, and while it’s still early on, Swell is growing faster than its competitors did at this stage.”

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

‘A Life Has Meaning And Purpose, No Matter The Age’

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Meghan Waldron is 15 years old, runs track for her high school, plays in the school orchestra and is working on a novel. She is remarkable in many ways. One way is that she has progeria, a condition so rare only about 300 kids in the world have it; few are expected to live past their 20th birthday–unless promising new treatments are found.

Waldron recently completed her first book, a children’s book called Running on the Wind about a bird born under a rock that doesn’t learn to fly but instead to run.

The book was published by The Red Fred Project, a nonprofit publishing company that helps “children who live in extraordinary circumstances” like Waldron’s to create a children’s book that will both serve as an adult-like achievement to bring a sense of fulfillment to their lives and as a lasting legacy, evidence that their short lives mattered. The company has now published ten books, is working on an 11th and on a plan to publish many more in the future.

Dallas Graham

“A life has meaning and purpose, no matter the age,” says Red Fred Project founder Dallas Graham, 41.

The nonprofit is funded almost entirely by donations. The books are professional quality and they are sold to help fund the costs, but producing books at that quality costs about $20,000, a cost that isn’t covered by book sales.

Some of the funding comes from the Doctorow Family Foundation. Executive Director Suzanne Larson says of the experience of seeing the young authors work published, “I see the look of astonishment, wonder and joy on the kid’s faces holding, touching, grasping palpable, tangible evidence of their accomplishment. I know their loved ones are experiencing all the same emotions from initial contact to book in hand. in addition, the effect ripples out to everyone who has contact with durable legacy produced. this is a gift of enormous magnitude.”

She also sees Graham as something of a kindred spirit, whom she describes as a “magician orchestrating the masterpiece.”

Graham finds a deep sense of purpose working with the creative kids. “I see them as wonderful creators only lacking certain skill-sets their adult counterparts have.”

Because many of the young people he works to help are limited in their physical ability, energy and capability, he enjoys finding a way to help them use their creativity, something that is unconstrained by their circumstances.

“I’m interested in creating something stemming from their imagination and collected and lived life experiences. A book is a wonderful model for this kind of expression and it’s been around for centuries,” Graham explains.

His goal is to help young people who may never reach adulthood–something he is reluctant to even acknowledge out of respect for their hopes and dreams–to leave their mark on the world. “Their lives have just as much value as yours or mine, but because of age or experience, perhaps those are not as equally measured as their adult counterparts.”

“As humans, much of our validation of who we are comes through what we produce or how we show up in the world with relation to others. The ripples caused by the creative act help us understand our placement among people and ideas,” he explains further.

The vehicle for helping the authors to leave a permanent legacy holds appeal to Graham as well. “Children’s books also seem to retain a certain understandability by their readers, that of trying to distill the essence of life into a simple, relatable story.”

Waldron’s book about the bird, Cassidy, that learned to run rather than fly ends with her learning to fly in her own unique way, running and flapping her wings at once. A perfect metaphor confirming Graham’s vision that each and every life has meaning and purpose.

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

CEO Comes Full Circle Beginning And Ending In Poverty

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

The fleeting memories of her childhood didn’t make sense until her mother told her the story of the poverty they’d experienced when Sheryle Gillihan was just a toddler. Now a CEO serving people experiencing poverty, she says she’s “come full circle.”

As the head of Causelabs, a public benefit corporation that provides strategy, design, prototyping and software development services, she is focusing the social enterprise on reaching profitability while staying true to the mission and values of the business.

The company finished 2016 with $1.7 million in revenue, an office in Denver and 16 employees. She says the company has pared expenses, including the office in Denver to give the firm a fighting chance at 2017 profitability.

At the same time, she says the firm has doubled down on preserving its values. “Our mission is to create positive social impact. We do so through our partnerships and with our expertise in technology.”

Recently, the firm completed a project that demonstrates the vision of using technology as a force for good. The tool the team created supports municipal governments with a visually appealing, easy-to-use budgeting tool that members of the community can use to get a better feel for fiscal issues. It helps people see the tradeoffs that small governments face in choosing between lowering taxes and providing essential services.

Money is a key issue for Causelabs, too. The firm works with lots of nonprofit customers. The funds for their projects often come from grants that the company has become adept at winning. Gillihan likes the relationship that creates with nonprofit customers, making it more of a partnership.

Sheryle Gillihan in India

She joined Causelabs in 2010 as a project manager. One of her first assignments took her to India where she saw poverty that was unlike she’d ever recalled.

She discovered a passion for addressing poverty that she’d not fully recognized before. She quickly became fully committed to the success of Causelabs as a result.

“Technology is changing the world. and I want to be a part of using that technology for good.” She says.

Gillihan didn’t always appreciate her own connection to poverty. She has flashes of memory from her childhood, including being bathed in a tub in the front yard, eating only fish and rice and her mother selling bananas just to make ends meet.

She didn’t learn until her 30s that she was sponsored by the Pearl S. Buck Foundation when she was 18 months old and received life-saving medical care.

“It’s it’s through the philanthropy of others that I’m even here today. And so I’m glad to be to be a part of that for somebody else,” she says.

That experience helps Gillihan put the clients’ social impact objectives first in priority.

One of those clients is Civicus; Cecily Rawlinson, a change lead says she was looking for a firm to help develop a secure online space where activists and organizations could seek support.

“CauseLabs’ development approach put our community at the center of the design process, beginning with interviewing our regional teams to understand what they needed and how our platform could best serve them.”

“We ended up with a solution that our community owns, uses and one that responds to their needs,” she concludes.

That focus on the key issues and outcomes has Gillihan thinking about a new hire. She’d like to add a scientist to the team to help explain the fundamental issues that underly the problems the firm helps to solve. She points out that poverty is complex; she’d like to have a scientist help the firm better understand the neuroscience behind it.

However she does it, she is excited to be a part of the solution to poverty. “This just deeply rooted in me that I’ve come full circle and I’m finally where I belong and I’m giving back in the way that I need to be giving back.”

Over 1 million people have read my books; have you? Check out my free webinar exposing the three myths that impair and two keys for crowdfunding success.


Never miss another interview! Join Devin here!

Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

Founded By A 4-Year-Old, This Nonprofit Is Her Incomparable Legacy

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Alex Scott, the second child and only daughter among four children, must have been born with the genes of a social entrepreneur. Her resilience and her perseverance are the hallmarks of almost all successful entrepreneurs.

Born prematurely in 1996, she manifested her fighting spirit immediately, defying the odds and quickly earning the right to leave the hospital. Her mother, Liz Scott, now 47, says it was a glimpse of what was to come.

Before her first birthday, Alex was diagnosed with neuroblastoma, a pediatric cancer. She would battle the cancer for the rest of her short life, about seven and a half more years.

Liz Scott says, “Everything they had they threw at her.” Ms. Scott says, Alex demonstrated extraordinary strength through it all. No matter what, she could “find the joy in the day.” When she had a bad day, she would find a way to get through it with grace.

Watch the full interview with Ms. Scott in the video player at the top of this article.

The doctors tried all the conventional therapies, chemo, radiation and surgery. Nothing worked.

They started experimental treatments. They tried Metaiodobenzylguanidine or MIBG therapy that allowed them to perform a stem cell transplant, which works much like a bone marrow transplant to boost the immune system after being obliterated except that they use the patient’s own stem cells.

Even before it was confirmed by the CAT scans, Alex told her parents the therapy was working. In January of 2000, she told her mom she wanted to do a lemonade stand. Given the weather in Connecticut at that time of year—not to mention everything else going on in the complicated lives of a young family with a cancer patient—her mom put her off.

In June, Alex, now four and half years old, says, “I still haven’t had my stand.”

Annoyed, her mother asked, “Alex, what do you want to buy so badly that you need to have this lemonade stand?”

“I’m not keeping the money; I’m giving it to my doctors so they can help kids the way they helped me.”

And so, Alex’s Lemonade Stand was born.

Volunteers working at an Alex’s Lemonade Stand

By the time she was six, she’d raised about $30,000. Her parents were giving the money to fund neuroblastoma research to find a cure for Alex’s cancer.

When Alex found out, she said, “That is so selfish.”

“I wanted to say, ‘I don’t care!’ because I wanted a cure for my daughter,” Ms. Scott says.

Before she could get the words out, Alex said, “All kids want their cancer to go away. We should be giving money to all hospitals for all kinds of cancer.” That statement has defined the nonprofit’s vision ever since.

Alex’s Lemonade Stand Foundation has now funded research on 25 different pediatric cancers. Researchers apply for grants that are reviewed and scored by scientists. The projects with the best scores get funded, Ms. Scott says.

Alex Scott

Toward the end of her life, Alex knew the treatments had stopped working. She was going to have one last stand and thought if everybody helps, if everybody has lemonade stands on the same day as hers, we could raise $1 million. “She held on to see that goal met,” her mother says.

“She died knowing that she had done this and had accomplished this seemingly insurmountable goal and number,” she adds.

After Alex passed away, the Scotts weren’t sure they would continue the fundraising effort. Alex really was the driving force.

But other people kept supporting the cause. “That put wind in our sails,” she says. Other families were reaching out for help and companies were signaling a willingness to help.

“How could you walk away from the opportunity to help other children?” With that thought, the work of the foundation did continue. Ms. Scott and her husband Jay Scott are the co-executive directors.

Ms. Scott confesses, “When Alex said she was going to cure cancer with the lemonade stand, honestly, I thought it was cute and I was proud. I didn’t think it would make a big difference in the world of fighting cancer.”

That isn’t what happened. Big progress has been made, especially over the past ten years. She says she regularly hears from parents now who say, my child is in remission for one year, two years, three years. It is “indescribable” to think that Alex’s life has had that effect.

Ms. Scott remains personally connected to the families of children with cancer even as the organization grows in scale and impact. “It’s both inspiring and really hard because a lot of them do really well. And some of them don’t.”

Applebee’s partnered with the Foundation beginning in 2005. This year, the restaurant chain raised $1.3 million for Alex’s Lemonade Stand.

“Each year, more and more of our franchise partners and restaurants join our campaign with Alex’s, allowing us to make even more of an impact in many of our Applebee’s neighborhoods across the country, uniting team members and guests with a common goal of curing childhood cancers,” said John Cywinski, president, Applebee’s.

Franchisee Diann Banaszek shared her story:

While this cause has always been important to me, it was brought home in 2012 when my grandson, C.J., was diagnosed with Chronic Myeloid Leukemia at the age of 11. As our family went through our own battle, we came to learn first-hand the enormous difference that ALSF has made in families’ lives. My grandson finally defeated his leukemia, but ultimately lost his life in 2014 from an infection that resulted from his treatment. Throughout his illness, he, like Alex, was passionate about doing anything he could to help kids like himself in the future. We continue their fight to see the end of childhood cancer in C.J.’s honor and are proud to have the Applebee’s family fighting alongside us.

Miriam Matz, the mother of eight-year-old cancer survivor Ellie Matz, shared a similar story:

When my daughter, Ellie was diagnosed with cancer, there were many long nights in the hospital those first few weeks. I was beyond exhausted but too anxious to sleep. I remember googling “Philadelphia” and “Childhood Cancer,” hoping to get a sense of whether there was a community or resources that I could be reaching out to. Alex’s Lemonade Stand Foundation immediately popped up, and I sent them an email. I was immediately contacted and offered both emotional and practical support, such as connections with other parents, a binder for organizing treatment and related information, and information about navigating the childhood cancer world. Early in our cancer life, our family decided that one way to survive and to hopefully make some meaning out of what we were going through, would be to get involved in helping raise money that could possibly help others. We’ve been lucky enough to be involved in ASLF ever since… being a part of that community has made us feel so much less lonely, and given us a tangible way to feel that we are contributing to help others.

Ellie’s cancer is the most common, meaning that there are several treatment options should the cancer return. Her mother points out that for families facing a rare cancer, there may be only one standard treatment—for some rare cancers, there are none.

It is for these families that Ms. Scott is most optimistic. She thinks curing cancer is realistic. Today’s progress is smart progress, she says. We’re looking at immunotherapies, targeted therapies and precision therapies or personalized medicine. “That’s how it’s going to become possible for every child to have the possibility of a cure.” For the cancers with no treatment and no cure today she predicts the greatest progress in the years to come.

As Alex’s mom reflects on her daughter’s life, she says, “She had to be one of the strongest people I have ever known.” She adds, punctuated by the sorrow only mothers who’ve buried their children know, “You have to remember to be grateful for what you have in your life every single day.”

Alex’s legacy is incomparable. Not only has the four-year-old founder’s organization gone on to raise over $150 million since she started selling lemonade in the front yard, the tally of lives saved and extended is just beginning. By the end of what should have been her natural lifespan in another 60 or 70 years, childhood cancer may be no more threatening than a cold—because she was a social entrepreneur.

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Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

3 Players That Exemplify The Complexity Of The Impact Investing Ecosystem

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

Three impact investment players provide an interesting view of the broader impact investing ecosystem and how all the parts work together. Their approach helps to make capital more available to social entrepreneurs and investment opportunities open to more investors, including some ordinary investors.

The three include Impact Assets, New Media Ventures and Better Ventures. Impact Assets, a nonprofit asset manager holding exclusively philanthropic capital, serves as a hub in this part of the impact investing world. New Media Ventures and Better Ventures use Impact Assets in strategic but almost opposite ways.

Impact Assets and Donor Advised Funds

Impact Assets provides a place for donors to place philanthropic capital in what is known as a donor advised fund or DAF. As the name implies, funds contributed to a DAF are donations where the donor gets to advise on the final disposition of the funds. DAFs work like small foundations with fewer restrictions and generally more flexibility. Most DAFs don’t give the donor much influence over the investments, only the final charitable distribution.

Impact Assets is different. Built from the ground up to facilitate impact investments, donors also have significant flexibility in advising Impact Assets on the investment strategy. The only investment options available through Impact Assets are impact investments.

Rick Moss, Better Ventures

Rick Moss, founder and managing director of Better Ventures, approached Impact Assets to access some of the capital. Individual donor advisors or clients were given the opportunity to put as little as $25,000 to work in the fund through Impact Assets. Apart from Impact Assets, the minimum investment was $500,000. This works because only Impact Assets is legally an investor in the fund. The individual donors get their information from Impact Assets and are not recorded as investors in the Better Ventures fund. Moss doesn’t have to worry about the number of individual investors participating because he doesn’t have to deal with them.

Tim Freundlich, president of Impact Assets, says you don’t have to be Bill Gates to have sophisticated impact investment options like big foundations see. The nonprofit has about 850 DAFs with an aggregate value of $350 million under management. Hundreds of the accounts are in “the $5,000 range.”

New Media Ventures, led by Julie Menter, its principal, also operates as a 501(c)(3) charity. To create a vehicle for making impact investments and grants, it opened a DAF at Impact Assets. The investors in New Media Ventures get a tax deduction when they make the contribution to the fund and will not have the capital returned to them. New Media Ventures uses the money both to make grants to nonprofits it supports and impact investments in for-profit ventures it decides to back. They can do both via the Impact Assets DAF.

How Impact Assets Supports Both Better Ventures and New Media Ventures

Freundlich explains that Impact Assets does professional due diligence so that its donor advisors don’t have to worry about doing it themselves. For the clients, the risk is mitigated somewhat by the fact that the money is legally a charitable contribution and can’t be withdrawn by the donor for noncharitable purposes.

Impact Assets has a broad range of investments across all asset classes and across all geographies. The company can’t hope to manage all those investments directly. Instead, the firm has brought in 55 funds like Better Ventures to make direct impact investments. The donor advisors can choose whether they want their DAFs to invest and if so how much, subject to the constraints of minimum investment sizes.

Impact Assets also has relationships with about ten firms like New Media Ventures, where they have assets in donor advised funds from which they make impact investments, grants or both.

Tim Freundlich, Impact Assets

Freundlich says not only that Impact Assets was built from the ground up to facilitate impact investing but also that the democratization of impact investing is important. You don’t need to be an accredited investor to establish a DAF and to begin making investments. That said, he acknowledges that to participate in the most sophisticated investment options you may need an account with $200,000 to $2 million. Still, at that level, donors get access to investments that otherwise may be open only to institutions and individual investors with greater than $25 million in net worth.

In addition to the relationships with asset managers like Better Ventures, Freundlich says Impact Assets does make direct investments in social ventures but only on behalf of clients. Last month, he says, the firm made six such investments at the request of donor advisors.

Investment Strategy

Certainly, among the readers of this article will be some who are interested in the investment strategy for both New Media Ventures and Better Ventures.

Menter’s New Media Ventures developed her vision for investing after realizing that business as usual could solve some but not all the world’s problems. She recognized that our beliefs are influenced by the media we consume and so she wanted to invest in and support media companies and nonprofits that support her progressive view of the world. She’s raised $2.6 million to do so and has invested in “nine or ten” media companies.

She describes three buckets into which the firm invests or makes grants. The first is media, companies like Upworthy, Daily Kos and Blavity. The second bucket is what she describes as movements and the technology to support movements. Examples of investments in this arena include Indivisible, Swing Left and Sister District. The third and final bucket she describes as non-partisan civic engagement platforms like Vote.org and Turbo Vote.

“We’re interested in how we essentially bring the levers of power into the hands of more people and we believe that over time that will create a more just, environmentally friendly world,” she says.

She acknowledges that the media space is challenging. “It’s still not clear how you make money in media.” She hastens to add, however, that Young Turks just raised $20 million, suggesting hope for the media industry.

Moss’s Better Ventures begins with this: “Our basic investment thesis is that mission-driven entrepreneurs outperform.” He believes that passionate entrepreneurs will work harder.

He focuses on firms that have impact with every sale so “the bigger they get the more good they do.”

Moss indicates that they look to invest in companies that have at least two founders that are solving an important problem. He notes that the companies don’t need to have a lot of revenue or historical growth. Typically, they have an MVP or minimum viable product in the market before Better Ventures invests.

Message to Those Passed Over

Most people don’t get investments. Moss acknowledges that when he started the fund he expected to be writing checks all day and instead ended up saying “no” all day.

To the companies he likes but doesn’t invest in, he usually says, keep making progress. He finds they come to him too early, before they are ready for his investment. He encourages them to raise money from family and friends and from angel investors first.

Menter reflects on the difficult “power dynamics.” She says, “I have all the power yet the entrepreneur is actually the one who’s actually making the world a better place.” Motivated by this philosophy, she says she’s developed the ability to deliver bad news well.

She tries to give specific feedback, identifies gaps in the team, business model or marketing strategy that need to be closed. She also encourages social entrepreneurs to get creative with funding, recognizing that not everyone has a network that will support them financially. Some, she points out, finance a startup by winning lots of business plan competitions, others keep their day job to support the work until outside financing comes in.

Evolution of Impact Investing

Freundlich has been working in impact investing for 20 years. A lot has changed in that time with a great deal more attention and capital devoted to the space today. Of the momentum in the impact space he says, “I remember 20 years ago thinking that it was like watching icebergs melt.” He reminds himself—and the audience—that others in the sector had been there for 20 years before he got there.

He sees the entrepreneurs as the real heroes, echoing Menter’s remarks. “Every single one of these tenacious, crazy people who are living a dream, eating ramen soup with the extra job while they crowdfund their way into some amazing venture… deserve the most support and admiration.”

He also admires the successful entrepreneurs like Seth Goldman of Honestea who sold his business to Coca-Cola and now gives back by investing much of his capital in startups and by serving actively on boards.

Business Models

The three firms profiled in this piece participate synergistically and differently within the impact investing space. Impact Assets, a 501(c)(3) nonprofit, earns fees from the clients that contribute to donor advised funds, much of which is tied to the size of the portfolio.

Julie Menter, New Media Ventures

New Media Ventures gets donations, earns some revenue from events and service contracts, plus takes a percentage of the donations to the NMV Innovation Fund. The nonprofit operates with just three full-time employees with the help of some contractors and volunteers. Menter describes the firm as an impact first investor.

Better Ventures relies on venture capital returns for its operating revenue. The seed fund has $21 million under management. He notes that the operates are profitable today. Moss says the firm seeks to back those who can achieve impact on a massive scale using technology. He says, he like to give founders a safe place to admit they care more about doing good in the world than they do about making money.

These three impact investing players don’t encompass and represent the entire spectrum of activity within the impact investing arena but they do help to demonstrate the breadth of approaches, business models and the necessary collaboration that make it work.

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Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

 

For This Family, The Bigger The Problem, The Bigger The Opportunity

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

The Food and Agriculture Organization of the UN estimates that “roughly one-third of the food produced in the world for human consumption every year gets lost or wasted.”

Recognizing the journalistic injunction to avoid hyperbole, that truly is an enormous problem.

Justin Kamine, his brother Matthew and his father Hal determined that was just what they were looking for: an enormous opportunity. The Kamines have been developing infrastructure scale-projects since the senior Hal got into the cogeneration business in the mid-80s.

Justin Kamine joined me for a discussion about the company the family founded, KDC Ag, to tackle the problem.

The food waste problem also gives them an opportunity to address social and environmental problems they feel a desire to fix.

Food waste contributes to climate change as all the food that ends up in landfills required substantial energy to get there. Furthermore, the soil we use to grow crops is being consistently depleted; chemical fertilizers fail to restore all of the nutrients lost.

Justin Kamine, KDC Ag

Those chemical fertilizers, Kamine says, are overused. The first 50% of the nitrogen added does 80% of the good; the second 50% largely is lost to runoff, resulting in huge dead zones, especially in areas where runoff is concentrated in the Gulf of Mexico near the mouth of the Mississippi River.

Matthew Weatherley-White, Managing Director at CAPROCK, asked for comment, said, “Petroleum-based fertilizers mean, as Michael Pollan is fond of saying, that we are all eating oil.”

KDC Ag’s board of directors is comprised of luminaries, including former U.S. Secretary of Agriculture, Ann Veneman and philanthropist Howard Buffett.

Kamine cites Buffett as suggesting that conventional farmers need to be “much more environmentally sensitive and progressive.”

Six years ago, the Kamines invested in California Safe Soil, which has been working with the University of California at Davis to develop a process for converting waste food into fertilizer and animal feed. With that technology now commercialized, the Kamines formed KDC Ag to bring the technology to infrastructure scale with a goal of eliminating food waste over the next five years.

The new process mimics human digestion; they sometimes refer to it as compost 2.0. Waste food can be converted to fertilizer or animal food in three hours and is available for use the next day.

The KDC Ag process starts with virtually any supermarket waste food, including fruits and vegetables, meats and baked goods. The food pellets that result taste “like raisin bran,” according to Kamine. The pellets are fed to chicken and pigs. The Food and Drug Administration prohibits feeding the products to cows.

The liquid fertilizer can be added to a farmer’s drip irrigation system providing for precision agriculture that returns a broad range of nutrition to the soil. Food contains relatively little nitrogen so conventional farmers have KDC Ag add nitrogen to the liquid fertilizer. Organic farmers use it as it comes out of the system.

Craig Wichner, Managing Partner of Farmland LP, which invests in conventional farms and converts them to organic production, notes, “Using supermarket food waste to create fertilizer is completely philosophically aligned with organic production. They are taking a known good product (food at supermarkets), and closing the loop on the waste, converting it quickly and efficiently back into food for plants.”

The production process is sufficiently benign to be conducted in urban areas near the supermarkets supplying the food, allowing for an efficient backhaul distribution model employing trucks that deliver food to the stores to return to the farms carrying feed and/or fertilizer.

Because post-consumer food typically contains too much salt for a healthy soil amendment, those food wastes are not good candidates for the KDC Ag process.

Kamine was recently invited to participate in a clean tech competition hosted by the Prince of Monaco. Against 30 invited competitors, KDC Ag won the Clean Tech Equity Award.

What initially appealed to the Kamines, who report having $3.5 billion of infrastructure in their other businesses, is the scale of the opportunity. They hope to be operating in all 50 states within five years.

They earn approximately the same margin on both the feed and the fertilizer, allowing them to adjust according to demand without an impact on the bottom line. The margins are good enough, according to Kamine, to allow the company to invest quickly to scale up the business.

The KDC Ag process will reduce chemical fertilizer use, reduce carbon emissions, increase crop yields 10 to 40% and reduce water consumption all while reducing food waste at a potentially massive scale.

Weatherley-White’s reaction:

As an impact investor, I’m intrigued. Clear benefits to healthy soils. Equally clear benefits to landfill management and organic waste therein (including landfill-released GHG reduction). Using organic, composted fertilizer on crops is a fantastic benign-by-design chemical replacement. And the potential for scale is certainly compelling: the combination of food waste reduction and ag chemical substitution could be a massive opportunity.

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Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

The Role Of Entrepreneurship In Ending Poverty And Homelessness

This post was originally produced for Forbes.

You can download an audio podcast here or subscribe via iTunes.

“Social entrepreneurship has proven to provide impactful innovations for poverty alleviation ,” says Abby Maxman, President of OxFam America. Maxman was among a diverse group of people working on poverty eradication who contributed to a recent roundtable discussion on ending extreme poverty and homelessness.

The idea of ending poverty seemed absurd a generation ago. Today, the idea has been enshrined officially in the United Nations Sustainable Development Goals or SDGs as something the world should achieve by 2030. The roundtable participants addressed a range of topics, including a focus on how social entrepreneurs would help achieve the SDGs. Watch the 80-minute discussion in the video player above.

Judith Walker, the chief operating officer for African Clean Energy, which sells clean cookstoves that generate electricity, explains the need for social entrepreneurs to see problems as opportunities. “Energy costs are very high compared to income in the markets we deal with, meaning its either not realistically accessible or almost certainly not reliable. This should be seen as an opportunity to improve the goods and services available in order to relieve burden and create other options for those struggling with any or consistent income.”

Judith Walker

She adds, “Where we see the most potential for impact is actually by catalyzing this potential by having access to the most desperately needed energy.” What customers are able to do to improve their own lives with the tools inspires her to continue working.

Why Entrepreneurs Should Care About Ending Poverty

Entrepreneurs solve problems. Social entrepreneurs solve problems that matter. Eradicating poverty pegs the mattering meter.

Haiti’s former Prime Minister, Laurent Lamothe, is now an active impact investor, supporting social entrepreneurs in Haiti. Everyone benefits from helping the poor. “Poverty is not solely the problem of the poor, the same way as climate change is not solely the problem of one country. It has consequences and implications for all of us because we live in an increasingly open and interdependent world. Improving the prospects of the most disadvantaged will improve prospects for all. ”

Anne Kjaer Riechert, a recipient of a Rotary Peace Fellowship and social entrepreneur in Germany, founded the ReDI School of Digital Integration to teach refugees, mostly from Syria, how to code. She says our focus shouldn’t be on helping people living below an arbitrary income threshold but on the income gap itself. “Poverty is relative. It is not a question of income, but the gap between the ‘haves’ and the ‘have-nots. ’”

Anne Riechert

OxFam’s Maxman agrees. “Our research has shown that since 2000, the poorest half of the world has received just 1% of the total increase in global wealth, while the top 1% received 50% of the increase. Inequality is bad for us all – socially, morally, ethically, economically and politically.”

Why Social Entrepreneurship is a Key Part of the Solution to Poverty

Entrepreneurship—especially social entrepreneurship—brings value to the fight against poverty that other players—governments, corporations and non-governmental organizations (NGOs) don’t.

Alicia Wallace, president of All Across Africa, which sources handicrafts in Rwanda for sale in the United States, points out the speed of entrepreneurship. “Entrepreneurship can be harnessed to fuel positive, sustainable global impact much faster than any other form of social good .”

“I definitely see competition as creating an urgency for solving poverty and homelessness,” she adds, helping to explain why entrepreneurs can have faster impact.

Social entrepreneurs have a unique mindset, according to Arlene Samen, founder of One Heart World-Wide, a nonprofit that uses a grassroots approach to improving maternal and child health in Nepal and Tibet. “Social entrepreneurs never give up, they think outside the box and are willing to empower ‘others’ to help solve their own challenges.”

Carla Javits is the CEO of REDF, a nonprofit that invests in social enterprises that serve people who are often considered unemployable, including those who have completed jail and prison sentences, recovering addicts and people who have experienced homelessness.

Javits says social entrepreneurs are flexible. “By developing new models that cut across and blend the assets of various sectors without being stuck in orthodoxies about what each sector can or should do, social entrepreneurship opens up new possibilities to solve stubborn, seemingly insurmountable challenges.”

She also points out that social entrepreneurs think outside the box of either operating as a nonprofit surviving on donations and grants or being fully supported by revenues. Operating in that middle space creates opportunities for social entrepreneurs to leverage donor dollars with revenue generating services.

Effective social entrepreneurs relieve burdens by selling products that customers need to improve their lives. The profits from the sales create sustainable impact and provide returns to investors.

Mari Kuraishi, CEO and founder of Global Giving, a crowdfunding site for nonprofits serving communities in the developing world, points out that social entrepreneurs can experiment and then scale up. “Social entrepreneurship can play a big role in experimenting within smaller jurisdictions and communities to demonstrate how to overcome issues like poverty and homelessness.”

Mari Kuraishi

She also notes that such innovators may be able to attract resources even when government grants are not available. “When political will is missing, it’s possible–but by no means a sure thing–for social enterprises to get access to the kind of resource flow that might begin to make a dent.”

Javits agrees, noting that the use of hybrid solutions can reduce public costs with other benefits to the community and the beneficiaries. “Social entrepreneurs identify hybrid solutions that can reduce but not eliminate public costs, increase individual initiative, and generate much greater value for all of us.”

Haiti’s Lamothe cautions, however, that social entrepreneurship got its start decades ago and we’re still dealing with some of the same challenges. “Poverty is a complex issue and, since the advent of social entrepreneurship in the 70s, no social enterprise has been capable of solving poverty all by itself. After decades of social entrepreneurship, it becomes obvious to me, as to many others, that reducing poverty takes a concerted, cross-sector effort that focuses holistically and long-term on the problem.”

Social entrepreneurship is becoming a primary weapon in the war on poverty but it isn’t a magic bullet.

What Social Entrepreneurs Can Do to Help

Having established that social entrepreneurs have the ability and flexibility to contribute meaningfully to the end of poverty and homelessness, let’s look at some specific things that they can do that can help to end poverty.

All Across Africa’s Alicia Wallace says one key is to equitably divide the gains and benefits. In her model, the US corporate customers are not the beneficiaries—the artisans in Africa are. She expects the corporate customers to pay fair prices for the products that will in turn allow her to pay fair wages to the largely female workforce producing mostly baskets.

African Clean Energy’s Walker agrees, though her lens is slightly different. Her customers in Africa are her beneficiaries. She explains, “We need to consider the beneficiaries as customers, and treat them with the respect they deserve, rather than just as victims or poor. ”

The division of value among entrepreneurs, customers and investors “only needs to be a little more balanced,” she says.

James Mayfield, the founder of CHOICE Humanitarian, highlights the power of income opportunities for the extreme poor. “The key to the eradication of poverty is the creation of income and employment enhancement programs. Such programs are best stimulated by the poor themselves supported by organizations that facilitate social-oriented enterprises.”

Dr. James Mayfield

After more than 30 years in the field, Mayfield highlights the importance of empowering women with income. “The missing ingredient in many unsuccessful poverty eradication programs is the importance of women participating in village decision-making , especially their role in ensuring village leaders are willing to adhere to the villager-determined core values that emphasize behaviors showing among other things integrity, generosity, service, tolerance.”

John Hewko, the general secretary—the professional head—of Rotary International, who has built his career almost entirely in international development, says that the way people think about their entrepreneurial prospects is as important as their structural access. He cites a report that women in Latin America have lower confidence in their own abilities and have a higher fear of failure. Providing training and encouragement is as important as providing access to financing.

Mark Horvath, an advocate for the homeless and producer of the popular YouTube show Invisible People, points out one limitation that impairs the work of nonprofits. Well-funded Silicon Valley companies provide lavish coffee stations with fresh fruit while nonprofits provide access to a coffee station with an honor jar for people to contribute money to keep it supplied.

Mark Horvath

He sees the problem as limiting the effectiveness of nonprofit social enterprises because foundations are risk adverse not funding new ideas or allowing autonomy for a nonprofit to do what they do best.

Government’s Role in Supporting Social Entrepreneurs

One surprising theme that developed in the discussion among these advocates for ending poverty was the need for governments to structurally support social enterprises.

Riechert, the young entrepreneur who founded the coding school for refugees in Germany, says, “I would love that there would be more collaboration between the government learning from the social entrepreneurs and entrepreneurs getting more capital from the government to continue growing and scaling their solutions.”

Relatively small amounts of capital infused in a revenue-generating business can have the impact of allowing the enterprise to scale. The closer the business is to complete self-funding, the higher the impact of grants or patient investments.

She notes, too, after her recent visit to the Zaatari refugee camp in Jordan that government policies in the camps inhibit the ability of the people there to care and provide for themselves. The government doesn’t allow refugees there to engage in any entrepreneurship.

“I would love to see a big change because if refugee was actually seen as an asset and it’s an opportunity for the Jordanian people to make money and to have more cash flow into the country by having these entrepreneurs coming from outside. I think everyone would stand to benefit from it,” she says.

Eytan Stibbe, the founder of Vital Capital, an impact investor actively serving in Sub-Saharan Africa, has achieved remarkable scale, building tens of thousands of moderate-income housing units. He says, “What we found is that the most important issue is sharing in order to reach scale in working with the government. And we try to cooperate with the government so that the interests are aligned. That’s the only way we can reach scale.”

Katie Meyler, the founder of More Than Me, a social enterprise that partners with the government in Liberia to operate primary schools. “We can only reach the masses of people who live without [education] through a public-private partnership.

Haiti’s Lamothe, sees a different but still complementary role for government. Noting that governments in the developing world are often as resource constrained as their people, the government can be a sort of GPS guide to where the problems and opportunities for social entrepreneurs are.

Laurent S. Lamothe, former Prime Minister of HaitiWorld Initiative

The Examples of Social Entrepreneurship Reducing Poverty

To emphasize the point that the members of the roundtable are not approaching this topic from ivory towers but instead they come from the field, bringing on the ground perspectives, let’s look at some of the projects and enterprises they are running.

Riechert founded her coding school for refugees after 800,000 arrived in Germany in 2015, overwhelming government resources. She noted that even after they arrived, Germany had 51,000 open jobs in the I.T. field. The economy was constrained by a lack of available talent. So, she launched her school training refugees to fill those vacant positions. Her students quickly coded an app called Bureaucrazy to help other refugees navigate the German bureaucracy.

Samen, whose grassroots efforts in Nepal and Tibet have made dramatic improvements in maternal and child health, says her One Heart World-Wide is a beneficiary of a social enterprise in Australia called Thankyou that donates 100 percent of its profits to charities. The company sells water, body care, food and baby care products.

Samen says, “They set it up that, so when you buy the product it has a code bar and you can actually see where your money is going to be invested.” She would like to see this model grow and replicate.

Javits, whose entire business model focuses on funding social enterprises serving people who are at risk of homelessness, offers an example.

“Nonprofits that provide services to people experiencing homelessness have started new businesses in property management that employ their clients, paying them wages, and preparing them for long-term employment. By selling their services like a business, while hiring people who most companies would not give a chance, offering a more supportive work environment, and investing 100% of their ‘profits’ in their employees’ success and well-being, the social entrepreneurs who start these enterprises offer a more sustainable approach that gets to the root of the problem.”

Carla Javits

Rotary’s Hewko points to a microlending program supported by Rotary in the Esmeraldas Province of Ecuador. “Borrowers are organized into credit groups, and cross-guarantee each other’s loans. With credit officers working locally, the people who benefit – primarily poor women and youth – gain more confidence to start businesses, and are more likely to repay the loans. They also receive vocational, business and personal development training from NGOs including Rotary, FUDECE and the Grameen Cooperative, and SECAP, a government training organization.”

Haiti’s Lamothe highlights the work in a small fishing village in Haiti destroyed by Hurricane Matthew in 2016. Working with a group of nonprofits, including the Carlos Slim Foundation, Happy Hearts and Sean Penn’s foundation, have been replacing tools of the trade—fishing lines and boats—lost in the hurricane. They’ve also been helping the villagers get access to buyers, connecting them to restaurants and supermarkets. “Their revenues have gone from about you know $1000 US per month for the whole village to right now it’s ten times more.”

Impact investor Morgan Simon, author of Real Impact, offers up her favorite example. “One of the projects I’m a big fan of is the Working World, which provides finance for worker-owned cooperatives and they do so through a non-extractive model.”

She credits Brendan Martin, the founder of Working World, with coining the term “non-extractive financing.” He defines this concept as being loans that can be serviced entirely by the projects they fund with surplus left over. None of the existing resources of the borrower need be devoted to debt service.

“They’ve funded over a thousand loans with the 99 percent repayment,” Simon concludes.

Expanding Social Enterprise Concepts to the Broader Economy

As the group discussed the challenges of eradicating poverty, another theme developed: the need to get the broader economy to apply more of the guiding principles of social entrepreneurship.

Rotary’s Hewko put it this way, “I think the big question here is: How do we channel the private sector? That’s really where the money is—in the private sector—and the long term sustainable solution is vibrant economic systems and economies that work.”

Not only is it important to put people to work but there needs to be a greater social awareness employed by more companies.

John Hewko

He continues, “How do you inculcate into core business models the idea of social good, so social good becomes part of the core business model of a corporation, for example, as opposed to just for corporate social responsibility which we’re doing today?”

He then goes a step further and suggests that we need a mechanism to reflect positive social impact in share prices in the stock market. “That’s not easy but that’s the holy–that’s the Holy Grail.”

Hewko highlights the leadership of Paul Polman at Unilever and others who are “beginning to think very seriously about how we work to change core business models where social good becomes not just something good we do on the side but part of our everyday business.”

Speaking of poverty and homelessness, Hewko concludes, “These problems all need to be addressed in a cohesive fashion with private sector, civil society and government working hand in glove.”

Walker, of African Clean Energy, agrees. “I do believe that the business models of nonprofits and of for-profits and everything should actually become more similar more like each other.”

Concerns and Opportunities

Still, there are some concerns about the challenges ahead in eradicating poverty and homelessness.

Horvath, the homeless advocate who was himself homeless for a time, worries that nonprofits are often forced to follow money over mission and aptitude. “What I’m seeing in the homeless services sector is and I like to say it like this maybe I’m a farmer and I grow apples. I’m really good at it but all of the money is over in oranges. I’m not so good at oranges but I’m going to start growing oranges even though I can’t do it really well because I’ve got staff to pay and I’ve got an electric bill and everything else. So you have all these people just going after the money instead of really addressing fighting poverty and homelessness.”

The United Nations Resident Coordinator and UNDP Resident Representative in Kenya, Siddharth Chatterjee, explains the challenge and opportunity ahead for Africa.

“Africa, for example, will see its population double from the current 1.1 billion to around 2.3 billion by 2050. Over 70% of its population is less than 30 and its median age is 19. One hundred million new jobs per year need to be created in Africa to cater to this looming ‘youth bulge.’ It could prove to be a demographic dividend or a disaster.”

Chatterjee is an optimist, however. He says, “Africa is going to be the new market of the future and if we invest now, not only will we overcome poverty and homelessness but contribute to reduced fragility and instability, advance peace and economic growth and reduce the burden of economic migrants to the West and the US.”

We’ve Got This

Generally speaking, the group was optimistic about prospects for eliminating poverty and homelessness.

REDF’s Javits says, “ Something we can do in our lifetime is to end homelessness for the vast majority of the hundreds of thousands who have no stable home each night. ”

Arlene Samen

Samen, who has spent her career among the poor in Nepal and Tibet, says simply, “ It can be done. ”

This article, which is published originally for Forbes, will become part of a book with the working title Thirty Years to Peace.

#30YTP

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Devin is a journalist, author and corporate social responsibility speaker who calls himself a champion of social good. With a goal to help solve some of the world’s biggest problems by 2045, he focuses on telling the stories of those who are leading the way! Learn more at DevinThorpe.com!

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