The unofficial motto of business school students has long been "Learn, earn, and return"--learn how to be successful in the corporate world, use that knowledge to make boatloads of money, and then turn a portion of your wealth over to charity. But a new generation of B-school students and recent graduates are redefining the step-by-step model by doing all the steps at once. Sure, they aspire to monetary success, but working for the greater good is just as vital. Social entrepreneurship--the use of innovative business ideas and earned income to address social problems--lets them do both.
"In the past, there's been the assumption that you either make money or make a positive social contribution," says Murray Low, executive director of the Lang Entrepreneurship Center at Columbia Business School. "Creating a positive social impact is not incompatible with profitability. We specifically look at how you can start an enterprise that addresses a social issue but that is financially self-sustaining." At Duke, Fuqua also finds itself on an exciting cusp, working within a relatively new field that doesn't yet have a lot of "theory, rigorous research, or empirical evidence to support it," says Beth Anderson, lecturer and managing director for the school's Center for the Advancement of Social Entrepreneurship. This gives teachers and students freedom to figure things out for themselves and develop their own enterprises. Social entrepreneurs come in to discuss the process with students, "from identifying attractive opportunities to mobilizing resources to developing strategies and building organizations for lasting impact," Anderson says.
Two of the most successful and oft-cited social ventures are the Grameen Bank in Bangladesh and Chicago-based ShoreBank. Grameen revolutionized the concept of microcredit by awarding millions of $200-or-less, low-interest, high-payback loans to impoverished Bangladeshi women starting in the 1970s. ShoreBank set up the first community development bank in the U.S. in 1973, and has provided $1.7 billion in loans since then to low-income families and businesses in underdeveloped neighborhoods in cities including Chicago, Detroit, and Cleveland.
The impact of Grameen and ShoreBank inspires and encourages young social entrepreneurs like Jason Franklin, a graduate of the Robert J. Milano Graduate School of Management and Urban Policy at New School University, who learned how to put together a community development deal in his school's Community Development Finance Lab. This helped him to set up IAM LLC, a company that cleans up contamination and develops commercial and community spaces in inner-city neighborhoods. "I wouldn't be doing this if all I could do was make a living," Franklin says. "I can pay my bills and go to sleep at night knowing I'm doing something worthwhile beyond that. It's a lucky place to be."
Franklin isn't the only lucky one. Sara Olsen, a 2001 graduate of UC Berkeley's Haas School of Business, is a founding partner of SVT Consulting (based in San Francisco), which helps investors and entrepreneurs measure the social impact of both their nonprofit and for-profit enterprises. Before she started business school, she worked with ShoreBank on a social venture called Studio Air that trains inner-city teenagers in entrepreneurship through the management of a design studio. To Olsen, social entrepreneurship has always seemed a fairly obvious choice. "It made immediate sense," she says. "Capitalism, where the only thing you pay attention to is financial performance, is not quite right."
Olsen acted on her commitment to these beliefs as a student at Haas, cofounding and organizing, in 1999, the National Social Venture Competition, a contest where teams of B-school students and entrepreneurs from across the country presented business plans for social ventures. There were 67 entrants in the first year. By 2003, Columbia Business School, London Business School, and the Goldman Sachs Foundation were on board, and the national contest went global. The 2004 Global Social Venture Competition drew 129 teams from all over the world. The grand-prize winner, announced in April, was the Rotterdam School of Management's Eco-Friendly Agricultural Products. EFAP manufactures a biodegradable, water-absorbent organic fertilizer to help arid regions provide plant nutrition while conserving water. Vasu Bhat, leader of the EFAP team, says they've already received the go-ahead to import the fertilizer in Australia. Though Bhat is motivated by the promise of profitability, he's more excited about the tangible benefit he'll provide to environmentally underserved communities. "Once we did the analysis, we realized that for every one dollar [we make], the community would derive five dollars," he says. "We could quantify the benefits."
One of those benefits is that social entrepreneurship makes good business sense, especially for investors. Says Columbia's Low: "If you have two businesses with the same expected return, but one is socially and environmentally damaging and the other is socially positive, which would you want to invest in?"