Dr. O on New Money

Last week I attended a site visit to the Achuwal village of New Jerusalem in the Peruvian Amazon, about 4 hours out of Iquitos, Peru, by car, boat and jungle trek. The project has been in operation for 15 years and is designed to give the village of 120 -150 people a sustainable cash income to ward off the illegal loggers and poachers and to retain their traditional culture while accepting those aspects of modernity that are compatible with their way of life. The lessons learned by the project’s founder and director are very valuable for anyone contemplating or operating a social entrepreneurial project in a remote area with traditional people.

The village is very remote: at present there is no electricity, running water, communications, etc. It is reachable by trekking through the jungle for an hour from another village on the Rio Yarapa, which is itself a small tributary of another tributary of the Peruvian Amazon, or by a very long, convoluted boat ride on a small tributary of the Rio Yarapa.

Our party of 7 people returned later last week, but photographs and reports are being downloaded this afternoon from various cameras and computers as there is no email or other communications from the village. Stay tuned to this space during the week for detailed reports on the agriculture projects, the Woman’s Art Collective, the struggle to gain title to the tribal land and the work to pass on the language and ritual of the Achual people to the next generations.

The Indian microfinance firm SKS Microfinance, one of the biggest players in social enterprise microfinance,  has planned an IPO for August 16, hoping to raise $347 million for a 21% stake .  As of today, the IPO is oversubscribed by investors who stand to make significant profits from the former non profit enterprise. Investors include George Soros, Sequoia Capital and Vinod Khosla – all major for profit players.

Also involved is the Seattle-based microfinance group, Unitus, which has a $1.5 million stake in SKS Microfinance and will profit from the IPO.

But Unitus recently began withdrawing from the microfinance world, citing the $50 billion in microfinance capital available to 150 million poor people around the world as a reason.

It's next steps are unclear, as are the disposition of its non-profit funds.

Other large NPO players still in microfinance include  ACCION, Opportunity International and Grameen, but commercial banks are now the major players in many countries since the Mexican microfinance organization Compartemos, changed to a FPO  and sold over $300 million of shares in an IPO, making its investors wealthy.

So, is small, non-profit  social enterprise microfinance dead?  Or is micro finance so commercial that social entrepreneurs should look elsewhere for tools to create enterprises in developing areas?

I think you have to take it case by case and adapt.  M-PESA, the mobile phone-based money transfer system launched  in Kenya by Safaricom and Vodaphone,  may be a new model: public-  private partnerships (Safaricom was originally a government department) that empower millions of small enterprises.  M-PESA now serves 9 million people, many of  whom have started small businesses renting out  cell phones in a village.  Others use the phones for market information and cash transfer for tiny businesses.  Local social enterprise organizations can provide small loans to help start businesses that use the M-PESA system as a tool that enables operations that were previously difficult or impossible.

Another model may be the Nameste-Direct Foundation (NDF), a small non-profit U.S. micro-lender operating in Guatemala. (full disclosure, I am on the Advisory Board).  When it became obvious that big commercial banks were flooding Guatemala with micro loan funds and that local MFI's preferred the loan volume generated by commercial banks to the personal relationships fostered by small NPO lenders, NDF  tested a new model.  It began to shift away from actual lending and towards providing the business development services it has always provided to its clients to the MFI's clients – helping to reduce the higher default rates that the commercial banks sustained.  Part of this is an annual Guatemala Businesswomen's Conference that NDF produces each year  - something a bank like Citibank would not think of.

I think the privatization of  large microfinance lenders is a signal to small social entrepreneurs to innovate:

· find ways to use systems created by private enterprise to foster small business development

· provide expertise in relationship building and business development to MFI's as a way to ensure higher success rates and lower default rates

· retain some micro lending capability to use in cases where a loan is an appropriate part of a business development package

· foster lending circles that bypass the high interest rates of the commercial micro lenders

· teach local people about responsible borrowing and the dangers of taking out one loan to pay another

· step up efforts to develop and fund local technologies and businesses based on them

These kinds of innovations and responses may now have a higher appeal to donors than simple micro lending.  They are more personal, they push back against the privatization of micro-lending – something donors are likely to appreciate – and they foster innovation which allows NPOs to differentiate themselves from the commercial banks and from each other.

Follow Dr.O on his radio show, The Fairness Doctrine, M-F 1- 3 pm EST www.cyberstationUSA.com 

Would you use the "F" word to raise funds?  Probably not, and you certainly would not post a video on your website that has children saying the  "f" word.  That would be a recipie for not only a failed fund raising drive, but a lot of angry donors. 

Or would it?

The environmental NPO UnF--kTheGulf.com did just that and raised money, awareness and lot of media.  The organization used  preschoolers in an F-word filled viral video that is rapidly raising funds for Gulf recovery efforts through online T-shirt sales. The group's unapologetic use of profanity by preschool and elementary children in the video is part of their strategy to demonstrate the depth of the environmental and economic crises facing the Gulf as a result of the BP blowout, 3 months ago.

UnF- -TheGulf.com's website features the expletive-laden video and pages that enable visitors to buy t-shirts, pins and stickers.  The site supports 4 environmental and justice organizations working on gulf recovering and litigation against BP.  None of the organization are part of the site, however and none approved the video.  Visitors can designate funds to the organization of their choice.

 Predictably, conservative organizations have denounced the site, giving evn more press and reach and ratcheting up sales. And predictably, the organization has received hundreds of angry emails and has generated hundreds of both positive and negative comments.  As of last week the site had recorded 50,000 hits in its first  two weeks. In response to conservative complaints, the organization released a second video with more children and more profanity and launched an "F-Bomb" campaign on Facebook and Twitter with the tagline, we are going to clean up the Gulf, one dirty word at a time.

 This is not for everyone, or even for most NGO's. But it is a clever tactic to use when dealing with an outrage or situation that has generated a great deal of public anger.  The use of profanity to describe the outrage – child soldiers, mass rape, sex slavery- models the anger than many people feel but don't express.  Anger can drive donations and support more than any other emotion, which is what UnF- - TheGulf.com  is relying on. A book on using profanity to raise money and awareness, "Crude Awakening: Viral Video Uses Bad Word for Good Cause, Drops $&%&*! Bomb on Gulf Oil Spill, has been released about the Gulf campaign.  Expect to see more of this kind of edgy fund raising.

 See a funny censored version of video here: http://www.youtube.com/watch?v=mTbZLdEpj8A

Follow Dr.O on his radio show The Fairness Doctrine, at www.cyberstationusa.com M-F 1 -3 pm EST

Follow Dr.O on his radio show, The Fairness Doctrine on www.cyberstationUSA.com

M-F 1 to 5 pm Eastern.

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 The processis win-win.  Teachers find donors for their supplies (likely parents in the distict), the captured profits that formerly went to distributors now funds iLoveSchool.com's donor matching process, the kids get supplies and the teachers no longer have to pay out of their pockets. Teachers can choose supplies from SSD's catalogue or create custom WishLists from other sources.

What Hall has done is what social entrepreneurs are famous for - finding profits for social enterprises where no one else sees them.  By creating a supply company and capturing the profits that previously went to to others, he can get teachers the supplies they need and fund the operations - all online.

Hall has launched  iLoveschools.com and raising funds to get the machinery going.  If you would like information, to volunteer or to invest in SSD, LLC, contact him at jhall@iLoveSchools.com. 

Follow Dr.O on his radio show, The Fairness Doctrine at www.wdisam.com M-F 3  to 5 pm Eastern or download the podcasts.

 Yaniv Rivlin, a Sauve Scholarship student and social entrepreneur has launched a new search engine monetization tool to compete with existing sites like GoodSearch and Google Adsense in the non profit marketplace. The site, Comtribute.com, offers simplicity, flexibility and a higher percentage of the search revenue sent to participating NGO's. It is still a beta and has a number of  kinks to work out, but social entrepreneurs looking for ways to utilize the internet for ongoing revenue streams should check it out. Yaniv may have put together the search monetization puzzle pieces in a way that fits with NPO's.

The BP blowout is decimating the ecosystem and economy of the Gulf of Mexico. North and South Korea are inching toward war. A naval battle may be shaping up in the Middle East . Global warming continues apace. The Eurozone economy is threatened by Greece and other's lined up behind it. The US stock market is on the way down while employment struggles and people are still losing their homes. Haitian rebuilding has stalled. Somalia continues its slide into a warlord warfare state. Mexico's drug gangs continue their wars despite troops arrayed against them.

• Don't fatigue them more. Don't invoke a crises. Focus on the future and the benefits of your project and how they will create a better future. Even if you project deals with crisis response or prevention, focus your message – especially the visual message in photos and video - on the positive change and the entrepreneurial excitement. Donors see plenty of suffering on the news; give them some hope in your appeal.

• Emphasize and qualify the difference their money will make. Many donors are throwing up their hands and saying these crises are so large and there are so many of them, I couldn't make a dent in them if I were Bill Gates. So offer them a very specific, tailored investment with very achievable (but optimistic) outcomes that they can see.

• Don't ask for money - offer investments. How many times have you heard this? A lot, and usually "investment" is developmentspeak for "donation". But not so if you are a social entrepreneur in a crisis environment. Charitable IPO's that focus on problem solving but in a positive way, investments in hybrid businesses like Hives for Lives, or a breakthrough idea that does deal with negatives, but in an exciting and unique way like Benetech can sidestep donor fatigue.

• Does not see itself as ready to retire and is looking for new challenges
• Is sympathetic to entrepreneurism and often its members were successful entrepreneurs
• Has a higher percentage of paid mortgages, savings, and investments (although the crash of 2008 diminished these) and disposable income
• Often has finished paying off its own and its kids' college expenses
• Volunteers in high numbers and donates more generously than younger demographics because it has more money to give.

• The Boomer generation does not text donate; they use smart phones in large numbers, but do not engage in online cash transactions to the degree 20- and 30-somethings do
• he Boomer generation is on social networks, but usually for family or business reasons and does not engage in social network giving to the degree younger demographics do
• Responds to email and snail mail solicitations
• Gives where it volunteers
• Often gives through planned giving, stock sales, bequests
• Get swamped with donor calls from alumni associations, hospitals, boiler rooms

• Don't treat them as "older" – and less "hip"; they often know more than you think and sometimes more than you know.
• Cultivate – bringing them on as volunteers is an ideal start
• Draw on their experience in management, technology, sales
• Put them on your board- they have valuable connections and good experience and are very reliable..
• Offer them the option of stock sales, bundling donations from other Boomers,  giving through a trust
• Don't expect them to hang out with you at a bar or on Facebook. They are often very goal-oriented – get the job done now. (which is actually kind of a relief for a fund raiser)

I have written in this space in the past about mobile giving, and the barriers to using it for most NPOs – high entry costs and expensive fees.  However, PayPal has teamed up with Apple. RIM and Google/droid to create a way around the text giving barriers with its own short code and apps.  They have launched m.paypal.com an online giving site that can be accessed through a mobile phone web browser or  aps for the iPhone, Blackberry and droid phones. 

 The service requires three things:

• Your organization has a PayPal account
• Your donor or prospective donor has a PayPal account
• Your prospective donor has an iPhone, Blackberry or droid phone(for texting, any phone with sms text capability will work).

If your donor has a iPhone, Blackberry or droid and downloads a PayPal app, money can be sent quickly and easily without texting.

Here's how it works.

By text: You send a request to your donors by text, email or by advertising it at an event or online with the instructions to donate by sending a text to 729725 (PAYPAL).  The text should  specify the amount of the donation and your  phone number or email address.  For example, email a donor: 

Help this woman start a business.  Send $50 to 212- 5551234 or to aname@domain.com nd add a note at the end of your text saying "microloan for Guatemala"  

By app.  Send an email or put in your newsletter or new member welcome note a request for holders of iPhones, Blackberries or droids to set up a PayPal account if they don't have one and download the PayPal app.  Those that do so can then participate. Send an email, text or advertise at an event for them to:

• Run the PayPal app on their phone
• Highlight "Send Money"
• Enter your email address
• Enter the amount
• Enter the message (i.e.,"microloan")
• Hit "Send"

There are no fees.  The service is free when the money comes from PayPal balance or bank account. PayPal charges 2.9% + $0.30 USD when the money comes from a debit or credit card or PayPal Credit.  You decide who pays this fee.

You can get creative with this, running text or online contests uing the message bar in the app as an entry – "tell us in the message bar how many people will donate and the person closest gets a a guided tour of the village where your money is put to work, or a free Green Day download, etc. Get crazy and go for it.

When I first met John Younger a decade ago through our kids he had the social entrepreneurial bug real bad.  John is a large, trim, well-muscled man with curly hair and a big smile –easy to like and make friends with.  And he needed friends because he had just launched a social enterprise and his main investor was his Visa card.

After working for years in high tech, John and his partners had quit and developed a digital platform that enabled companies, foundations  and NGOs looking for skilled people to easily find them.  The platform quickly and cheaply linked people with skills to employers and put them together for a successful interview – a sort of Kiva for HR Directors and job seekers.  His vision was to create a company with this platform that not only got people working quickly and saved employers millions of dollars, but that measured its own success on its impact on the community, the environment and the quality of lives of its employees.

A decade later, Accolo – the name of John’s company- has offices in new York, Chicago and the San Francisco Bay area and serves national and international organizations and businesses across America.  Acollo’s walls are covered with awards for being a best place to work, a best run company and letters from non profits that it donates cash and time to.

John’s muscles come rowing – he was on the US National (Olympic) Rowing Team – and the energy he applied to rowing he also applies to his social enterprise – never stopping the quest for new ways to give back.  His latest social enterprise is a system that uses his platform to generate donations for non-profits from his company's success.   Accolo does this by joining forces with NPOs to dramatically increase the number of jobs launched through Accolo and sharing some of the increased revenue with its non-profit partners.  

How much?  Accolo will pay a partner NPO $200 to $1000 per job launched up to 5 jobs per company, with theoretically no limit on the number of companies. 

  Here is how it works:

• Accolo partners with an NPO or school with an active community made up of members or parents or volunteers.
• Members of the NPO's community who work in medium to large businesses are encouraged to ask their employers to use Accolo to support its recruiting new employees. ("support" is much more than recruiting - it involves all the steps needed to bring the right company representative together with the most qualified and best fitting potential employee).  Even in poor economic times most companies do some hiring to deal with turnover and as the US economy improves, hiring will expand dramatically.
• When the job is launched in Acollo's system it is tagged with a code for the participating NPO;  the code directs a payment to the NPO from Accolo's revenue.
• For every job launched, Accolo will donate between $200 - $1000 to the NPO. In addition, If the company signs an annual agreement, Accolo will give the NPO 5% of the contract value which can range up to $ 1million for a very large company.

Since many medium and large companies spend $500,000 or more a year on finding and hiring new employees, the contracts can result in substantial donations to participating NPOs.  Accolo's platform cuts advertising, recruiting, interviewing and hiring costs by 25% - 30%, so the company saves money. This makes the NPO  program a win-win – the company saves money,  Accolo gains a client and the NPO gains income.   

Accolo is now piloting the process with a local school, Glenwood Elementary, and has already sent the school $3000 for jobs launched.  The Glenwood beta test is partnering with school parents who engage their employers, but the Accolo system will work with any NGO or NPO with an active community.After the Glenwood beta, Accolo will determine how best to scale up.

The Glenwood Elementary school is Accolo's first test of the system, but so far the results are good.  Interested NPOs can log on to the Glenwood Beta site and see how it works and contact Accolo if your organization would like to explore a partnership.  John notes that the US economy created 290,000 jobs last month and if those had been Accolo partner jobs, Accolo could have given $290 million in fees to partner NPOs. That's his dream.

www.accolo.com/glenwood

The worst environmental disaster in American history is unfolding in the Gulf of Mexico. A deep water drilling rig operated by Transocean under contract with British Petroleum exploded last week and sank in 5,000 feet of water. The drill string sheared off and the well head began spewing hundreds of thousands of gallons of oil into the Gulf the standard blowout prevention equipment installed at the wellhead did not work and BP and its contractors chose not to spend the money to install backup systems. They told the US Federal government in the drilling plan filed last year that there was little or no chance of the well leaking oil.

Follow Dr.O on his radio show, The Fairness Doctrine.  www.wdisam.com  Monday thorugh Friday 12 -2 pm Pacific and on podcast

• global – they come from over 50 countries and work together as if they were sharing a classroom and a lunch table every day
• organized - they arrive with concrete plans, often business plans, to launch projects, organizations, companies that will have scaleable social impact. One young entrepreneur shared plans for a company that would enable NGO’s to raise funds from online searches – his business plan calls for a build out at $10 million a year in 5 years.
• tech savvy - they see no technological boundaries. Last year the CGIU awarded a grant to a project that designed a soccer ball that absorbs energy to light a home.  One project honored by President Clinton today seeks to build a 200 MPG car.
• multidisciplinary – students and graduates came from all majors including engineering, business, political science, art, history - it is all part of the mex
• woman powered - a striking number of the participants are women; at one workshop I attended 2/3 of the attendees were women and the plenary sessions are was a sea of pony tails and headscarves.  The men are here, but women have obviously emerged as the force in youth social entrepreneurism.

Because there is only one of me here, and I am also a speaker, I will only be able to blog from my session, the plenary sessions and the exposition booths. The CGUI webcast the entire event and will post video, which I will post links to when available. 

The CGIU looks very broadly at “social entrepreneurism”, and includes traditional NGO’s supported by foundations and working in areas of peace, human rights and education. In my conversations with the youth, they all got it – they saw themselves as social entrepreneurs and many used those words on their posters and handouts even if the projects they are launching look like traditional NPOs whose mission is social development but whose methods do not strictly include business methods.

EDUCATING AFRICA's Pan-African Awards for Entrepreneurship in Education 2009, organized by  Teach a Man to Fish, announced the top three winners earlier this month. They were Educate!, House of Nations and Mama Zimbi. Educate! will receive a $10,000 prize and the second and third place winners will receive $5,000 prizes. Twenty-three runner-up entries will each receive a $1,000 country prize. Details of the contest can be found at the AidWorkersNetwork.