Capitalists for Change

Amidst a recession, a new breed of entrepreneur strikes a balance between social and fiscal responsibility, forging a business model that is a catalyst for good and for profit.

by Geoff Griffin

On the one hand, Kerry Patterson says, “I have a problem when people go to bed hungry,” and describes his involvement in helping indentured servants in India to pay off their debts as “the most rewarding experience you can ever have.” But in the same conversation, Patterson doesn’t hesitate to say, “You have to tell people, ‘We’re trying to make a profit and we’re not ashamed of it.’ People have to come to grips with that.”

While those might sound like opposing viewpoints, or Patterson, those opposites meld together perfectly in the area of social entrepreneurship, where a for-profit business model is used to try to solve social problems, usually in the Third World.

“It’s a no-compromise solution,” explains Jessamyn Lau, an MBA candidate at Brigham Young University who is planning to pursue a career in social entrepreneurship. “You don’t have to be pigeonholed. You don’t have to be one or the other — either a capitalist or a Mother Teresa.”

From micro-loans to macro-movement

The beginnings of social entrepreneurship (SE) are generally traced to Muhammad Yunus opening Grameen Bank in Bangladesh in 1983 to make micro-loans of very small amounts, often less than $100, to people in the Third World who only needed small amounts of money to start individual businesses and use the profits from those businesses to repay the principal and interest on the loans. SE has since grown to the point where Yunus won the Nobel Peace Prize in 2006.

Along the way, the movement picked up people like Patterson, co-author of New York Times business bestsellers such as Influencer: The Power to Change Anything, Crucial Conversations and Crucial Confrontations as well as cofounder of Provo-based VitalSmarts, which works in the field of corporate training and organizational performance. He and business partner Joseph Grenny found themselves with well-stocked bank accounts, and as Patterson puts it, “We began asking ourselves how we would handle it as responsible stewards.”

What they decided to do next speaks to just how far the social entrepreneurship movement has come in a short time. Patterson and Grenny could have given the money to charity, or they could have rolled it into new business ventures to make even more money. Instead, they attended a weeklong workshop with Yunus and later helped to form Unitus, which does micro-financing. VitalSmarts also donates a portion of its profits to social entrepreneurship.

“It’s a business model that can actually carry itself,” Patterson says describing the SE philosophy. “You can help people create small businesses and earn a living wage. You can solve problems without having to constantly ask for funds.”

Baby boomers and MBAs

“There are several forces coming together in social entrepreneurship,” Patterson explains. “One is baby boomers and others with disposable income. With that money comes the opportunity to help, but there is also skepticism about traditional charities.”

Warner Woodworth, a BYU professor with over 20 years of SE experience, says he typically hears baby boomer businesspeople say things like, “I’ve got tons of money and I’m bored,” but when it comes to what to do with that money they also say, “I want to use it myself” rather than give it away. These are typically people who have experience in building a business, and find crossing over to social entrepreneurship an exciting challenge.

At the other end are people like Lau, an MBA student who did an internship for Ashoka, a leading SE organization, and found, “You see the world differently. You see solutions instead of seeing the status quo. The creative process comes out and you see something that hasn’t been there before.”

Lau is now planning to start her career in social entrepreneurship, having secured a job with the Peery Foundation that will allow her to work in the cutting edge area of helping philanthropic organizations better understand SE and become effective at investing in social ventures — sort of. “It’s not even that much in the box,” Lau says of describing her future job in such common terms, other than that, “I’ll get to use a lot of investment skills I learned in business school.”

Beyond the immediate future, “It validates this as a career path,” Lau says. “If other people ask, ‘Can you support a family?’ and ‘Can you be in an exciting area?’ I can say, ‘Yes you can, and I haven’t had to compromise anything.’”

Woodworth says that’s an attitude that is becoming more common. “These kids are a lot different than 10 or 20 years ago,” he says. He explains that in years past, students would enjoy doing SE projects while in school, then tell Woodworth they would be back to do more work with him — after they had gone off and made their millions in the private sector. Woodworth contrasts that mindset with the current crop of students, such as Lau, who see social entrepreneurship as the primary goal of their careers, rather than as a secondary goal to be pursued after becoming financially secure.

BYU: Hotbed of SE?

When looking at SE in Utah, one trend that comes to the fore is how often members of the LDS Church are involved either as donors or as people running programs. Patterson recounts how Yunus visited BYU and also had an audience with some of the top leaders of the LDS Church.

Brigham Young University chartered the Economic Self-Reliance Center in 2003, and runs a variety of programs through that entity. In 2007, Utah State University’s business school formed a project called “Global Enrichment,” which is funding business projects in an area of Peru so remote it can’t even be accessed by paved roads, where interns are also running business courses for the locals. Having SE programs puts BYU and USU in some pretty select company. The list of the other 10 universities in America which have such centers or programs reads like a list of, well, 10 of the best universities in America — Harvard, Yale, Penn, Columbia, Cornell, Stanford, Northwestern, NYU, Michigan and Duke.

“We are the No. 1 place in the country for social entrepreneurship,” Woodworth claims of BYU specifically and Utah generally. “We’re a leading hotbed of social entrepreneurship in the world.”

John Keller, a BYU graduate who started a social entrepreneurship business called “Worldwide Book Drive” with partner Dave Casteler, points out, “The student body at BYU has a high percentage of people who have been out there in other countries and served people. They know how good that feels, and they want to keep doing it.”
As an international studies major, Keller would attend forums where “it’s inspiring to hear what’s going on in the world. It makes you want to make a change.” But he also came away frustrated because, “Nobody could give you a road map of how to do it.” Social entrepreneurship turned out to be his GPS.

Woodworth notes that “there is the Mormon notion that we can make a difference if we’re proactive,” and traces Utah’s affinity for entrepreneurship clear back to a guy who first showed up here in 1847 and declared it “The Place.”
“We get that drive from the pioneers,” Woodworth says. “Under Brigham Young, they embraced new technology and were very entrepreneurial. We still have that legacy today.”

Social entrepreneurship may also be a good fit for Mormons because it allows them to bring together what could be two very different areas of their lives. On the one hand, church leaders and scriptures stress the importance of helping others. On the other, many Utah Mormons are politically conservative and see free markets as a better solution to economic problems than government intervention. Social entrepreneurism’s mix of capitalism and philanthropy allows Mormons to uphold their religious ideals without having to turn their backs on their political principles.

Although Woodworth maintains that many of the rich Mormons he has dealt with who invest in SE have “pretty radical” ideas on the subject of money, Patterson notes that social entrepreneurship is somewhat similar to the LDS Church’s welfare system in that both expect some performance from the recipient.

Doing it the right way

The sense of using harsh realities to temper do-gooder dreams can be found throughout the social entrepreneur community. While there is a win-win to be found in SE in terms of doing good works while doing well financially, Doug Jackson says such a situation can only be found when both sides of the equation are taken in to account. Jackson, president of Deseret International Foundation, a company that contracts with local doctors to help expand medical care in Third World areas, emphasizes, “There has to be a relationship between making money and doing charity. That’s the only way to sustain it.”
The attitude he takes when meeting with local doctors in high-poverty communities is, “Let’s make a deal. We want our partners to make money.”

Jackson cautions that, “Many times we actually do damage,” when trying to be charitable, noting, “Just because it’s important to us doesn’t mean it’s important to them. … I don’t think people realize how hard it is to give money away. You have to do it the right way.”

Into the future

As social entrepreneurship continues on through the 21st century, changes seem to be continuing at a breakneck pace. Young people like Lau and Keller feel that today’s young social entrepreneurs might be leaders of tomorrow’s green- and clean-tech revolutions because of their ability to see beyond the rigid classifications of business and humanitarianism. Patterson notes that in some countries, social entrepreneurs have created popular television programs that draw big ratings while also teaching literacy or addressing important social topics. Some people within large companies are acting as “intrapreneurs” and are helping their employers to find new markets in the Third World.

Even though he’s been involved in social entrepreneurship for two decades, Woodworth still claims, “I think it’s really still in the beginning stages. We’ve taken baby steps and now we’re taking bigger steps. It’s really being unleashed now.”

But doesn’t it still sound a little bit crazy to think that the world’s problems can be solved by people turning a profit? That’s fine with Woodworth.

“That’s the definition of a social entrepreneur,” he says with a laugh. “People think you’re crazy.”

Marketing for a Cause

Boost your brand while benefiting others

Although you might not yet have the funds to start your own organization as a social entrepreneur, you and your company can still be involved in helping to change the world through what is known as “cause marketing,” where you tie your company to a particular cause through a marketing campaign.

“Cause marketing is a little like eating a really great dessert and finding out from the waitress that it also lowers your cholesterol,” says Paul Jones, president of Alden Keene & Associates, a Utah communications agency that specializes in cause marketing. Jones, who blogs at causemarketing.biz, defines the topic as “a relationship that bridges commerce and cause in a way that benefits both parties.”

In cause marketing, a company conducts an advertising campaign where it lets consumers know of its commitment to a certain charity or cause. One example of such a commitment is when a company offers to donate to a specified charity with every purchase a customer makes. A well known example is Yoplait’s yogurt containers bearing pink lids. When consumers turn them in, Yoplait donates to Susan G. Komen for the Cure, a charity that works to fight breast cancer.

Cause and effect

Jones cites a recent study from Duke University that found that consumers will spend twice as much time reviewing a cause advertisement as other ads. The study also found dramatic differences in the amount of sales for products such as shampoo and toothpaste when the product was tied to cause marketing.

In “goodpurpose,” a study released by global PR firm Edelman in November 2008, 68 percent of respondents said they would stick with a company through the recession if they thought that company was supporting a good cause.

Utah case study: Jiffy Lube

One of the best known examples of cause marketing in Utah is Jiffy Lube’s connection with the Utah Food Bank. Customers who bring donations for the food bank to Jiffy Lube during the holiday season receive coupons for services. The relationship began a few years ago when the Jiffy Lube brand was being introduced to Utah, and “We wanted something favorable that would allow people to get to know Jiffy Lube at the same time,” says Franchise Owner and Controller D.J. Griffin.

Griffin points out, “People often drop off donations without coming in,” because, “If your car doesn’t need an oil change, you’re not going to get it done,” just because you happen to be making a donation. However, Jiffy Lube gives a thank-you card with coupons to those who just drop food off and, Griffin reports, “We see those redeemed quite frequently.”

Utah case study: United Way

United Way of Salt Lake has had impressive consumer and corporate response to its Live United Campaign. The campaign’s overarching premise is that we can facilitate change through actions such as volunteering with adult literacy programs, mentoring at-risk children and becoming more involved with our elected officials.

“The message conveyed by Live United is a large factor in why this campaign has been so successful,” says Deborah Bayle, president and CEO of United Way of Salt Lake. “It is a unifying message that invites all of us to come together and work towards one goal — making our community a better place to live.”

Bayle says the sponsors of the 2008-2009 Live United campaign — CHG Healthcare Services, Comcast, Questar, Utah Housing Corporation, Workers Compensation Fund and Zions Bank — all report that “the campaign has been a positive boost to their image in the community, as well as to the pride felt by their employees.”

“The message helped United Way of Salt Lake show many organizations how they can realize a culture of living united with their employees,” she says.

Choosing a charity

Given his experience with cause marketing, Griffin has a couple of pointers for other business owners who may be thinking of entering the arena.

“You have to ask yourself, ‘How good is the charity really?’” Griffin notes. “If you’re going to use your brand name with a charity, it should be one where the money goes to the actual cause and not to administration.”

Griffin also advises, “Find a charity you can have some ownership in. If you can’t be No. 1 with that charity, you might need to look at other options.” He points out that the goal is that when people think of Jiffy Lube, they think of the Utah Food Bank and vice versa.

Align well

Cause marketing often works well when there is a natural relationship between the company and the cause — Home Depot working with Habitat for Humanity, for example.

“Academic researchers have consistently demonstrated that a clear alignment between cause and sponsors tends to pay off best,” Jones notes, adding, “But it’s more complicated than that. … In the real world, you see a lot of successful cause marketing campaigns where the relationship between the cause and the sponsor isn’t exactly ‘strategic.’”

Either way, Jones warns, “If the consumer doesn’t understand the relationship between your company and the cause, you’re shooting blanks.”

Social Skills

Visit these Web sites to learn more about the social entrepreneurial movement, or to find ways in which you can join it.

• Ashoka.org Support this social entrepreneurial organization in a handful of ways, its cause, nominating social entrepreneurs who deserve recognition and support, and volunteering your entrepreneurial expertise.



• Selfreliance.byu.edu Sponsor a micro-credit initiative of Brigham Young University’s Economic Self-Reliance Center or become involved as a business practitioner or researcher.



• Socialedge.org Listen in to the conversation at this blog written by and for social entrepreneurs. It is a program of the social entrepreneurial Skoll Foundation, established in 1999 by Jeff Skoll, eBay’s first president.