Social Entrepreneurs: Compassionate Capitalists

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Lori Hanna roasts coffee beans with her host sister, Vanessa, in summer 2006.You might call University of Dayton senior Lori Hanna an accidental entrepreneur. The mechanical engineering major recently won the $10,000 top award in the University of Dayton’s business competition for her project to build portable solar-powered medical equipment sterilizers.

Her project has blossomed into a nonprofit technology assistance company, Salud del Sol, whose first business, producing a sun-powered medical sterilization device, could be a tremendous boon to health-care providers in remote rural communities.

“I’ve never worked with anything business-related before,” said Hanna. “It has gotten so much bigger than I thought it would be, but it’s so exciting.”

She is an example of the fast-growing culture of “social entrepreneurs,” people who apply technological and business skills to humanitarian projects. Social entrepreneurs bring creative management and marketing into the do-gooder territory long inhabited by social workers, activists and others trying to bring about change.

Hanna’s idea for medical equipment began when, through the University of Dayton’s ETHOS program (Engineers in Technical, Humanitarian Opportunities of Service Learning), she spent two summers in Totogalpa, Nicaragua, as a volunteer with local nonprofit Grupo Fenix. There she was assigned to test and promote solar box cookers, which use the sun’s energy to cook food.

A local leader learned that Hanna had worked for a Cincinnati medical device company and showed her a prototype solar autoclave used to sterilize medical instruments, which had been constructed several years ago by another student but never funded. Hanna saw “honors thesis” written all over it. She enlisted other engineering and business students to help her refine the product’s design and develop a business plan for its production. They tinkered with software that will collect weather data in order to determine how well a cooker will perform in a location on a certain day, entered the project into the University’s senior design clinic in order to refine the prototype, and created the prize-winning business plan.

More than tycoons

Although Americans have always admired entrepreneurs, those tenacious go-getters with a sixth sense for the next big thing, today’s 18- to 24-year-old “millennials” are more likely to admire -- or become -- social entrepreneurs like Hanna, who find their rewards in the intersection between doing well and doing good. You might call them compassionate capitalists.

They are a far cry from fat cat tycoons we love to hate, from railroad magnate James J. Hill to real estate wunderkind Donald Trump, from captain of industry Andrew Carnegie to style-setter Martha Stewart. But that doesn’t mean they aren’t on the cutting edge of business trends or that they lack interest in making money.

Lucas Weingarten, 31, is a DePaul University MBA student who has volunteered as a consultant to New Orleans nonprofits and has entered a business development competition there sponsored by JPMorgan Chase, the financial investment giant. His proposal is a green business park. “People wonder, ‘How can you say you are serving society and you are getting rich off of it?’ That might be a little myopic. Not that I want to get rich off it, but you absolutely have to be profitable.”

Chris Campbell, left, of GreenWerks with his business partner, Chad StauberChris Campbell, already a business owner at 22, also has his eye on that dual prize: making money while doing good. Campbell, a marketing and public relations major at DePaul University, just launched a business, GreenWerks, Inc., providing ecofriendly contractor and remodeling services in the Chicago area. “I really think going green is going to be the next industrial revolution for the U.S. economy, as it’s begun to be in the [United Kingdom],” he said. Campbell says he’s a born entrepreneur. #147;Ever since a young age, I have always been the one mowing the neighbor’s lawn or having the lemonade stand,” he said. He credits his studies, including ethics and a class in sustainable lifestyles, with helping to sharpen his focus to a business aimed at creating solutions “that are cost-effective and for the greater good.”

Catholic colleges on board

There is no question that entrepreneurship in general is a robust sector of the national economy. And social entrepreneurship, in particular, is as hot as Hanna’s solar box cooker.

“It is a whole new field,” said Fred Kiesner, who holds the Conrad Hilton Chair in Entrepreneurship at Loyola Marymount University in Los Angeles and has been a professor there since 1974. “It’s not as big as I think it’s going to get.”

Young people “have a different attitude about corporations and their role in society,” said Paul Buller, a professor of management and director of the Hogan Entrepreneurial Leadership Program at Gonzaga University in Spokane, Wash. “They have always been idealistic and wanting to change the world. I see a hunger for the social enterprise idea.”

Gonzaga and other Catholic universities are joining a host of secular schools in providing programs to support compassionate capitalists. In fact, three of the top 10 undergraduate programs in entrepreneurship for 2007 and five of the top 25 are Catholic colleges and universities, as are three of the top 25 graduate programs, as rated by the Princeton Review and Entrepreneur magazine.

Colleges and universities sponsor business competitions and offer substantial cash prizes, and connect students with mentors and advisers in the business community. They also launch specialty centers for social entrepreneurship and sponsor incubators for creative problem solving, with names like the Idea Clinic (DePaul) or the New Venture Lab (Gonzaga).

“Writing business plans is more than taking a pen to paper; it provided a great opportunity to take my knowledge and apply it to a real idea,” said Jordanna Chord, a 2006 computer science graduate of Gonzaga’s Hogan Program. Several of her business plans won first or second prizes in 2004, 2005 and 2006, and at least three had traction: an online mentoring program used by Spokane Community College; a publication focused on concerns affecting those who are homeless, taken up by AmeriCorps; and a game company. (Chord is now a software engineer with Google.)

Though she isn’t Catholic, Chord said the Jesuits at Gonzaga were “inspiring in the care they had for the community, and their incredible faith in social justice. This aspect of Jesuit education definitely has influenced my own beliefs and understanding of how I can make an impact.”

Just how to make an impact is exactly the question social entrepreneurs must negotiate; a key question for many is whether to go the commercial or nonprofit route. Noted Kiesner: “A nonprofit is no different from a for-profit business, it’s just that all your profits go back into the enterprise.” Nonprofit status may open the doors to funding sources from foundations, governments and other donors -- but usually also requires a business to conform to funders’ criteria and outcome measurements.

A commercial enterprise may offer necessary incentives, said Heather McCorker, an international relations major in Gonzaga’s Hogan program. She spearheaded a business plan for the Small World Filter, a project expected to launch this summer in Kitale, Kenya. Eventually as many as 800 home-use clay water filters a month may be produced, selling for about $15 each. She said she’s often asked why the filters aren’t distributed free.

“When somebody has to actually save and purchase, it is more likely to be used,” McCorker said, citing her research on the Kenyan marketplace. Besides, the exchange of currency stimulates the economy. “These countries need growth in the economic sector, more than aid.”

Let’s start a bank

-- Amy C. Elliott: Charlie WilcoxWeingarten, the MBA student, continues to wrestle with what social entrepreneurship is, exactly. Measuring financial success is easy enough, but social gains? “That is much more nebulous. Social entrepreneurs seek a different equilibrium,” he said.

-- Amy C. Elliott: Kelly DillonFor Charlie Wilcox and Boston College alumna Kelly Dillon, the “social gain” is as simple as putting faith in people other banks have spurned. Last November they, along with Mac Wilcox, Charlie’s cousin, opened CheckSpring in New York’s South Bronx, the first bank to open in that economically depressed area in 25 years. Though the South Bronx is just a quick subway ride from Wall Street, there was just one bank serving 100,000 people within a half-mile radius.

CheckSpring, a full-service bank, opened as a commercial enterprise in November 2007 a few blocks north of Yankee Stadium, in a hardscrabble working-class neighborhood, home to many immigrants from Latin America and Africa as well as native New Yorkers. Some are unemployed, some self-employed as construction or daycare workers, others work in health care or have city jobs. Today 600 depositors have accounts, and nearly as many use check-cashing services, which CheckSpring offers at a better rate than other financial institutions in the area. CheckSpring’s nonprofit arm, Ariva, provides tax preparation services and financial education classes.

CheckSpring, a full-service bank serving the low-income residents of South Bronx, N.Y.Dillon and Wilcox believe that by offering the products their customers want today such as check-cashing and wire transfer service -- used often by immigrants sending money to families back home -- they’ll build trust and open the doors to long-term financial empowerment.

“People make assumptions that if you are low-income you’re dumb about finances,” said Dillon, who left Morgan Stanley in 2002 to help open Ariva and work on the plan for CheckSpring. “They are very savvy about cash flow.”

-- Amy C. Elliott: Myra Tejada, a CheckSpring customerA former vice president of strategic business development with Citibank, Charlie Wilcox and Dillon, also a former Citibank employee, met several setbacks getting CheckSpring off the ground. They applied for a bank charter assuming they’d secure such investors as larger banking institutions, only to meet with skittish check signers who saw a Bronx bank as a big risk. After five months the charter expired, so they had to start again. This time, they lined up funding first, from a wide group of investors including two successful immigrant businesspeople who wanted to support a venture that appealed to their personal and business values.

Dillon said their dream is to expand. “We want to prove the model, work out the kinks -- then blow it out elsewhere by purchasing check-cashing stores and use their storefronts,” she said. This is something Wilcox predicts will take at least five years.

“Ultimately we want to show that profitably, and in collaboration with our customer base, we can change the way financial services are provided in moderate- to low-income neighborhoods across the country,” Wilcox said.

Faith plays a role

Sam X. Renick and his sidekick, Sammy Rabbit (AKA Mark Celio), encourage students and their families at Monte Vista Elementary School in Santa Ana, Calif., to get in the habit of saving money.Social entrepreneurship is by no means the sole purview of the 20-something crowd. Sam X. Renick, a 1980 graduate of Loyola Marymount, isn’t exactly a member of the millennial generation, but he’s engaged interns from his alma mater to help build his business, It’s A Habit. Its mission is to teach children to save money and take responsibility for their choices through products such as books, videos and school appearances.

Mark Celio, a more recent graduate of Loyola Marymount, spent two years as an intern with Renick’s company, helping with marketing, building a database and performing before school audiences as “Sammy Rabbit,” a character Renick created.

Renick decided to bring his values more directly into the marketplace while working with Fortune 100 companies and as an independent consultant. In his personal life, he embraced his parents’ example of thrifty living and was surprised to discover through his work that few people “lived below their means” as he’d learned to do. In his consulting work, he heard many clients regret that they didn’t know how to handle their money better.

“I reflected on this and realized this was my life’s mission and purpose,” Renick said. He was raised Catholic, and though not active in his parish now, he retains a deep affinity for the Christian doctrine of free will. “That really ties in with what we are encouraging kids to do in terms of choice-making. Choices have consequences. In my mind that was a big part of my Catholic training.”

Celio continues to embrace his mentor’s entrepreneurial and community spirit. As owner of a franchise of Club 50 Fitness, a health club for people over 40, Celio donates 5 percent of his company’s profits to community organizations and volunteers with the St. Vincent de Paul Society.

Hanna, the University of Dayton senior, also finds her Catholic background merging with her goals as a social entrepreneur. Along with the $10,000 first-place cash prize she won for her solar-powered medical equipment sterilizers, she counts another reward: the maturing of her faith.

When she returned to Dayton after her summer in Nicaragua, Hanna joined a lay Marianist formation team, a community of students who share their faith, pray together, and agree to live according to Marianist values for one year. The Society of Mary (or Marianist order) sponsors the University of Dayton.

Hanna plans to return to Nicaragua this summer with two of her teammates to begin organizing local women who will eventually run the solar-powered sterilizer business. Hanna’s team will train the women to use Excel and Word software, interview prospective suppliers and hobnob with potential supporters. These include corporations with business interests in Nicaragua, such as Chiquita Banana. Then she plans to come home and finish her final semester of college, graduating in December.

“I have never been anywhere with such a strong sense of community,” Hanna said of the rural Nicaraguan community. “Many people have this whole idea that faith is something that is only yours, [and] you keep it to yourself. Here, the whole concept of a community of faith is important.”

Not every social entrepreneur is as clearly motivated by her faith as Lori Hanna, but most share similar goals of creating a more sustainable and just world where people have access to basics such as clean water, food and shelter, as well as education and economic opportunity.

To have big dreams may be audacious -- but to paraphrase a presidential candidate, therein lies hope for lasting and meaningful change.

Kris Berggren writes from Minneapolis.

Additional online resources

The Skoll Foundation
www.skollfoundation.org

Ashoka
www.ashoka.org

Idealist.org
www.idealist.org

National Catholic Reporter May 30, 2008