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Keynote speaker Matthew Bishop called for public-private collaboration to spur entrepreneurship. Bishop, U.S. Editor for <i>The Economist</i>, spoke Oct. 8 at the Kellogg School's Innovating Social Change Conference.

Matthew Bishop

Kellogg conference ‘redefines’ social impact

Leaders increasingly seek to make a profit and a difference; cross-sector partnerships seen as key

By Ed Finkel

10/13/2008 - Social entrepreneurs should take center stage at a time when the public and corporate sectors are reeling from the global financial crisis, and social problems like disease and poverty continue. But to do so, cross-sector partnerships are vital, said panelists at the Kellogg School’s Innovating Social Change Conference, held Oct. 8 at the James L. Allen Center.

Matthew Bishop
Jessica Flannery
Billionaires like Bill Gates, George Soros and Warren Buffett are more numerous than ever, totaling 1,200 as of July, according to Forbes magazine, said Matthew Bishop, chief business writer and U.S. business editor for The Economist. The author of the recent book Philanthrocapitalism: How the Rich Can Save the World, Bishop shared his views during a keynote address at the conference, which marked its ninth year with the theme “Redefining Social Impact.”

He wryly noted that his book celebrating capitalism’s success in helping to solve social problems arrived on shelves just as the markets melted down. “People have said to me, ‘So much for this great period of wealth creation,’” Bishop said. “I suspect we’re going to get through this crisis. And the people who will survive best are the 1,200 billionaires. … The need for philanthropy is going to be greater.”

Given the fiscal challenges that will likely limit government spending to address societal problems, social entrepreneurs will be more critical than ever in funding innovation — and then the public sphere can step in and take the most successful ideas to scale, Bishop said. “Government cannot innovate. It’s extremely hard to take risks,” he said. “Taxpayers’ money has this precious quality that entrepreneurial money doesn’t have.”

But given the relatively small amount of entrepreneurial money vis-à-vis other sectors, social investors must find tipping points where a bit more money invites a wave of other capital, Bishop said. “They need to be really smart about how they use their money,” he said. “They need to leverage their money.”

There are also cultural divides to bridge between billionaires and nonprofit administrators, Bishop said. “To the business mind, a lot of them are very poorly run,” he said. “There’s far too many nonprofits trying to do the same thing, and there’s no mergers-and-acquisitions. … The philanthropic world is far less transparent than the business world. It’s harder to measure performance.”

Participants in the panel “Investing in Social Change” discussed how they have put money to work in ways that have broad impact. Elmira Bayrasli, director of partnerships, policy and outreach at Endeavor Global, said her agency works to match for-profit entrepreneurs and emerging markets with the goal of creating jobs.

“Entrepreneurs say, ‘We need money. We need capital,’” she said during the panel, one of four at the daylong conference. “But trust is the greater challenge. How do you build trust in order to get that capital? In a lot of emerging markets, there are no mentors. There are no role models. There aren’t a lot of mechanisms they can go to, to get capital.”

Trinita Logue, president and CEO of IFF, formerly Illinois Facilities Fund, said her organization, which supports child care centers, health clinics, charter schools and similar institutions, differs from most by not lending against the appraised value of real estate. “That’s our innovation. That’s our strategic difference,” she told the Kellogg audience. “We found a market gap. We’ve been doing the same thing for 20 years.”

Kelly Ward, director of America Forward at New Profit Inc., said that attracting talent, measuring impact and going to scale are the three biggest challenges facing social entrepreneurs. “Social entrepreneurs are great at getting money, especially seed grants,” she said. “How do you find money to get you to the level you want to go to, to get to scale, to actually solve the problems? It’s incredibly hard.”

“This issue of scale, nobody has the answer,” Logue said. “Measurement is often difficult, depending on the field. But that doesn’t mean we should stop trying.”

Ward said those are among reasons why cross-sector partnerships are so important. “It’s a new model of leveraging government,” she said. “So that government is not the ‘doer,’” but rather funds social initiatives that others carry out.

Another panel on global health offered specific anecdotes on the challenges and triumphs of social entrepreneurs in that field. Dr. Michael A. Tolle, family medical services director at Baylor Pediatric AIDS Initiative, said his program that operates in sub-Saharan Africa faces the challenge of combating the disease’s stigma.

“The further back into the countryside I went, the more stigma there was, and the more HIV there was,” he said. “The stigma of being positive in Africa is tremendous. In some rural districts, the rate among men is more than 50 percent. A lot of moms won’t bring their babies in for testing – if the baby is positive, the mom knows she’s positive, and if the baby is treated, everyone in the village will know.”

Krista Thompson, vice president and general manager, global health, for Becton, Dickinson and Company, said her organization faces infrastructure limitations, lack of technology and lack of trained workers in handling laboratory training in developing nations. “A lot of capacity building needs to go on,” she said. “Collaboration is absolutely critical. Nothing in resource-poor countries is done alone.”

“Partnering and collaboration are sort of like motherhood,” said Karl Hoffman, president and CEO of Population Services International. “It’s difficult to collaborate because public institutions are weak. We’re being paid by donors to deliver a health outcome. We want to do it the most efficient way.”

The conference, which for nearly a decade has been among the Kellogg School’s most attended, also featured panel discussions on microfinance and corporate social responsibility, a roundtable lunch discussion, an afternoon keynote by Jessica Flannery, co-founder of peer-to-peer microlending site Kiva, and a networking reception.

Kellogg and its students have been leaders in social entrepreneurship, including serving as a host for the national Net Impact Conference. The school’s curriculum includes many courses for those seeking the skills and analytic frameworks to pursue a career in entrepreneurship. The Kellogg Social Impact Club is among the most popular student organizations, providing programming that reinforces the school’s formal learning opportunities, while also educating members about careers that make a broad social contribution.

Innovating Social Change Conference panel
The Oct. 8 Innovating Social Change Conference at Kellogg featured several panel discussions. One of them, 'Investing in Social Change,' included (from left): Kelly Ward, director of America Forward at New Profit Inc.; Elmira Bayrasli, director of partnerships, policy and outreach for Endeavor; Trinita Logue, founding president and CEO of IFF; and Clint Mabie ¹88, executive director of Return on Chicago.
Photo © Nathan Mandell