Issue to be Considered for Entrepreneurship -6

Investing in Social Problems?

Why is it that we invest in Genzyme or Microsoft, but give to Red Cross or Transparency International? Why is it that it takes 44 cents on a dollar for a good nonprofit to raise a dollar compared to about 5 for for-profits (Sargeant, Jay, & Lee, 2006)? Arguments fly back and forth that nonprofits subsidize for-profits or that nonprofits are less efficient and more fragmented than for-profits. And of course, the same tired old pivot--that for-profits are profitable and nonprofits are not. We find it difficult to believe that investing in software is more profitable than investing in the creative fount from which such a thing as "software" originated in the first place. If a piece of code that moves around a bunch of electrical impulses can create wealth, it is absurd to think that the mind that creates that piece of code is less profitable--and societies that foster and develop such minds even less so. We seek answers elsewhere.

For millennia, human beings did not realize how to harness and use the energies locked up in steam or in the movement and structure of atoms--just as we today struggle to usefully harness the energy locked up in sun, wind, and corn. Similarly, we simply have not yet found the mechanisms that can unleash the potential to close the virtuous circle connecting healthy societies with healthy babies and wealthy futures. Once a society has grown the baby and the ensuing adult has produced goods and services of value, we have relatively efficient and useful ways of pricing them and distributing them to those who want them and are willing and able to pay for them. With the invention of credit, we even know how to identify some of these in advance and reap the benefits within reasonable time lags. But credit markets are relatively new in human history (Poovey, 2008). There is considerable creative work ahead of us to expand them effectively to close the larger circle of human and social improvement. We do not believe this is a task better left to the revolutionary or to the policymaker. Instead we find tremendous scope in innovations already existent in today's credit markets. Moreover, these innovations can be transferred and transformed through entrepreneurial initiatives. The history of micro-credit alluded to earlier attests to such a profitable transfer. There is more where that came from. To give you but one new example, we present a brief case study: