Commercial microfinance institutions (MFIs) must calculate two bottom lines: alleviating poverty for clients and also generating profits for investors. To achieve the latter goal, some MFIs charge their impoverished clients exorbitant interest rates. The recent Banco Compartamos IPO in Mexico raises a red flag, demonstrating how easily well-intentioned MFIs and their investors can shift from microlending to microloan-sharking.
For-profit businesses can efficiently and quickly raise large amounts of money to fund growth and innovation by tapping equity capital—money that people invest in a company in return for ownership and a share of profits. The nonprofit world has no corollary, making it difficult, costly, and time-consuming to raise money. In this article the author explores ways that nonprofits and funders can create their own version of equity capital, and, just as important, develop an equity approach to doing business.
Critics of microfinance institutions (MFIs) ask them to choose between helping the poor or making money for investors, but this is a false choice. MFIs can have their impact and profit, too, says the author, the CEO of the Grameen Foundation. He sketches a new vision of microfinance as a platform, not a product; one that relies on high volumes, not high margins, and that uses limits on private benefit, holistic performance standards, and third-party certification to help MFIs meet both their bottom lines.
From the Girl Scouts, to Partners In Health, to the city of Providence, R.I., great organizations have one thing in common: great managers. These managers, in turn, share four simple management principles that they use to guide organizations from mere mediocrity to stand-out stardom.
Social enterprises combine the best of the nonprofit and for-profit worlds, but that very innovation has made it difficult for them to raise money. Philanthropists are reluctant to give grants to profit-making organizations, and commercial investors are wary of investing in organizations that are driven by a social mission. The authors explore the social enterprise capital market and offer short- and long-term solutions to this funding gap.
Funders are calling for more program evaluation, but nonprofits are often collecting dubious data, at great cost to themselves and ultimately to the people they serve.
Large-scale social change requires broad cross-sector coordination, not the isolated intervention of individual organizations.
With an understanding of these 10 funding models, nonprofit leaders can use the for-profit world's valuable practice of engaging in succinct and clear conversations about long-term financial strategy.
Social entrepreneurship is attracting growing amounts of talent, money, and attention, but along with its increasing popularity has come less certainty about what exactly a social entrepreneur is and does.
By working closely with the clients and consumers, design thinking allows high-impact solutions to social problems to bubble up from below rather than being imposed from the top.
