On Purpose

A friend of mine recently told me about a conversation she had with a business leader about Impact City, my vision for transforming Dallas into the center of the world for solving the world’s greatest problems.

She told him about Impact City like this:

“You have to meet my friend Salah. He wants to make Dallas the nonprofit capital of the world!”

My heart sank. That is the last thing I want to do to our great city! I want to transform Dallas into the impact capital of the world. There’s nothing nonprofit about impact.

I encourage you to think about organizations in three dimensions:

(1) For-profit vs. nonprofit. 

The only thing that makes an organization a for-profit is that it is designed to make money for its owners. Pepsi, Soap Hope, Google, Radio Shack, and Whole Foods are all for-profit. They may have a mission, or not. They may be making money right now, or not. In the end, if there is money made, it will go to its owners (shareholders). The government collects taxes on the profits. For-profits are not inherently good or bad, sustainable or not sustainable, purposeful or not purposeful. They just have owners.

The only thing that makes an organization a nonprofit is that it has no owners. The American Heart Association, the NFL, and the Republican National Committee are all nonprofits. They may have an important social mission (ending hunger), or not (the clown museum). They may serve the poor, or they may serve wealthy business members. Their leaders may be volunteers, or they may earn $40 million a year. Nonprofits are not inherently good or bad, sustainable or not sustainable, purposeful or not purposeful. They just don’t have owners.

One key problem for nonprofits is that, since they don’t have owners, they generally struggle to scale. When Pepsi wants to build a new distribution facility in Africa, they can quickly and easily raise capital from investors (owners) because the investors will earn double digit returns. When Feed My Starving Children wants to build a new distribution facility in Africa,  there is no source of capital other than donations, which may take years to raise, or may be impossible to raise.

(2) Sustainable vs. non-sustainable.

An organization is sustainable if its normal operations generate enough money to cover its expenses.

Sustainability is not related to for-profit or nonprofit status. For example, the PGA (a nonprofit) is highly sustainable, as is Google (a for-profit).

It’s important to note that for-profit does not automatically mean sustainable. Most startup companies are not sustainable. Blockbuster was not sustainable. Even Amazon is currently not sustainable.

If a for-profit is not sustainable and doesn’t reform itself, it goes out of business when investors stop investing new capital. If a nonprofit is not sustainable, it goes out of business when donors stop giving it new donations.

It’s also important to understand that while many nonprofit organizations are currently not sustainable, there are more and more that are partially or fully sustainable. When Esperanza International first started, for every dollar it took in, it used up the entire dollar. Now for every dollar it takes in, it can return over 70 cents after one year. In a few years, it will be fully sustainable.

(3) Important purpose vs. non-important purpose.

This one is easier to understand but harder to quantify. Pepsi’s core reason for being does not serve an important human purpose: it is made to sell chips and soda. Feed My Starving Children’s core reason for being does serve an important purpose: it is made to feed starving children.

There is a large spectrum in between.  People will argue over the relative merits of the ballet, spaying cats, beautifying parks, and the Clown Museum.

The way I think about it, an organization’s purpose rises to the very top when its primary reason for being is to solve a key challenge of humanity. At Good Returns, we focus on these eight: poverty, slavery, water, conflict, health, energy, environment, and education. The United Nations’ Sustainable Development Goals offer a different take on top-purpose initiatives.

With these three dimensions in mind, we can now identify what an Impact Organization is – and we can see how Impact City will approach solving the world’s greatest challenges.

When an organization is scalable, sustainable, and very high on the purpose scale, we call it an Impact Organization (or IO for short). An IO can provide solutions to the world’s biggest problems (purpose), without relying on donations (sustainable), and access capital to expand everywhere the problem exists (scalable).

Traditionally, sustainable for-profit companies focusing on top human problems have been rare, but they are growing in number every day. And traditionally, sustainable nonprofits have been challenged to access scaling capital, but Impact City will be promoting innovative business models such as the Good Returns model that enable such nonprofits to scale, turning them into Impact Organizations as well. For-profit and nonprofit Impact Organizations are on the way in greater numbers than most people imagine.

Stay tuned to learn more about Impact City – I will be updating you soon on how and why we are creating the “Silicon Valley of Impact” right here in Dallas, Texas.

The Social Entrepreneur’s Scaling Dilemma (and One Solution)

It’s rare for a social entrepreneur to get through the gauntlet of hurdles to reach that amazing milestone she strives for: a functioning, growing, sustainable business that is solving a core problem of humanity.

But even once she gets there, she faces a decision that can be excruciating: I call it the social entrepreneur’s Scaling Dilemma. Scaling strategy is yet another area where impact organizations face an either/or decision that profit-only businesses don’t have to make.

A traditional business has only one thing to maximize: profits. Well-run businesses optimize their prices based on what will produce the greatest profit, not what will produce the greatest number of customers. If a company believes that raising prices will increase profits after taking into account lost customers, then that’s what it will do.

But for a social entrepreneur, raising prices can be heartbreaking when the customer is disadvantaged. Not only are fewer clients served by the mission; those that are no longer able to afford the service will be the most disadvantaged in the pool.

A clean water service that charges just enough to break even will serve the largest possible pool of people that it can reach. It also leaves the most money in those people’s hands as possible. If the facility increases its prices, it will be more profitable – but less people will be served, those that are served will have less money for other survival needs, and those that can’t afford the water at all anymore will be the poorest of the population.

A water business run as a for-profit company with ROI as its primary objective will find the perfect price to maximize its profits, with no care at all to these social negatives. But for an impact organization, the loss of impact is a terrible side effect of increasing profits.

Now here is the dilemma: those profits that the social entrepreneur is foregoing to serve today’s poor are the same profits that would enable the business to scale. Without profits, there is no self-funding capital to build the next water treatment plant. Without returns, there is nothing to entice investment capital either. So the impact organization, by maximizing today’s impact, has limited tomorrow’s impact.

What should the CEO of the impact organization do? Should she maximize profits today, grow through reinvestment, and then accept lower profits later to increase scale? When should that happen? What if she knows that some people will die in the meantime? Should she pass up investors today, because she knows she won’t be able to downshift later to increase reach by lowering prices? This is a difficult moral place to be for the social entrepreneur.

That’s why social enterprises need a model like Good Returns. It solves the Social Entrepreneur’s Scaling Dilemma. Good Returns effectively says, “CEO, offer your services at the lower possible price while maintaining sustainability. Maximize today’s reach. We will provide the scale capital you need so you can maximize tomorrow’s reach, too.”

Good Returns works because it creates new value by providing businesses and their investors with a reason to invest capital into impact organizations. This capital provides a missing piece that solves the Scaling Dilemma.

Profits are the end for traditional business. For impact organizations, profits are not the end – the mission is. But profits are a critical tool that provides the sustainability and scale that the impact organization needs to achieve its mission. This need to focus on both mission and profits creates a multitude of challenges for social entrepreneurs. We need to be working together to find structures and devices that transcend these dilemmas.

If you have struggled with the Scaling Dilemma, please share your thinking process and the decisions you have made. If you have found other solutions to the problem, please share your approach so other social entrepreneurs can learn. Comments are open below.

The Easy Way

I once told my friend Lucy something I secretly had been thinking about for a while.

I told her I wanted to get rid of the few things I keep around in life, and move to the Dominican Republic to work for Esperanza International – an anti-poverty institution that I love and admire.

I’d spend half my time at headquarters, helping to improve operations and fundraising. And I’d spend half my time in the field, working directly with the women who are empowered by Esperanza.

It’s so compelling to me. For the rest of my life I would know that I had helped, hands-on, some of the most vulnerable people in my human family. I would forever have those memories, being shoulder to shoulder with the women and the field workers, changing lives. I would have the incomparable experience of helping to build a first class poverty fighting institution.

Lucy is one of the most practical people I know, so I thought she was going to tell me that wouldn’t be very wise for my career or retirement plans. But that’s not what she said at all. Her eyes flashed, and she spoke sharply, so I would remember it.

“Salah! You’re being selfish!”

It wasn’t the reaction I expected after just explaining that I wanted to get rid of all my worldly possessions and move to another land to help impoverished women.

Lucy said, “You’re mixing up feeling good about what you do with actual impact. There are many people who can go help the women of Esperanza. There are less that can help improve the operations of Esperanza, but there are still a lot. But you told me that you are working on a business model that could enable thousands of entrepreneurs to impact the lives of millions of people around the globe.”

“Your problem,” she said, “is that you are scared that you might fail. If you strive for something really big and really difficult, the likelihood of failure is high. You might waste precious years in your effort to create a platform to empower millions of lives. You might be left with nothing to show for your work. But if you don’t make the attempt, you will certainly not achieve your potential.”

“If you go to the island, the likelihood that you will help a few people is very high. It will certainly make you feel good. But you will be squandering any chance you have at making a big, worldwide impact. There’s nothing wrong with that – but see it with clear eyes. It’s selfish.”

If you are a social entrepreneur, I hope you have a Lucy in your life. Whenever I have a difficult decision to make, I remember what she showed me that evening. It helps give me the courage to go all-in. It keeps me from accidentally taking the easy way.

Thanks Lucy!

I’d like to hear your stories about risk taking and impact. Comments are open, or e-mail me at salah@soaphope.com, or connect with me on Facebook.

Heroes

Dr. Muhammad Yunus
Professor Muhammad Yunus

Most entrepreneurs, myself included, are independent spirits.

The “independent” part has always been a big piece of my personality. I’ve never aspired to be “like” someone, and when those stock interview questions show up I’ve always cringed at the one that asks “Who is your hero?”

That is, until 3 years ago.

Three years ago, I found myself with heroes, and someone I want to be like.

In 2010, I heard Professor Muhammad Yunus speak about humanity. He spoke extemporaneously for 45 minutes, sharing first hand stories of mothers and daughters whose lives had been transformed through education and opportunity; a vision for the end of the man-made condition of poverty; a call to action to all people to end the unacceptable suffering in our worldwide community.

It was the first time I ever had the thought, “I want to be like him.”

Yohaustria Pena, Hero
Yohaustria Pena, Hero

That same year, I went to the Dominican Republic and to Chiapas to see the work of poverty-ending microfinance institutions in the field. I saw for myself the bravery of women standing up against cultural oppression; taking steps that no woman in the history of her family had ever taken before so that her children could go to school; finding the right balance between personal initiative and working as a community; taking risks and succeeding with so little capital and time that they put entrepreneurs like me to shame. I found my heroes.

When I first started Soap Hope, my intention was to create a strong example of social entrepreneurship so that we could make a huge impact in ending poverty, both with our own company and through others adopting the model and learnings that came out of Soap Hope. And while Soap Hope did grow again for the third year in a row, and we did fund over 10,000 days of microlending for women entrepreneurs this year, most days my vision for Soap Hope still seems distant and fragile to me.

As if on cue, this week a friend sent me a video about social entrepreneurs, and when I clicked play I heard the unmistakable compassionate voice of Professor Yunus – there once again to motivate and inspire. Every time I hear his voice, I hear my calling. And when I go inside and ask what I’m to do, Soap Hope always is the answer I see.

When someone buys one bar of soap from us, it funds one day of microlending for a woman. So I say, “A bar of soap is a day of hope.” This spring, I’m starting a new initiative at Soap Hope called “One Million Days of Hope” – to fund one million days of microlending through sales and partnerships with other companies and organizations.

Everywhere Professor Yunus goes, he looks for ways to create partnerships with people, companies, and institutions small and large, to further his vision of ending poverty in our world. Yes, I want to be like him. So I will do the same.

One million days of hope would mean 100 times the impact we had last year. It would provide tools and opportunity to thousands of the women who have become my heroes. That’s not something I can do alone. You’ll surely hear me ask you for ideas and action, partnership and participation.

Watch for #onemilliondays. Think about how we can partner together. Expect a call from an independent spirit.

What You Spend Is What You Get

I often ask people, “What’s the biggest problem in the world?” If you don’t know your personal answer to this question, please stop and take a moment to think about it. When you know what the biggest problem in the world is to you, keep reading.

Did you say “potato chips and soft drinks?” No one ever does. Some of the most common answers I hear are water, energy, poverty, intolerance, and war. But did you know that last year, PepsiCo spend over $50 billion in their business of distributing drinks and snacks across the globe? Compare that to the World Health Organization’s (WHO) budget last year of just $5 billion.

You may not think of your potato chip purchase as a driver of human behavior, but it is. PepsiCo has built factories all around the planet; hired some of the smartest engineers, scientists, financial minds, and management experts; created an IT infrastructure that spans the globe – all to support the purchase of potato chips by you and billions of other people. It’s because you spend money on snacks and drinks that drives PepsiCo to create this amazing infrastructure and to organize these incredible resources.

Are snacks and soft drinks ten times more important than global health? They why do we spend ten times as much through PepsiCo than we do through the WHO?

Whatever your biggest problem in the world is, here’s how NOT to solve it: try to convince people to spend their potato chip money on your world problem instead. Trying to change powerful forces like capitalism or culture is a recipe for wasting time and energy. If you want to solve a problem quickly and effectively, use existing forces to accomplish your goal.

That’s where most non-profits take a wrong turn. They reframe the question like this: “How do we arrange for money to be spent on problems we care about like World Health, rather than on problems we don’t care about like Potato Chips?”

It’s the “rather than” that’s the error in thinking. Instead we need to ask the question in forms like these:

  • “Can we get people to spend money on World Health every time they spend money on potato chips?”
  • “Can we get potato chip companies to spend money on World Health?”
  • “Can we create powerful financial incentives for investors that will motivate them or their companies to invest in World Health?”

Guess what: the answer to all these questions is, “Yes!”

There are many ways to leverage existing forces to solve world problems. My favorite is to teach companies that they can make bigger profits if they will partner with world-problem-solvers under a model I call Good Returns (see Scaling Social Ventures).

So I ask you again, “What’s the biggest problem in the world?” Each person has their own answer, so to make it easy to write about here let’s just call it Your Opportunity for now. Now I challenge you to think about Your Opportunity using our new approach: can you get people to spend money on Your Opportunity every time they spend money on coffee? Can you get a glass cleaner company to spend money on Your Opportunity? Can you create powerful financial incentives for investors in a fast food chain that will motivate them to invest in Your Opportunity?

The answer to all these questions is, “Yes.” Now, go do it. Don’t delay, Your Opportunity is here.

If you read my blog, please shop at Soap Hope where we carry everything good for body and home. Every dollar of profit is invested into programs that enable women to lift themselves from poverty.

If you appreciate my ideas, please write on your blog or Facebook right now about Soap Hope and help me solve the biggest problem in the world – poverty in women. You’ll be busy tomorrow, so write a post now!

The Moneylender in Microlender’s Clothing

When Dr. Muhammad Yunus first went into the villages of Bangladesh to study the causes of poverty up close, he found the people oppressed by loan sharks or as he calls them “moneylenders.”

Dr. Yunus’ model involved lending small sums of money to women in self-motivating, self-regulating groups of women for the purpose of creating sustainable income. His approach has improved the lives of millions of people around the world. The model became known as “microfinance.” One key success factor in his model is that the lender’s primary goal is not to earn a profit; instead the first goal is to lift women from poverty.

Dr. Yunus’ approach became so large and successful that it attracted the attention of corporate, banking and political interests around the world – most of which do not have the cause of ending poverty as their priority, but rather see profit potential in lending to the world’s poorest. These interests now dominate the microlending landscape. They have usurped the term “microfinance.” The most egregious of them are big, sophisticated, well-financed and powerfully marketed versions of the moneylenders that Dr. Yunus fought so hard against.

I have called on Grameen Foundation and other anti-poverty leaders to create a new, legally protected term for the kind of microfinance that is designed to end poverty, and to develop an international certifying body that will let philanthropists, foundations and social entrepreneurs have a clear picture of what groups are practicing anti-poverty driven microfinance. Minimum standards and practices would be developed by this international body and would evolve as our knowledge, tools and methods evolve.

In the absence of a branded term, those in my circle who work in anti-poverty driven microfinance have begun to call it “Microfinance Plus.” Microfinance Plus implies the following to us:

– The lender is either not for profit, of if it is a for profit institution (which is required by law to engage in lending in some countries) then the lender is owned almost exclusively either by a not-for-profit or by the clients of the lender themselves. Another way to think about it: the lender’s profits are not for the enrichment of anyone except the poor.

– Although failure to pay loans may impact a borrower’s ability to borrow again, the lender never punishes a borrower for failure to pay. Another way to think about this: a borrower’s financial situation is not to be made worse by having taken a loan, whether repaid or not.

– Money is only loaned for purposes of investment (for example business, education, home, and so on) and the borrower must demonstrate a plan for repayment. Loans are never given for paying back other debt or for purposes that do not increase the borrower’s ability to improve her financial situation.

– The lender, whether itself or through partners, actively works with its clients to eliminate the drivers of poverty in borrowers’ lives. These drivers are different in various parts of the world, so each lender creates its own approach. Some common drivers of poverty that are currently addressed by Microfinance Plus institutions are: lack of affordable clean water, lack of basic health education, malnutrition, illiteracy, chronic illness, lack of affordable childcare, and cultural or political oppression. There are many more. Each organization addresses its local needs.

It is imperative that the anti-poverty driven microfinance industry move quickly to create a protected term and a certification process, because without it we cannot drive large capital flows into Microfinance Plus institutions. Companies like my business Soap Hope (which invests all its profits into Microfinance Plus institutions) and philanthropic donors and investors need a simple and reliable way to identify these groups and to hold them accountable. By making the investment to define and certify what qualifies as anti-poverty microfinance, our industry will be able to grow the number of people served under Dr. Yunus’ original intent.

– Salah Boukadoum

Stay in touch with me:
salah@soaphope.com
@soaphope
(subscribe to this blog in the sidebar on the right)

The Deep Well

Regardless of any political party, sociological theory, or business organization telling you to the contrary: it is a fundamental part of our humanity to help those who are in great need. It is totally unacceptable to allow another human being to suffer in poverty without assistance.

I did not teach myself to read, did not haul my own drinking water across miles today, did not give myself a vaccine against polio. Because I’m smarter or work harder? Of course not – it was a gift of the circumstance of my birth, and yours.

A close up look at the lives of those in extreme poverty will show that the poor are creative, resourceful, and hard-working – contrary to common prejudices held by many in the developed world. Realize the amazing enormity of the gifts you were given in life, and give just a small share to those who haven’t been so lucky. Use your time, talent or money – all three if you can. Start right now, not tomorrow.

If you don’t know where to start, I invite you to go to any of the pages at the end of this post to learn about nonprofit microfinance, my preferred way of enabling those in very deep poverty to lift themselves up.

If you are in a deep well, no amount of creativity and hard work will get you out of that well. You will need someone outside the well to throw you a lifeline, or you will die in the well.

Those in the deep well of poverty cannot climb out without a ladder provided by someone else. Nonprofit microfinance is such a ladder. It’s not charity. The recipient does all the climbing themselves.

Pick whatever you see as the greatest need that another human being is facing, and begin to do something about it, today – don’t let this day go by without taking an action for another human being who needs you.

Please visit:

Grameen Foundation
Grameen America
Chiapas International
Esperanza International
The PLAN Fund

– Salah

The Leverage of … You

We’ve all recently heard the “dangers of leverage” – housing crisis, debt crisis, derivative losses – when it multiplies risk. But it’s also important to understand the power of personal leverage, which enables each of us to maximize our impact for good in the world.

Leverage allows you to take a small action that multiplies itself over and over, so your action can create a large positive effect in the world. It’s dear to me because it makes nonprofit microfinance work, it makes Soap Hope work, and it makes the Good Returns social business model work. Leverage will create the scale we need to solve the world’s greatest problems.

AlSol is a microfinance institution in Chiapas, the state in Mexico with the deepest level of poverty today. When AlSol provides a $50 loan to a woman and helps her start a business we see leverage operating at every level. The woman who receives the loan gets a permanent investment in her well-being. Unlike charity organizations, AlSol doesn’t give its clients food or money or clothing. Instead it gives them knowledge, confidence, skills and loan capital to start a business. AlSol uses leverage: it creates a lifelong change for its client, not just one-time help.

The $50 loan has its own leverage. As AlSol’s client becomes successful the loan is repaid. The $50 can be loaned to another woman who will also repay it. Over ten years the $50 loan will help twenty different women. A $50 gift would have helped only one.

AlSol as an institution creates leverage through the entire world of sustainable nonprofit initiatives. It shares its best practices and its lessons learned with other institutions. As it succeeds, other groups learn from its model and grow faster. Other people become inspired to start their own similar institutions around the world.

It’s because of this kind of leverage at every level that my social business Soap Hope chooses to invest in AlSol. Our own model provides leverage too. Soap Hope’s model of Good Returns, where every dollar of profit spends one year interest-free in sustainable non-profit partners, is designed to scale to thousands of businesses, creating billions of dollars of capital to solve the world’s most pressing problems.

It’s important to remember the power of your own personal leverage. As you make your every day choices in life, notice which ones will multiply many times over for the good of yourself, your family, your community, and your world.

Participate!

You can use your personal leverage with me right now. You might be surprised at the power you have to influence the behavior of thousands of people. Here are three things you can do with me right now in 10 minutes for far-reaching results:

– Share this blog. If you share this blog with 100 friends and colleagues, and they share it with 100 friends and colleagues, what will happen? One of those people – whom you may not even know – may be the next person to adopt the Good Returns model in their business. If that person’s business is an average Good Returns small business, it will generate $100,000 in loan capital – enough to serve four thousand woman through AlSol. Look at that again: one person who shares this blog can help four thousand women from poverty. That one person can be you.

– You can send a bar of soap to a friend. Soap Hope’s packages are designed for leverage. They are designed to capture your attention and educate you about microfinance and the power of each individual to make a difference in the world. If you receive a gift from Soap Hope, you can’t help but give a gift from Soap Hope to another. The profits provide capital to groups like AlSol all around the world.

– Post our video to your Facebook, blog, and Twitter. Videos have leverage – they have the opportunity to become virally active and seen by millions of people.

Salah Boukadoum
Founder, Soap Hope

Scaling Social Ventures

Pepsi – selling chips and soda

You can travel to almost any part of the world and you’ll find products made by PepsiCo. You’ll find Lay’s potato chips in India and Argentina, in France and Israel; you’ll find Pepsi drinks in Egypt, Germany, Canada and Brazil. In the third quarter of 2010, PepsiCo made $1.92 billion in profit.

Let’s look at that number again: in 90 days, during a global economic turn-down, PepsiCo sold soda and chips around the planet to earn two billion dollars in profit.

The performance of PepsiCo is a testament to the power of business. How does this happen? Clearly there’s a lot of complexity to running a global marketing and manufacturing operation. But we can still boil PepsiCo’s worldwide scale down to a few key elements:

1. It creates something that lots of people want.
2. It sells its products for a lot more than it costs to make them.
3. It has access to a vast amount of capital that finances its growth around the world.

It’s #2 – the big profit margin – that makes possible #3 – access to capital. Investors put lots of money into PepsiCo, because they know those profit margins are going to produce dividends and create a high return on investment.

Esperanza – lifting communities from poverty

Let’s look now at Esperanza International, a microfinance institution in the Dominican Republic. Esperanza makes a profit – but not much. Its goal is not to make a lot of money for investors; it is to help women come out of poverty permanently, transforming families and communities.

Unlike PepsiCo, Esperanza provides its service for the lowest possible cost at the expense of large profits. Why? Because its revenues come from the poor, and Esperanza believes it is important to leave as much money as possible in the hands of the poor that it serves. Its mission is to eliminate poverty, not to enrich investors.

Unfortunately, that decision also means Esperanza doesn’t get access to capital as PepsiCo does. Investors will not give Esperanza large and continuous infusions of capital to scale its operations, even though it is profitable – because they can make a lot more money investing their funds in PepsiCo. This is why PepsiCo is on every corner of the planet and Esperanza is not.

Notice that the social good performed by an organization doesn’t figure into the financial equation. It doesn’t matter that PepsiCo sells chips and Esperanza provides a path from poverty. All that matters is the return on investment.

Social Ventures Solve Important Problems

There are thousands of small-scale low-profit social enterprises around the world. They are working to solve urgent problems for society and for the poor. They provide medical services, housing solutions, sustainable energy solutions, clean water operations, anti-poverty programs, educational offerings – all the things we need desperately in our world. But even when these operations are capable of solving problems worldwide, they will never scale fast enough to address these problems on a global basis. They operate like Esperanza, filling an important need but earning only a small profit. There aren’t enough philanthropists in the world to put the needed capital into them. The vast sums of money that are available to finance growth for ExxonMobil, Google, PepsiCo, Bank of America, Microsoft – companies that generate substantial profits and thus high returns for investors – are not available to these important social ventures, and so the problems that they could solve worldwide remain unaddressed.

How To Finance Social Ventures

It’s always a better idea to work with existing forces rather than trying to change them. Asking investors to take a lower return in exchange for improving social conditions is an idealistic – and unrealistic – dream. Lobbying governments to provide capital is the same. That’s why we have invented the Good Returns model. This model works with existing market forces to drive capital into social ventures. It supports the desire of investors to make high returns, of entrepreneurs to create wealth for themselves, and of consumers to get the products they want at the lowest price.

Good Returns is simple. Any small business can do it: when it’s normally time to pay a dividend, instead 100% of the dividend is loaned to a sustainable social venture for one year, interest-free. After that one year, the social venture repays the capital and the investor receives his dividend.

Example: at the end of each year, my company Soap Hope calculates its profits and pays its taxes, then reserves some of its cash for the next year’s capital needs. Every remaining dollar goes to microfinance institutions so they can make more loans to more women. After a year, these institutions repay Soap Hope, and Soap Hope then distributes that money to its investors.

Why is this not philanthropy? Because the investor’s return is much higher in a Good Returns company than in a “normal” company. Because Soap Hope operates under the Good Returns model, we are able to inspire our customers to levels of loyalty and viral marketing that a traditional business never could. “100% of profits are invested for women in poverty” – it’s a powerful draw for customers. They can change the world just by choosing Soap Hope over a competitor. Soap Hope receives hundreds of messages each month from customers who are thrilled by our social mission. A traditional company would need a large marketing budget to achieve the same goal. Soap Hope has thousands of customers working to spread the word.

Is a one year loan of any use to a social venture? Definitely. If you think about the flow of money, the Good Returns model creates a semi-permanent capital pool. Each year we are repaid the prior year’s loan so investors can take their share – but we replace the capital with the new year’s profit distribution. When thousands of small companies operate together this way a very large pool of capital will be created to power social ventures.

Good Returns is organizing to provide services to entrepreneurs and social ventures around the globe. Some of those key services:

  • A program to teach entrepreneurs how to implement Good Returns in their business
  • A Good Returns seal to tell consumers their purchases are helping to solve the world’s biggest challenges
  • An insurance bond that guarantees investors will receive their dividend after its year of service
  • Education for nonprofits to teach them how to transition from a fundraising model to a sustainable low-profit social venture model

Social ventures have already figured out how to solve pressing world problems. They just need capital to scale their operations. Good Returns will generate billions of dollars for social ventures – all financed by consumers who choose companies that are working for good in the world.

Please share the Soap Hope mission – empowering institutions that help women in poverty around the world – with friends,  family, and the media. Buy from Soap Hope and help change the world.

Poverty Offsets – Local Commitment to Global Good

When a developer wants to build, in some areas she must offset her impact on the environment by planting trees. Companies that want to be carbon-neutral can purchase carbon offsets from other businesses. I propose a similar idea for public projects that are made possible by our incredible prosperity in the developed world – arts centers, sports stadiums, parks and sculptures. I call it a Poverty Offset.

In my home town of Dallas, we’ve created a fantastic cultural beacon for our Arts District: the AT&T Performing Arts Center. Renowned Dallas leader Bill Lively led the effort to raise $354 million over a nine-year period.  The Center houses four new performance venues and a public park, all designed by world-famous architects.  This amazing project is like a lens that has focused the city’s creativity, capital, leadership, culture, and expressive passion all in one dense area in downtown Dallas. The production is highly local and demonstrates what people can accomplish when they are able to harness their community resources.

I propose that we “offset” the local, resource-rich creation of such a facility with an equal attention and passion for the opposite side of the coin: the global resource-poor. As we amass such a powerful achivement of capital and creativity for Dallasites and the arts, let’s also amass an equal amount of capital and creativity for the poorest across our world.

I propose a Poverty Offset for the AT&T Performing Arts Center.  Let’s create a new nine-year plan – this time to invest $354 million of capital into sustainable social ventures worldwide that reduce poverty, create clean water solutions, reduce disease, drive renewable energy solutions, and enable education in those parts of the world that struggle most. Dallas has thriving social venture and arts communities that will be energized around such a grand project. The Center’s venues can contribute space and act as an event catalyst. The great philanthropists and fundraisers that made the Center possible can coordinate resources for this Poverty Offset as the next phase of giving. The entire city will be inspired as we know that the Center is now not just about arts and culture, but also about creating massive new opportunities for our world community.

Let me be clear: I’m not suggesting that we raise $300+ million in charitable donations or “give money away.” I propose that we use this project to motivate, direct, and leverage that capital into sustainable social enterprises that address global-scale problems.  Done in the right way, all $354 million would return to its sources in Dallas. One approach is the Good Returns model. There are many others we can incorporate.

Bill Lively has moved on to another big project: he’s now President and CEO of the North Texas Super Bowl XLV Host Committee. Cowboy Stadium cost over a billion dollars to create. What would a Poverty Offset for the Stadium and the Super Bowl look like?

If every stadium, arts center, arena, museum, and park focused equal attention on the resource-poor through a Poverty Offset, we would quickly create a trillion – yes with a T – dollar capital pool and see powerful, sweeping improvements in the lives of billions of people across the world – not through handouts, but through opportunities provided by sustainable social ventures.

My first career was as a classical pianist, so I have a deep love of music and art. I understand the importance of expressing our higher selves through arts, sports, and culture. But we must also express our higher selves by extending opportunity to those around us, so they too can have their own full expression of life.

Let us start here in Dallas with a Poverty Offset for the Performing Arts Center. Let’s get together and create a broad and clear strategy for this nine-year initiative and a way to measure our $354 million investment in the world’s neediest. Let’s rise to our highest selves, Dallas: use the great cultural gains we’ve made in the past decade as a launching point to become the world leader in global social philanthropy, the world’s clear example of how to scale social entrepreneurship to solve our greatest global challenges.

Salah Boukadoum
Citizen, Dallas