Changing the World Through Business

November 18, 2009

Here are the slides from my speech last weekend at the Entrepreneurship Education Forum in Norfolk, Virginia.

The presentation was called, “Changing the World Through Business”

The link is: http://bit.ly/3hTqhb

UPDATE: Here’s the video…

Enjoy!

-Ryan

Message at Jaycees Ten Outstanding Young Americans

September 15, 2009

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Tonight I’m in Orlando with Jess for the U.S. Junior Chamber (Jaycees) Ten Outstanding Young Americans (TOYA) Banquet. I was very proud to be one of the recipients, along with nine amazing individuals with whom I’m honored to be associated.

The speeches tonight that the winners gave were truly inspirational. I had the opportunity to give a four minute speech to the U.S Jaycees in the room and I wanted to post the text of the speech here.

TOYA Speech

Thank you for this award and honor. Thank you to my lovely girlfriend Jess for joining me tonight. Thank you to Peter Ansbacher and the NC Jaycees for nominating me.

What I love about Jaycees is that it is an international organization of young folks in our generation passionate about service who want to change the world.

When I came into this room tonight the second sentence of the Jaycees Creed on the back of the program caught my eye. It says “The brotherhood of man transcends the sovereignty of nations.” Grab your program and read it with me now. “The brotherhood of man transcends the sovereignty of nations.” This sentence spoke to my heart. It is with this inspiration that I speak tonight.

I am an entrepreneur and social entrepreneur. The phrase social entrepreneur may be new to some. To me, it is someone who rearranges resources to improve the world. In this sense, all of you are social entrepreneurs. My friends, there are some truly great leaders of our generation in this room tonight, not only the award winners but all of you as Jaycees. You may be one of these leaders. Tonight I’d like to speak directly to those in this room who are the leaders of our generation. I’d like to share a great challenge that our generation faces that is especially dear to my heart.

Let me start by sharing two facts that strike me. One from the World Bank and one from UNICEF.

First, 2.56 billion people, that’s 40% of humanity, people just like you and I, live on under $2 per day, PPP adjusted (1). That’s half a latte at Starbucks. Imagine living on $2 per day. Second, on average 24,956 children under five die each day in the developing world (2). This doesn’t have to happen. As we sit here at this wonderful banquet and nice hotel in Orlando, we must remember that so many do not have the opportunity we have been given.

We are all social entrepreneurs and we have the opportunity to reshape our world. For the first time in human history we have the resources and communication technology necessary to end extreme poverty and hunger in our lifetime. There is no way we will have true global security until all of us have access to education and opportunity, starting from the simple principle that all lives have equal value.

I look forward to spending the next five decades working with many of you to change the world. We are all social entrepreneurs. We are all leaders. So let’s use our leadership capacities to build something greater than ourselves.

This is our calling. This is our opportunity. It is our time. Thank you!

=================

Here are the bios for the winners from the Jaycees website:

Ryan Allis, 25, Chapel Hill, North Carolina. Ryan is co-founder and CEO of iContact, the leading provider of e-mail marketing tools for small to mid-sized businesses. He started iContact at the age of 18 and has built iContact into a company with more than 180 employees and 50,000 customers. An active board member of Nourish International and with his own non-profit foundation, The Humanity Campaign Inc., Ryan’s goal is to reduce poverty and hunger and increase access to education, healthcare, technology, and entrepreneurial opportunities worldwide.

Lt Colonel Steven Matthew Beasley, 37, Rapid City, South Dakota. Currently serving as Commander of the 34th Bomb Squadron and B-1 Instructor Pilot at Ellsworth Air Force Base, his military career has included designing training routes for stealth fighters in preparations for Operation Desert Strike to serving as a B-1 pilot over Afghanistan. His commitment to volunteerism at orphanages in Djibouti, Africa and through organizations such as Habitat for Humanity has inspired those around him.

Jacqueline Baly Chaumette, 40, Sugar Land, Texas. Councilmember for the city of Sugar Land and President and CEO of BalyProjects, LLC. Through her company, Chaumette is currently working on replacing aging local school district buses with clean-fuel buses. On City Council, she is the only woman, only black person, and youngest person on the city council, where she helps oversee the city’s policies and budget. Her work with the city of Sugar Land has involved planning Town Square, the city’s new downtown.

Lieutenant Colonel Troy Edward Dunn, 37, Washington, D.C. Currently, Dunn is the Commander, 11th Mission Support Squadron, Bolling Air Force Base, Washington D.C. where he has administrative command authority over 48,000 Airmen in 95 countries and 34 states, including 9,400 Airmen in the National Capital Region. As Air Staff Branch Chief and Air Force Crisis Action Team Leader, Dunn was the Air Force’s number-one authority on personnel readiness and deployments. Father of two autistic sons, Dunn has launched the Heart of Autism Project to provide a closer look into this national issue through a documentary, series of interviews with professional organizations, and personal accounts of families sharing their story.

Kathryn Cunningham Hall, 23, Philadelphia, Pennsylvania. Founder of Power Up Gambia, an organization formed to provide the necessary funds to purchase a solar powered electrical system for Sulayman Junkung General Hospital (SJGH) in The Gambia, West Africa. Hall is now working on her second project, providing power to a sister clinic of SJGH. Power Up Gambia is dedicated to providing reliable electricity and water to healthcare facilities in The Gambia through solar energy to make primary and lifesaving healthcare available to Gambian citizens.

Cameron Johnson, 24, Roanoke, Virginia. Currently President and CEO of Cameron Johnson Inc., by the age of 21, Johnson had started 12 profitable Internet companies and had been the youngest American appointed to the board of a Tokyo-based company at the age of 15. Consultant to several Fortune 500 companies, Johnson is a frequent speaker and an author, and volunteers his time focusing on promoting financial literacy among young people in America.

Atif M. Moon, 24, Rancho Palos Verdes, California. Born with cancer that left him wheelchair bound, Moon is a nationally ranked Wheelchair Tennis player. He works for Bertech Industries, an Electronic Distribution company. Moon will be pursuing a Masters degree in Sport Management in Spring 2010. He has co-founded the Center for Global Understanding (CFGU), a non-advocacy, non-religious organization to encourage the Muslim American youth to participate in civic engagement and is a role model through his example of living a full life with a disability.

Gary C. Norman, 35, Baltimore, Maryland. Founding principle of Norman Access and Conflict Resolution Consultants Group, Norman provides a range of legal and non-legal services extending to pro bono and professional-related activities. Serving as Chair of the Animal Law Section of the Maryland State Bar Association, Norman is also leading the planning for the first-ever MSBA animal law symposium. He is immediate past president of the Maryland Area Guide Dog Users, Inc., and is a well-published author and noted speaker.

Michael Richard Simmel, 31, Allendale, New Jersey. A professional show basketball player with the Harlem Wizards Basketball team, Simmel is a featured performer and performs in front of millions of people all across North America. He is one of 3,000,000 Americans living with epilepsy and is also one of 2,500,000 affected with bipolar disorder. Constantly donating his time and talents encouraging and advocating for people, especially children, who have other disabilities in addition to epilepsy, Simmel has his own non-profit organization, The Bounce Out the Stigma Project, to help empower young people and educate the public.

Robert J. Witte, 41, Plano, Texas. Partner with the law firm Strasburger & Price, LLP, Witte combines his expertise in business litigation with his leadership in actively mentoring young lawyers. He is a noted author and speaker, and has led countless humanitarian efforts and record-setting philanthropic initiatives for organizations including the Dallas Summer Musicals, the Dallas Heart Ball, the Make-A-Wish Foundation of North Texas, and the Muscular Dystrophy Association.

Sources for statistics used:

1 – 2008 World Development Indicators: Poverty Data Supplement, World Bank

From p. 10: “…the number of people living on less than $2.00 a day has remained nearly constant at 2.5 billion. From Table 3: “People living on less than 2005 PPP $2.00 a day (millions), 2005 – 2.564″

2 – UNICEF State of the World’s Children, 2009

From p. 121, Statistical Tables, Table 1 Basic Indicators, Summary Indicators, Developing Countries “Annual Number of Under 5 Deaths (Thousands), 2007 – 9109″ To arrive at 24,956 deaths of children under five per day I took 9,109,000 total deaths per year for children under 5 in developing countries and divided by 365.

Five Ways a Non-Profit Director Can Be An Entrepreneur

September 3, 2009

As a Non-Profit Director, you are an entrepreneur as well. You have a product and a customer, and you are working to rearrange limited resources to create value.

For the non-profit entrepreneur, today earned income models are becoming the norm rather than the exception. While 501(c)(3) non-profits have a benefit of being able to receive tax deductible contributions, these contributions are often unpredictable and at times can influence a non-profit to go in an undesired direction.

The age of non-profits being able to rely solely on donors and grants is over. For a non-profit entrepreneur, an earned income model exists when the non-profit company sells a product or service to others and gains net income on that sale which is reinvested in growing the non-profit in a sustainable manner. The line between non-profit entrepreneurs and for-profit entrepreneurs is indeed getting gray.

While you are required to reinvest practically all your net income back into the organization, you have a great advantage. As a registered 501(c)(3) you can accept tax-deductible monetary contributions from individuals and corporations. You can apply for and receive grants from foundations. You can also receive in-kind donations from local companies or receive discounts or pro-bono work from service providers.
At the end of the day, just because you cannot distribute net income to your shareholders doesn’t mean you aren’t an entrepreneur. Here are some ways you can be entrepreneurial as a non-profit founder or director:

1.Create an earned-income model. Find a product or service you can sell to others. Just because you have to reinvest your profits, doesn’t mean you can’t make a profit. You don’t have to give away everything. The more value you create, the more you will can earn and the more you’ll be able scale your organization to serve its mission. –> Quick Case Study: As an example, a non-profit I’m the Board Chair of this year, Nourish International, has an earned-income model.

Nourish teaches college students to run entrepreneurial ventures on its campuses. These ventures range from ‘Hunger Lunches’ with corn bread and beans to poker tournaments to selling medical scrubs.

Nourish then takes the net profit from the students’ ventures and funds a portion of administrative overhead at the national office and contributes to community-based non-profit organizations in the developing world that work to reduce extreme poverty and hunger. This past summer Nourish sent 58 of its students to nine projects in developing countries. Nourish’s model is growing and it now chapters on 29 college campuses.

2.Have an entrepreneurial mindset. Just because you have donors doesn’t mean you don’t have to have a sense of urgency and work quickly and efficiently to produce results and compete. The market for non-profit donations is competitive and contributions will go to those that are well-run and maximize positive human impact with minimum dollars (or at least maximize human impact in the fields that those with resources most care about, a substantive difference).

While there seems to be a somewhat unfortunate reality that some well-established non-profits with celebrity representation or large budgets can often get the bulk of available contributions and crowd out perhaps more deserving smaller NPOs, many of these established non-profits were start-ups once as well and only came to be influential by being efficient, achieving their mission, and attracting larger and larger contributions and grants.

3.Hire people who are smart, ambitious and driven. Don’t settle for poor-performers. As a Non-Profit Director you have the ability to attract talented, caring staff members that are willing to work hard for less than market pay. Use this to your advantage.

There are driven, smart, ambitious, educated, and talented individuals in the work force that want to work for a non-profit. Too often I have seen non-profit entrepreneurs settling for lower quality team members and not managing their performance. Hire A players who are passionate about what you are driving to achieve and empower them to be entrepreneurial, take risk, and grow the organization.

4.If You Aren’t Maximizing Social Value, Consider Merging. One of the issues in the non-profit world is that it is rather challenging for one non-profit to merge with or be acquired by another non-profit. This creates the reality that there are often dozens if not hundreds of small non-profits inefficiently and disparately going after the same cause. Industry consolidation and M&A in the business world happens naturally as controlling shares can be purchased in private or public markets. For a non-profit this is not possible so it is up to the humility of the founder to consider whether a merger could create a better social outcome.

Allowing for the benefit of competition and time it takes to start-up, test your model, and make it scale–consider shutting down or merging your organization with a more efficient or larger organization if you feel like your organization isn’t best using resources to create positive social value. Non-profit mergers can allow the combined entity to share resources, reduce overhead costs, and go after bigger grants while achieving the shared mission.

5.Run your non-profit like a business, because it is. Non-profit organizations sometimes use their non-profit status as an excuse not to seek to be efficient, employ staff performance management systems, or make the tough decisions for-profit businesses have to make to survive and thrive. Being a non-profit does not mean you should not seek to earn profit. It simply means you must reinvest this profit. The more profit your organization can make the faster it can scale and grow and achieve its mission (of course don’t make a profit in a manner that goes against your values and mission!). After all, your non-profit corporation is a business, just one that has committed to reinvest its profits every year back into the business and not distribute them.

What type of organization should I work for to make the greatest positive impact?
Often the best answer to the question “what type of organization should I work for to make the greatest positive impact” is a gray hybrid to the old-school black and white.

The answer is often a for-profit business that is socially responsible and integrates the concepts of social business into its organization, or an entrepreneurial non-profit organization that is run like a business, efficiently and with a sense of urgency.

And finally, today the boring and bureaucratic public sector is slowly but surely changing as it is again becoming cool for smart driven people to work in government. The bureaucracy that is Washington D.C. can only change if it is infused with entrepreneurial, efficient management that has a sense of urgency and passionately cares about making a positive difference.

Five Ways a For-Profit Entrepreneur Can Be a Social Entrepreneur

September 2, 2009

At the Entrepreneur & Social Entrepreneur Meetup on Tuesday I was having a great discussion with a new friend named Phil. Phil asked me a question I’ve heard often recently, “Can I still be a social entrepreneur if I run a for-profit business and not a non-profit?” In my view, the answer is a resounding yes.

What is an Entrepreneur & What is a Social Entrepreneur?

To me an entrepreneur is “a problem solver who takes action.” To me a social entrepreneur is “a problem solver who takes action.” There is no difference. The line is wonderfully blurry. Let me explain.

An entrepreneur is someone who rearranges the resources of land, labor, capital, and entrepreneurial ability to create a product or service that provides value to others. Whether the entrepreneur is doing this within a for-profit corporation, in which the net profits are either reinvested in the corporation or distributed to the shareholders or a non-profit corporation in which the profits are fully reinvested into the corporation, he or she remains an entrepreneur.

Non-profit founders and directors have customers and products too. Traditionally the customers of a non-profit are its donors and grant makers and the product is the social value it produces. If the product is not valued, customers (donors) will stop giving and leave.

Today, the black and white world of non-profits and for-profits is graying. If you want to change the world for the better, it is an open question as to whether you can make a bigger impact in a for-profit or a not-for-profit company.

Profit’s Correlation With Social Value Provided,
As long as the for-profit entrepreneur a) competes within the laws of a competitive market system b) does not create short-term profit for the company by externalizing the costs of the off-balance sheet destruction of the environment and c) does not exploit its labor force, the only way for the entrepreneur to make a profit is by creating value for others.

The more the ethical entrepreneur helps others, the more profit he or she will make. Profit for an ethical entrepreneur who has not exploited the environment or labor force to gain that profit is not an ugly sign of exploitation but rather a laudable sign of value created. The successful and profitable entrepreneur has rearranged resources in such a manner that the value of the output created exceeds the sum value of the inputs.

For the ethical for-profit entrepreneur, as products are produced that help others, social value is created. The very act of building your business creates jobs, provides product and services that others value, and enables you to give back to your local and global community.

Your for-profit business can often be more sustainable than a non-profit business as you are not reliant on grants and donations to grow. While you have a disadvantage of not being able to receive tax-deductible donations, you have the big advantage in the labor market of being able to offer a wonderful thing called stock options to employees, which enables you to attract top talent and enable all to participate in the value-creation.

One of the most important things you can do as a for-profit entrepreneur to enable you to make a social impact is to be profitable. As Joel Makower argues in his book Beyond the Bottom Line, “One of the most socially responsible things most companies can do is to be profitable.” Without profits one cannot pay taxes, provide jobs that pay well, give back to a community, or invest in innovation.

Five Ways a For-Profit Entrepreneur Can be a Social Entrepreneur
So for a for-profit entrepreneur, if you really want to be a ’social entrepreneur’ here are some suggestions:

1. Give all your employees stock options. Requiring a team member to be there a minimum amount of time (like 6 months) before they earn the options is okay. Vest the options over a few year period (3 or 4) to help with retention.

2. Treat your employees well. Show that you care about them. Offer health insurance and good working conditions. While you have to manage to results and that requires being a professional firm that tracks performance, you can do many little things that create a good work environment and culture that actually help the firm reduce costs, retain great people, and attract a better team.

3. Ensure your net impact on the environment is at least neutral, if not positive. Don’t externalize the cost of environmental damage. In other words, don’t profit off of destroying the environment, even if it may still be legal to do so. Take into account the full cost of any environmental degradation or destruction in the production of your products and services. Look up the supply line and ensure your suppliers also neutralize their impact on the environment.

Quick Case Study: Last Month, Walmart introduced a Sustainability Product Index that asks each of its suppliers fifteen questions on energy, climate, resource use, and labor practices. It has asked its suppliers to respond by October 2009. It is using this data to understand the practices of its upstream supplier network (of over 100,000 suppliers) and provide a Sustainability Index for each of its suppliers. Walmart is also creating a “consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products – from raw materials to disposal.”

4. Have a formal corporate social responsibility policy. A particular CSR structure I’m fond of is called the 4-1s program, in which you set aside 1% of company profit (or 1 percent of payroll if you are venture-backed and not yet profitable), 1 percent of employee time, 1 percent of product, and 1 percent of equity to contribute back to your local and global community.

Quick Case Study: At iContact, we have been contributing 1 percent of payroll since 2007. In 2008 we contributed $55,000 to 37 different non-profit organizations. In 2009 we’ll reach $100,000. We are now expanding our CSR program based on the 4-1s model to include 1 percent of employee time (up to 2.5 days of paid time-off per year to be spent on community service products), 1 percent of product (we are providing iContact free to any non-profit organizations in the Triangle), and 1 percent of equity. Don’t wait until you’re 60 and wealthy to give back. Start from day one and create an integrated giving model. You can read about iContact’s Corporate Social Responsibility Program here.

5. As you succeed personally, give back. A great differentiator for the for-profit entrepreneur is that you and those working with you can become wealthy through the appreciation of the value of your stock ownership as you scale your ability to help others.

If you’re fortunate enough to have a liquidity event (go public or get acquired) use your personal resources to invest in other entrepreneurs and social entrepreneurs who are changing the world for the better, contribute personally to the organizations (and candidates) that you feel are making the biggest positive impact for humanity, and vote with your dollars as a consumer and doing your best to purchase from companies who have a similar view about corporate social and environmental responsibility.

There is a movement of socially responsible companies that is defining our generation. These socially-responsible for-profits, sometimes informally called B Corporations instead of C or S corporations, can make a huge positive impact on the world, up and down supply chains.

Networks springing up
There are networks springing up for socially responsible professionals such as the Social Venture Network and Net Impact.

Companies like Vestergaard Frandsen, Salesforce.com, Danone, Stonyfield Farms, and Whole Foods are leading the way in this integrated social business model. They are doing well not in spite of their social mission, but often partially because of it.

There is a new genre of books focused on how to use business to change the world. There are many, but my favorites are The Business of Changing the World, Creating a World Without Poverty: How Social Business Can Transform Our Lives, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, and The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.

There are now publications that focus on the socially responsible business owner, including Stanford Social Innovation Review and Good Magazine (founded by the son of INC. Magazine). There is even a newswire just for social responsible news called CSRWire. There is even a stock index called the KLD400 for socially responsible companies!

There are venture capital firms that now focus on investing in socially responsible companies. These include Good Capital and SJF Ventures.

What Ben & Jerry’s and The Body Shop started is becoming wonderfully mainstream and necessary as a new generation that connects and collaborates globally like none before it becomes corporate leaders.

While I am generally a fiscal moderate who believes in the ideology of individual freedom and liberty, Milton’s Friedman’s 1970 assertion that ‘the business of business is just business’ was wrong. As Peter Drucker argued in 1942 in The Future of Industrial Man, companies must have a social dimension as well as an economic purpose.

25 Facts on Global Military Spending

August 23, 2009

25 Facts on Global Military Spending

August 17, 2009 · Print This Article

Last week on an airplane ride to Boston, I was reading the book Common Wealth by Jeffrey Sachs when I came across some statistics on military spending in Chapter 12, Rethinking Foreign Policy.

One statistic stood out to me from p. 274. I read that “One day’s Pentagon spending would provide enough funds to ensure antimalarial bed net protection for every sleeping child in Africa for five years.” I learned that while the Pentagon spent an average of $1.6 billion per day in 2007 only $1.5 billion in total was needed to provide nets for 300 million sleeping sites. This was interesting, and compelling.

I decided to do some additional research on global military spending, and here’s what I found. I’d love your thoughts and comments!

25 Facts on Global Military Spending

To make it on this list a statistic must be from a trusted primary source with a clear “as of” date or a reputable secondary source that clearly lists its primary sources. All statistics are sourced and cited at the bottom of the page. Please add a comment if you find additional good sources.

  1. Between 2000 and 2008, including supplemental war spending, U.S. military spending increased from 387 billion to 710 billion, an 83% increase. (1)
  2. In 2007, world military expenditure reached $1.339 trillion (2)
  3. In 2007, the USA’s military spending accounted for 45 per cent of the world total, followed by the UK, China, France and Japan. (2)
  4. In 2007, the 15 countries with the highest military spending account for 83 per cent of the total (2)
  5. Between 2001 and 2007 US military expenditure has increased by 59 per cent in real terms, principally because of spending on military operations in Afghanistan and Iraq and due to increases in the ‘base’ defense budget. (2)
  6. Global Military spending increased 45% between 1998 and 2007 (2)
  7. In 2007, the United Nations and all its agencies and funds spent $24.9 billion, or about $4 for each of the world’s inhabitants (2)
  8. In 2007, the UN’s budget was 1.86% of the world’s military expenditure (2, 3)
  9. In 2008, world military expenditure reached 1.472 trillion (4)
  10. In 2008, U.S. military spending was $711 billion, 48.28% of the global total, followed by China with 8.28%, Russia with 4.75%, and the UK with 3.76% (4)
  11. In 2008, the combined military spending of the second through eighth largest military spenders (China, Russia, the United Kingdom, France, Japan, Germany, and Italy) was $300.2 million less than the military spending of the first largest military spender, the United States (4)
  12. In 2008, US military spending was more than the next 46 highest spending countries in the world combined. (4)
  13. in 2008, US military spending was 5.8 times more than China, 10.2 times more than Russia, and 98.6 times more than Iran. (4)
  14. In 2008, US military spending is almost 55 times the spending on the six states of Cuba, Iran, Libya, North Korea, Sudan and Syria whose spending amounts to around $13 billion. (4)
  15. In 2008, the United States and its strongest allies (the NATO countries, Japan, South Korea and Australia) spend $1.1 trillion on their militaries combined, representing 72 percent of the world’s total. (4)
  16. In 2009, the U.S. Military base budget was $515.4 billion in 2009 plus 135.8 billion in emergency and discretionary spending for a total of $651.2 billion. (5)
  17. In 2006, including all military-related expenditures outside of the Department of Defense, the United States spent $934 billion on its military in 2006 (6)
  18. In 2007, one day of spending of the U.S. Pentagon ($1.6 billion) would equal enough funds to ensure antimalarial bed net protection for every sleeping site in Africa for five years (300 million bed nets at $5 each). (7)
  19. In 2007, the United States spent $572 billion on its military, $11 billion on international security, $14 billion on development and humanitarian aid, and $11 billion for diplomatic functions. (8)
  20. In 2009, the United States spent $710 billion in military spending (4), $18.8 billion in total bilateral economic assistance via USAID (9), and $5.2 billion in development aid to Africa (10)
  21. Military expenditure comprised approximately 2.4 per cent of global gross domestic product (GDP) in 2008. (11)
  22. The combined arms sales of the Top 100 arms-producing companies reached $347 billion, an increase of 11 per cent in nominal terms and 5 per cent in real terms over 2006. (12)
  23. Between 2002 and 2007 the value of the Top 100 arms sales has increased by 37 per cent in real terms. (12)
  24. Forty-four US companies accounted for 61 per cent of the Top 100’s arms sales in 2007, while 32 West European companies accounted for 31 per cent of the sales. (12)
  25. The estimated financial value of the international arms trade in 2007 was $51.1 billion. According to national data, the USA was the largest arms exporter in 2007, with exports worth $12.8 billion; Russia was in second place, with $7.4 billion; France was in third place, with $6.2 billion; Israel was in fourth place, with $4.4 billion; and the UK was in fifth place, with $4.1 billion. (13)

Additional Facts in Graphs & Images:

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military
Image Source: U.S. Military Spending vs. the World, Center for Arms Control and Non-Proliferation
us
us
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Image source: Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 2A
Arms
Image source: Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 6A
Arms
Image source: Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 6A
arms
Image source: Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 6B
nuclear
Image source: Nuclear Warheads by Country, Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Chapter 8
arms
Image source: Nuclear Warheads by Country, Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 12A

Fact Sources:

  1. Travis Sharp, Growth in U.S. Defense Spending Over the Last Decade, Center for Arms Control and Non-Proliferation, February 26, 2009
  2. Stockholm International Peace Research Institute (SIPRI)’s 2008 Year Book, Chapter 5
  3. Global Policy Forum, Total UN System Contributions
  4. U.S. Military Spending vs. the World, Center for Arms Control and Non-Proliferation
  5. U.S. Department of Defense Budget 2009
  6. Robert Higgs, The Trillion-Dollar Defense Budget Is Already Here, using data from U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2008 and U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970
  7. Sachs, Jeffrey, Common Wealth p. 274
  8. White House Office of Management and Budget, Budget of the United States Government, FY 2007
  9. USAID, FY 2009 International Affairs Budget Request, Summary and Highlights, p. 7
  10. USAID, FY 2009 International Affairs Budget Request, Africa Regional Overview, p. 2
  11. Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 3A
  12. Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Chapter 6
  13. Stockholm International Peace Research Institute (SIPRI)’s 2009 Year Book, Appendix 12A

Please add comments below on any thoughts you have or additional good sources. Thank you!

25 Facts on Global Poverty

August 1, 2009

25 Facts on Global Poverty

August 16, 2009 · Print This Article

One of the challenges I’ve faced as I’ve sought to learn all I can on global poverty over the past few years has been how challenging it is to find accurate, trusted statistics on the topic. I spent a few hours tonight beginning a compilation of stats on global poverty, which I’ve added as a new page on The Humanity Campaign web site.

What do you think about these facts? What can we do to end extreme poverty in our lifetime? Please feel free to comment at the bottom of the page.

Special Thanks:

Thank you to the site GlobalIssues.org for their work in collecting verifiable facts and statistics on major global issues. Their page “Poverty Facts & Stats” was of great help in compiling these statistics. Thank you also to the World Bank, UNICEF, UNICEF Cananda, and UNDP for vital reports neccessary for the compilation of these statistics. The United Nations report “The Millennium Development Goals Report 2009” was also particularly helpful.

A Collection of Sourced & Verifiable Facts on Global Poverty

To make it on this list a statistic must be from a trusted primary source with a clear “as of” date. All statistics are sourced and cited at the bottom of the page.

  1. As of 2008, 79.8% of humanity lives on less than $10 per day. (5.15 billon people) (1)
  2. As of 2008, 48.6% of humanity lives on less than $2.50 per day. (3.14 billion people) (1)
  3. As of 2008, 40.2% of humanity lives on less than $2 per day. (2.60 billion people) (1)
  4. As of 2008, 21.7% of humanity lives on less than $1.25 per day (1.40 billion people) (1)
  5. As of 2008, 13.6% of humanity lives on less than $1 per day. (880 million people) (1)
  6. As of 2008, the world’s richest 20% consume 76.6% of private consumption (1)
  7. As of 2008, the world’s richest 10% consume 59.9% of private consumption (1)
  8. As of 2009, 25,000 children under 5 years old die each day due to poverty (2)
  9. As of 2006, access to piped water into the household averages about 85% for the wealthiest 20% of the population, compared with 25% for the poorest 20%. (3)
  10. As of 2007, every year there are 350–500 million cases of malaria, with 1 million fatalities: Africa accounts for 90 percent of malarial deaths and African children account for over 80 percent of malaria victims worldwide. (4)
  11. As of 2007, 1.6 billion people — a quarter of humanity — live without electricity (5)
  12. As of 2007, the GDP (Gross Domestic Product) of the 41 Heavily Indebted Poor Countries (567 million people) is less than the wealth of the world’s 7 richest people combined. (6, 7, 8 )
  13. As of 2009, the poverty line in the USA for a single individual is drawn at $10,830 per annum or $29.67 per day. (9)
  14. As of 2006, 10.6 million children die every year from causes that are easily preventable – equal to 29,000 children every day (10)
  15. As of 2006, half of these deaths 29,000 daily deaths of children occur in just six countries – China, the Democratic Republic of the Congo, Ethiopia, India, Nigeria and Pakistan (10)
  16. As of 2006, 2 million children die every year from pneumonia and other acute respiratory infections, making it the leading cause of death of children under five years of age (11)
  17. As of 2006, 1.6 million children die every year from Diarrhoeal disease, primarily from the resulting severe dehydration that can quickly result in the failure of vital organs in young children (11)
  18. As of 2006, 1.1 million children die every year in Africa from malaria, making it the largest cause of death for children under five in Africa. (11)
  19. As of 2006, 657,000 children under the age of 15 are infected with HIV every day, most through transmission of the virus from mother to baby during pregnancy, childbirth or breastfeeding (11)
  20. As of 2006, 500,000 children die every year from measles. (11)
  21. As of 2008, on the whole, people are healthier, wealthier, and live longer today than 30 years ago. If children were still dying at 1978 rates, there would have been 16.2 million dealths of children globally in 2006. In fact there were only 9.5 million such deaths. This difference of 6.7 million deaths is equivalent to 18,329 children’s lives being saved every day. (12)
  22. As of 2007, each year, more than 500,000 women die from treatable or preventable complications of pregnancy and childbirth. (13)
  23. As of 2007, in sub-Saharan Africa, a woman’s risk of dying from complications from childbirth over the course of her lifetime is 1 in 16, compared to 1 in 3,800 in the developed world. (13)
  24. As of 2005, an estimated 15.2 million children had lost one or both parents to AIDS (14)
  25. In 2008, net disbursements of official development assistance (ODA) reached $119.8 billion. That is equivalent to 0.3 per cent of developed countries’ combined national income. (15)

Global Poverty Facts in Graphs

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Global

Source: UN Millennium Development Goals Report 2009, p. 51

Global

Source: UN Millennium Development Goals Report 2009, p. 52

Sources:

  1. World Development Indicators 2008, World Bank, August 2008
  2. UNICEF State of the World’s Children, 2009
  3. 2006 United Nations Human Development Report, pp.6, 7, 35
  4. 2007 Human Development Report (HDR), United Nations Development Program, November 27, 2007, p.25.
  5. UN Millennium Development Goals Report 2007, p.44
  6. World Bank Key Development Data & Statistics, World Bank
  7. Luisa Kroll and Allison Fass, The World’s Richest People, Forbes
  8. World Bank’s list of Heavily Indebted Poor Countries (41 countries)
  9. www.hhs.gov“. The 2009 HHS Poverty Guidelines. http://aspe.hhs.gov/poverty/09poverty.shtml.
  10. UNICEF Canada 50 Year Progress Report 2006, Overview Sheet
  11. UNICEF Canada 50 Year Progress Report 2006
  12. World Health Organization, World Health Report 2008, p. 14
  13. UN Millennium Development Goals Report 2007, p.16
  14. UN Millennium Development Goals Report 2007, p.20
  15. UN Millennium Development Goals Report 2009, p. 48

Review of The Dream by Gurbaksh Chahal

June 23, 2009

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I’m sitting in the corner of the Starbucks at the Southpoint Barnes and Noble in Durham. I’m reading The Dream by Gurbaksh Chalal (nickname ‘G’), a 26 year old internet entrepreneur from India and San Jose, California. G has a compelling writing style in the beginning, writing of the difficulties he encountered growing up as an Sikh Indian-immigrant. Here are my notes from the book.

G dropped out of high school at age 16 to start a performance-based advertising network called Value Click.

Growing Up a Sikh Immigrant Indian in San Jose

Some of the stories in the first part of the book that initially struck me were:

  • His father and him day trading on margin in 1997 and doing equity research together. In October 1997 (right before the Asian Market Crisis) the market had a small dip and in fear of the market falling further and not being able to cover his margin sold at the very bottom, which caused his father shame and nearly to lose their new house.
  • G being forced to remove his turban at knifepoint when playing basketball in the ‘hood’ of San Jose.
  • G taking a public speaking class in high school and having to give a speech as a very traditional Sikh about the randomly assigned topic of Viagra.

Here’s how G. got started…

  • Buying the HP.net and Dell.net domain names in 1997 and sending a letter to the companies offering to sell the names back to them for $10,000–and then receiving threatening cease and desist letters and giving the domains back for free.
  • Starting to sell printers on eBay, then starting a performance-based advertising network Click Agents
  • Setting us his very first deal in a very ‘Elliot Bisnow’ type of way–by getting one ad agency to commit one $30k insertion order (IO) at $1 CPC and only after having it, building his ‘consortium’ of web sites to traffic the ad at a 50/50 rev share, all along using the fake name Gary Singh.

Results Matter

An excerpt from p. 59:

“All the knew was that Gary Singh delivered, and that’s all they cared about. They had no idea they were dealing with a sixteen-year-old kid because I presented myself as a serious professional. Once again, perception is realty. That’s not a kid on the other end of the line. It’s a guy who delivered on his promises.”

On page 80, G tells a story I can relate to, his servers went down for a week due to a vengeful vendor. His story reminds me of the week in December 2003 our server went down due to hardware failure. An excerpt:

“We were offline for an entire week… A week without the Web. Well that was the lifeblood of my business, and that week almost put us under… Time in the Internet is measured in dog years .For that entire week, Click Agents had ceased to exist.”

Ideas Vs. Execution

Gurbaksh makes a good point about the value of ideas vs. execution on p. 100.

“If you have an idea for a company, that’s just the beginning–that’s your entry point. What really matters is execution. Don’t think about the millions you’re going to make, think instead about creating a company that will be worth millions… The difference is huge. Success is laregely about substance. If your company is about real, tangible assets, and you’re looking the the long term, you are going to be handsomely rewarded for it.”

Struggling With Bureaucracy at ValueClick

On page 117, G laments in an amusing paragraph, working for the slower, bigger, public ValueClick. VCLK had bought Click Agents in November 2000 for $40 million.

He notes, “…in this new environment, I couldn’t move forward without official approval. I had to sell an idea to one guy, then to a second guy, and then to two or three more guys after that, and they all seemed incapable of making a decision. I guess that’s what people mean when they talking about the bureaucracy. It’s a place where absolutely nothing gets done. And the larger the organization, the less one is able to accomplish…I couldn’t understand how corporations actually accomplished anything, since the bureaucracy seemed to be designed solely to steer you into one brick wall after another.”

Getting over The Fake Excitement of Materialism

Around page 136, G. begins to talk of all the Ferraris and Lambourghinis he purchased after selling his ValueClick shares. I was disappointed by the materialistic focus of this part of the book, but I could understand it in my own imperfection. I owned a 350z for two years when I was 21 to 23 before I sold it due to what it was doing to my personality.

On p 139, G writes, “I was breaking one of my own business rules. Need versus necessity. Did I really need that king of luxury.? No. Then again, maybe I’d earned it. So I Lived with it. After all, as they say, all work and no play makes G a dull boy.”

G was close to coming to the conclusion that the two luxurious $240,000 Lambourghini’s he bought was a little over the top but didn’t quite get there. I was disappointed in him at that point.

One of G’s ‘lessons’ later in the book that he shares is “Forget noble motivations.” On this, more than anything else, I disagreed with G.

Blue Lithium

After his three year non-compete agreement with ValueClick was up and after G sued ValueClick for securities fraud, he started BlueLithium in 2004 at the age of 22. He raised $11.5 million from 3i and Walden VC when the company was doing $200,000 per month in sales in February 2005. I’m not sure what G was thinking, but as part of this deal he agreed to a 5 person board, of which 3 were selected by the investors.

In my view, it is not in an entrepreneur’s best interest to let investors pick a majority of the board (and thus effectively control the entire company for a minority investment). It seems like G did not have a choice based on the amount of money raised and the stage but I would have thought he would have had more ability to set terms in the round having had a nice success previously. On p 186, G describes the difficulty he experienced with his Board believing in him when ValueClick sued BlueLithium claiming he had stolen trade secrets.

In the end, BlueLithium did well with its behavioral targeting ad technology that was able to show relevent ads to consumers based on their internet browsing history. They sold the company to Yahoo on September 4, 2007 for $300M when they were about the same size iContact is today. They had good timing and in retrospect sold at a good time, following the DoubleClick/Google, aQuantive/Microsoft, and 24/7 Real Media/WPP Group transactions.

The Secret Millionaire

In Chapter 6, G describes how he ended up being part of the current Fox show The Secret Millionaire. The premise of the show is that an American millionaire (in this case, G) lives in a distressed community for one week and talks to people and then decides at the end of the week how to allocate $100,000 to non-profit organizations in the area.

As an aside, relevant to the premise of The Secret Millioniare, last night at Crunkleton’s (bar in Chapel Hill), I had an in-depth passionate debate with my friend Jess last night about Easterly’s The White Man’s Burden and whether any benefactor or philanthropist, including myself, can legitimately and morally go into a distressed community for just one week and then appropriately contribute funds without knowing fully how they will be used and whether the impact will in fact be positive or sustainable.

I made the point to Jess (who spent 2 months in Uganda at the Sachs’ Millennium Village Project in Ruhiira last summer) that I had visited Uganda in July to see the impact of the small funds I’d already contributed and to see with my own eyes how the funds were being used and whether the organizations could efficiently and and positively utilize more in the future. I argued that some BHNs like education, healthcare, and clean water were simply fundamental to humanity and that the core issue with aid that Easterly described were mainly caused by bi-lateral government to government aid that was not reaching the people. Instead, providing aid directly to grassroots organizations run by locals in which you could see the impact yourself was qualitatively a better method. The show has gotten some criticism here and here and of course on ValleyWag multiple times, but I’ll hold my view until I can catch an episode.

G’s Entrepreneurship Lessons

Finally, G ends the book with 27 lessons on entrepreneurship. They are:

  1. Listen to your heart.
  2. Forget noble motivations (one I disagree with)
  3. Adjust your attitude
  4. Figure out what you’re good at
  5. Trust your gut
  6. Do your homework
  7. Be frugal
  8. But don’t be frugal with hiring
  9. Hire smart people
  10. Don’t expect perfection, but strive for it
  11. Learn to listen
  12. Own your mistakes
  13. Never compromise your morality
  14. Never lose sign of the competition
  15. Watch your back
  16. Don’t procastinate
  17. Don’t do anything by half-measures
  18. Be nice to people
  19. Negotiate from a position of strength
  20. Expect the unexpected
  21. Perception is reality
  22. Don’t get emotional
  23. Be fearless
  24. Pick your battles
  25. Grow a think skin
  26. Take chances
  27. When you commit, you really have to commit.

Overall, I would recommend the book as for me it was good to understand the process of professional and personal development of a similarly aged internet entrepreneur. It did not provide much how-to and was more biographical in nature.

I’m sure I’ll meet Gurbaksh soon enough at one of Elliot Bisnow’s get-togethers for young technology entrepreneurs sooner or later, and I look forward to the day. I could relate to much of the bananas G went through including being bullied when young for being different, sacrificing other opportunities to build a business, raising venture capital at 21, and finding flow every day by being immersed in a company.

The Revolution Will Be Tweeted – Saturday May Bring Change to Iran

June 19, 2009

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As we sleep tonight in America, there is history afoot. Never before has the social web been used to such an extent within a country to attempt to remove a leader and coordinate a political revolution. Tomorrow, Saturday, will be an important day in the history of Iran.

For the sake of this post and citizen journalistic integrity, I’ll try to be as objective as I can here as few of us outside of Iran can know enough to truly know what is accurate. This noted, the consensus of the digerati has been made known and it is clear. In the world of Twitter, Facebook, Flickr, and YouTube–the crowdsourced view is behind the ‘Green Uprising.’

A tipping point may be reached after today’s day of prayer and Ayatollah Khameni’s speech which may only inflame protesters. The momentum behind a movement has begun and it won’t easily taper.

As I browse Twitter tonight, I see tweets like the following:

I am seeing Facebook Statuses tonight like this one:

  • Shervin Pishevar – please pray for Iran and the brave Iranian people. In 5 hours we meet our destiny. I will not be able to sleep.

The informative Green Brief is coming out nightly from an Afghan man named NiteOwl, sourced entirely from Tweets from inside Iran. There are instructions on “Anonymous Iran” on how to surf in Iran using proxies so one can access the social web. There is a tremendous set of Flickr photos of the protests on the Fhashemi Flickr account. There are 180 posters from protesters shown at Design for Iran.

In two days, hundreds of thousands of Twitter members have turned their avatar green in support of the Iranian protesters using a tool at HelpIranElection.com.

Here are some videos seemingly showing violent oppression of the protests:

There are so many ethical issues here that we must tread carefully on. We must be careful in the West to so naturally and quickly support this uprising simply because we tend to lean toward the beliefs and views of the more moderate candidate Mousavi. Here is a good article supporting Ahmadinejad’s win. There are folks on the Ahmadinejad/Khameni side who are claiming that the support for the “American led coup in Iran” is causing unneccessary blodshed. Here is an example:

  • @JimJones45 – 99% of tweets are from US backing a BLOODY revolution. People are dying. STOP destabilizing the Iranian state! #IranElection

This noted, others on Twitter seem to suggest these twitter accounts, most of which have no history before yesterday, are agents of the Iranian government.

To me, this doesn’t seem to be a Western-led coup. The pictures and videos of the hundreds of thousands of people in the street lay doubt to this claim.

Here is an excerpt of an email posted on Iran Fax Blog the that seemingly comes from an Iranian citizen:

Tomorrow, people will gather again in Valiasr Square for another peaceful march toward the IRIB building which controls all the media and which spreads filthy lies. The day before Yesterday, Ahmadinejad had hold his victory ceremony. Government buses had transported all his supporters from nearby cities. There was full coverage of that ceremony where fruit juice and cake was plenty. A maximum of 100,000 had gathered to hear his speech. These included all the militia and the soldiers and all supporters he could gather by the use of free TV publicity. Today, at least 2 million came only relying on word of mouth while reformists have no newspaper, no radio, no TV. All their internet sites are filtered as well as social networks such as facebook. Text messaging and mobile communication was also cut off during the demonstration. Since yesterday, the Iranian TV was announcing that there is no license for any gathering and riot police will severely punish anybody who may demonstrates. Ahmadinejad called the opposition as a bunch of insignificant dirt who try to make the taste of victory bitter to the nation. He also called the western leaders as a bunch of “filthy homosexuals”. All these disgusting remarks was today answered by that largest demonstration ever. Older people compared the demonstration of today with the Ashura Demonstration of 1979 which marks the downfall of the Shah regime and even said that it outnumbered that event. The militia burnt a house themselves to find the excuse to commit violence. People neutralized their tactic to a large degree by their solidarity, their wisdom and their denial to enage in any violent act. I feel sad for the loss of those young girls and boys. It is said that they also killed 3 students last night in their attack at Tehran University residence halls. I heard that a number of professors of Sharif University and AmirKabir University (Tehran Polytechnic) have resigned. Democracy is a long way ahead. I may not be alive to see that day. With eyes full of tear in these early hours of Tuesday 16th June 2009, I glorify the courage and bravery of those martyrs and I hope that their blood will make every one of us more committed to freedom, to democracy and to human rights. Viva Freedom, Viva Democracy, Viva Iran

On balance, to me the evidence seems to show that a reasonable person could come to the conclusion that this election may have been rigged. To avoid a revolution and further bloodshed, a new fair election must be held.

In an age of instant communication you cannot deceive your population for long. If you throw an election, it will get out. In an age of transparency, the days of leaders who don’t serve their people are numbered.

If you’re on Twitter, you can connect with me via @ryanallis.

The revolution will be Tweeted.

P.S. – Here is an interesting article on how protests were organized before the days of social media.

Can a For-profit Entrepreneur Be a Social Entrepreneur?

June 1, 2009

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Can a for-profit entrepreneur be a social entrepreneur? Can the Executive Director of a non-profit be an entrepreneur? Yes and yes!

At the Entrepreneur & Social Entrepreneur Meetup on Tuesday I was having a great discussion with a new friend named Phil. Phil asked me a question I’ve heard often recently, “Can I still be a social entrepreneur if I run a for-profit business and not a non-profit?”

In my view, the answer is a resounding yes.

What is an Entrepreneur & What is a Social Entrepreneur?

To me an entrepreneur is “someone who rearranges resources to create value.” To me a social entrepreneur is “someone who rearranges resources to create value.” There is no difference. The line is wonderfully blurry. Let me explain.

An entrepreneur is someone who rearranges the resources of land, labor, capital, and entrepreneurial ability to create a product or service that provides value to others. Whether the entrepreneur is doing this within a for-profit corporation, in which the net profits are either reinvested in the corporation or distributed to the shareholders or a non-profit corporation in which the profits are fully reinvested into the corporation, he or she remains an entrepreneur.

Non-profit founders and directors have customers and products too. Traditionally the customers of a non-profit are its donors and grant makers and the product is the social value it produces. If the product is not valued, customers (donors) will stop giving and leave.

Today, the black and white world of non-profits and for-profits is graying. If you want to change the world for the better, it is an open question as to whether you can make a bigger impact in a for-profit or a not-for-profit company.

Profit’s Correlation With Social Value Provided

As long as the for-profit entrepreneur a) competes within the laws of a competitive market system b) does not create short-term profit for the company by externalizing the costs of the off-balance sheet destruction of the environment and c) does not exploit its labor force, the only way for the entrepreneur to make a profit is by creating value for others.

The more the ethical entrepreneur helps others, the more profit he or she will make. Profit for an ethical entrepreneur who has not exploited the environment or labor force to gain that profit is not an ugly sign of exploitation but rather a laudable sign of value created. The successful and profitable entrepreneur has rearranged resources in such a manner that the value of the output created exceeds the sum value of the inputs.

For the ethical for-profit entrepreneur, as products are produced that help others, social value is created. The very act of building your business creates jobs, provides product and services that others value, and enables you to give back to your local and global community.

Your for-profit business can often be more sustainable than a non-profit business as you are not reliant on grants and donations to grow. While you have a disadvantage of not being able to receive tax-deductible donations, you have the big advantage in the labor market of being able to offer a wonderful thing called stock options to employees, which enables you to attract top talent and enable all to participate in the value-creation.

One of the most important things you can do as a for-profit entrepreneur to enable you to make a social impact is to be profitable. As Joel Makower argues in his book Beyond the Bottom Line, “One
of the most socially responsible things most companies can do is to be profitable.” Without profits one cannot pay taxes, provide jobs that pay well, give back to a community, or invest in innovation.

Five Ways a For-Profit Entrepreneur Can be a Social Entrepreneur

So for a for-profit entrepreneur, if you really want to be a ’social entrepreneur’ here are some suggestions:

  1. Give all your employees stock options. Requiring a team member to be there a minimum amount of time (like 6 months) before they earn the options is okay. Vest the options over a few year period (3 or 4) to help with retention.
  2. Treat your employees well. Show that you care about them. Offer health insurance and good working conditions. While you have to manage to results and that requires being a professional firm that tracks performance, you can do many little things that create a good work environment and culture that actually help the firm reduce costs, retain great people, and attract a better team.
  3. Ensure your net impact on the environment is at least neutral, if not positive. Don’t externalize the cost of environmental damage. In other words, don’t profit off of destroying the environment, even if it may still be legal to do so. Take into account the full cost of any environmental degradation or destruction in the production of your products and services. Look up the supply line and ensure your suppliers also neutralize their impact on the environment. –> Quick Case Study: Last Month, Walmart introduced a Sustainability Product Index that asks each of its suppliers fifteen questions on energy, climate, resource use, and labor practices. It has asked its suppliers to respond by October 2009. It is using this data to understand the practices of its upstream supplier network (of over 100,000 suppliers) and provide a Sustainability Index for each of its suppliers. Walmart is also creating a “consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products – from raw materials to disposal.”
  4. Have a formal corporate social responsibility policy. A particular CSR structure I’m fond of is called the 4-1s program, in which you set aside 1% of company profit (or 1% of payroll if you are venture-backed and not yet profitable), 1% of employee time, 1% of product, and 1% of equity to contribute back to your local and global community. –> Quick Case Study: At iContact, we have been contributing 1% of payroll since 2007. In 2008 we contributed $55,000 to 37 different non-profit organizations. In 2009 we’ll reach $100,000. We are now expanding our CSR program based on the 4-1s model to include 1% of employee time (up to 2.5 days of paid time-off per year to be spent on community service products), 1% of product (we are providing iContact free to any non-profit organizations in the Triangle), and 1% of equity. Don’t wait until you’re 60 and wealthy to give back. Start from day one and create an integrated giving model. You can read about iContact’s Corporate Social Responsibility Program here.
  5. As you succeed personally, give back. A great differentiator for the for-profit entrepreneur is that you and those working with you can become wealthy through the appreciation of the value of your stock ownership as you scale your ability to help others. If you’re fortunate enough to have a liquidity event (go public or get acquired) use your personal resources to invest in other entrepreneurs and social entrepreneurs who are changing the world for the better, contribute personally to the organizations (and candidates) that you feel are making the biggest positive impact for humanity, and vote with your dollars as a consumer and doing your best to purchase from companies who have a similar view about corporate social and environmental responsibility.

There is a movement of socially responsible companies that is defining our generation. These socially-responsible for-profits, sometimes informally called B Corporations instead of C or S corporations, can make a huge positive impact on the world, up and down supply chains.

There are networks springing up for socially responsible professionals such as the Social Venture Network and Net Impact.

Companies like Vestergaard Frandsen, Salesforce.com, Danone, Stonyfield Farms, and Whole Foods are leading the way in this integrated social business model. They are doing well not in spite of their social mission, but often partially because of it.

There is a new genre of books focused on how to use business to change the world. There are many, but my favorites are The Business of Changing the World, Creating a World Without Poverty: How Social Business Can Transform Our Lives, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World, and The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.

There are now publications that focus on the socially responsible business owner, including Stanford Social Innovation Review and Good Magazine (founded by the son of INC. Magazine). There is even a newswire just for social responsible news called CSRWire. There is even a stock index called the KLD400 for socially responsible companies!

There are venture capital firms that now focus on investing in socially responsible companies. These include Good Capital and SJF Ventures.

What Ben & Jerry’s and The Body Shop started is becoming wonderfully mainstream and necessary as a new generation that connects and collaborates globally like none before it becomes corporate leaders.

While I am generally a fiscal moderate who believes in the ideology of individual freedom and liberty, Milton’s Friedman’s 1970 assertion that ‘the business of business is just business’ was wrong. As Peter Drucker argued in 1942 in The Future of Industrial Man, companies must have a social dimension as well as an economic purpose.

Five Ways a Non-Profit Director Can Be An Entrepreneur

As a Non-Profit Director, you are an entrepreneur as well. You have a product and a customer, and you are working to rearrange limited resources to create value.

For the non-profit entrepreneur, today earned income models are becoming the norm rather than the exception. While 501(c)(3) non-profits have a benefit of being able to receive tax deductible contributions, these contributions are often unpredictable and at times can influence a non-profit to go in an undesired direction.

The age of non-profits being able to rely solely on donors and grants is over. For a non-profit entrepreneur, an earned income model exists when the non-profit company sells a product or service to others and gains net income on that sale which is reinvested in growing the non-profit in a sustainable manner. The line between non-profit entrepreneurs and for-profit entrepreneurs is indeed getting gray.

While you are required to reinvest practically all your net income back into the organization, you have a great advantage. As a registered 501(c)(3) you can accept tax-deductible monetary contributions from individuals and corporations. You can apply for and receive grants from foundations. You can also receive in-kind donations from local companies or receive discounts or pro-bono work from service providers.

At the end of the day, just because you cannot distribute net income to your shareholders doesn’t mean you aren’t an entrepreneur. Here are some ways you can be entrepreneurial as a non-profit founder or director:

  1. Create an earned-income model. Find a product or service you can sell to others. Just because you have to reinvest your profits, doesn’t mean you can’t make a profit. You don’t have to give away everything. The more value you create, the more you will can earn and the more you’ll be able scale your organization to serve its mission. –> Quick Case Study: As an example, a non-profit I’m the Board Chair of this year, Nourish International, has an earned-income model. Nourish teaches college students to run entrepreneurial ventures on its campuses. These ventures range from ‘Hunger Lunches’ with corn bread and beans to poker tournaments to selling medical scrubs. Nourish then takes the net profit from the students’ ventures and funds a portion of administrative overhead at the national office and contributes to community-based non-profit organizations in the developing world that work to reduce extreme poverty and hunger. This past summer Nourish sent 58 of its students to nine projects in developing countries. Nourish’s model is growing and it now chapters on 29 college campuses.
  2. Have an entrepreneurial mindset. Just because you have donors doesn’t mean you don’t have to have a sense of urgency and work quickly and efficiently to produce results and compete. The market for non-profit donations is competitive and contributions will go to those that are well-run and maximize positive human impact with minimum dollars (or at least maximize human impact in the fields that those with resources most care about, a substantive difference). While there seems to be a somewhat unfortunate reality that some well-established non-profits with celebrity representation or large budgets can often get the bulk of available contributions and crowd out perhaps more deserving smaller NPOs, many of these established non-profits were start-ups once as well and only came to be influential by being efficient, achieving their mission, and attracting larger and larger contributions and grants.
  3. Hire people who are smart, ambitious and driven. Don’t settle for poor-performers. As a Non-Profit Director you have the ability to attract talented, caring staff members that are willing to work hard for less than market pay. Use this to your advantage. There are driven, smart, ambitious, educated, and talented individuals in the work force that want to work for a non-profit. Too often I have seen non-profit entrepreneurs settling for lower quality team members and not managing their performance. Hire A players who are passionate about what you are driving to achieve and empower them to be entrepreneurial, take risk, and grow the organization.
  4. If You Aren’t Maximizing Social Value, Consider Merging. One of the issues in the non-profit world is that it is rather challenging for one non-profit to merge with or be acquired by another non-profit. This creates the reality that there are often dozens if not hundreds of small non-profits inefficiently and disparately going after the same cause. Industry consolidation and M&A in the business world happens naturally as controlling shares can be purchased in private or public markets. For a non-profit this is not possible so it is up to the humility of the founder to consider whether a merger could create a better social outcome. Allowing for the benefit of competition and time it takes to start-up, test your model, and make it scale–consider shutting down or merging your organization with a more efficient or larger organization if you feel like your organization isn’t best using resources to create positive social value. Non-profit mergers can allow the combined entity to share resources, reduce overhead costs, and go after bigger grants while achieving the shared mission.
  5. Run your non-profit like a business, because it is. Non-profit organizations sometimes use their non-profit status as an excuse not to seek to be efficient, employ staff performance management systems, or make the tough decisions for-profit businesses have to make to survive and thrive. Being a non-profit does not mean you should not seek to earn profit. It simply means you must reinvest this profit. The more profit your organization can make the faster it can scale and grow and achieve its mission (of course don’t make a profit in a manner that goes against your values and mission!). After all, your non-profit corporation is a business, just one that has committed to reinvest its profits every year back into the business and not distribute them.

What type of organization should I work for to make the greatest positive impact?

Often the best answer to the question “what type of organization should I work for to make the greatest positive impact” is a gray hybrid to the old-school black and white. The answer is often a for-profit business that is socially responsible and integrates the concepts of social business into its organization, or an entrepreneurial non-profit organization that is run like a business, efficiently and with a sense of urgency.

And finally, today the boring and bureaucratic public sector is slowly but surely changing as it is again becoming cool for smart driven people to work in government. The bureaucracy that is Washington D.C. can only change if it is infused with entrepreneurial, efficient management that has a sense of urgency and passionately cares about making a positive difference.

Comments & Thoughts?

I’d love your comments on this post! Particularly if you have any examples of companies that truly integrate social responsibility into what they do, interesting models of corporate social responsibility, or examples of non-profits that are run like an entrepreneurial businesses. Also, I’d love any thoughts on the graying of the for-profit and non-profit sector and any thoughts on infusing entrepreneurial principles and efficient management into government. Thanks for reading! – Ryan

MIT IDEAS Competition Slides – The Great Opportunity of Our Generation

April 13, 2009

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I wanted to post my Powerpoint slides from the presentation I gave at MIT for their 2009 IDEAS Competition on Monday night. You can view them on Scribd or below via this blog post.

The topic was “The Great Opportunity of Our Generation”

Some of the formatting is off in Scrib but mostly OK…

MIT IDEAS Social Entrepreneurship Competition, Ryan Allis, The Great Opportunity of Our Generation, May 200…


Here are some notes from the award ceremony following my presentation from Joe Chung. Congratulations to the winners! AquaPort, HeatSource and EGGTech were especially interesting to me.

Opening: Nick Fontaine
Keynote: Ryan Allis

Chancellor introduced
$2.5k IDEAS Award Winners
Aquaport
Oladapo Bakare
Ashley
Mary
Rob
Joonhaeng
Ash
Rebecca
Daniel
(water filtration)

Professor Thomas Byrne introduced
$2.5k winner
Vision Group (seeing machine)
Quinn Smithwick
Brandon Taylor
Yi Fei Wu
(project image directly into eye, bypass distorting part)

Barbara Baker introduced
$5k IDEAS Award winner
sponsored by Baruch Family
Global Citizen Water Initiative
Scott Frank
Stephanie Bachar
(place water in tube for 24 hrs to see if clean)

Allan Powell introduced
$5k IDEAS Award Winner
sponsored by The MIT COOP
BLISS
Saba Gul
Dr. Ishrat Hussain
Nadeem Mazen
Ghanzala Mehmood

Presented by Dean Stephen Lerman
$5k IDEAS Award Winner
sponsored by the office of dean of grad education/Yunus Challenge Winner
EGGTech Blandine Antoine Emmanuel Cassimatis Alla Jezmir
(providing battery for lighting to those in tanzania without electricity)

Yunus Challenge Winner
$7,500 IDEAS Award Winner
Lebone
Alexander Fabry
Aviva Presser
Hugo Van Zuuren
(microbial fuel cell solution for providing electricity)

Presented by Professor Thomas Byrne, MD
$7,500 IDEAS Award Winner
Braille Labeler
Aleksander and Anna Anita Leyfell
Adelaide Calbry-Muzyka
Josh Karges
Karina Pikhart
Maria Prus
Rachel Tatem
(electromechanical braille labeler)

Presented by Professor Michael Cima
Sponsored by the Lemelson – MIT Program
$7,500 IDEAS Award Winner
HeatSource
Amy Qian
Celeste Chudyk
Scot Frank
Allen Lin
Mary Masterman
Catlin Powers
Saad S
(encapsulating solar radiation through textile/material that provides heat during night)

Winner’s Retreat 2 Days at Endicott House

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