Investing In Social Change

By William Dowell

Bill Drayton, 57, is widely credited with pioneering charitable support for "social entrepreneurs"--innovators whose ideas can leverage small cash investments into large and self-sustaining improvements in a society's health or education or housing. "We really don't want to be mistaken for a foundation," Drayton says somewhat disdainfully. "Philanthropy has been dominated by governments and foundation bureaucracies that have not evolved quickly enough and don't adapt well to changing demands from the field. We need to invent new institutions."

That's one reason Drayton in 1980 founded Ashoka: Innovators for the Public (named for a benevolent Indian Emperor from the 3rd century B.C.). Its approach grew out of Drayton's background as a student activist at Harvard, traveler through India and consultant for nearly a decade for McKinsey & Co. Ashoka started by raising "seed capital" mostly from small donors, including three family foundations belonging to Bill Golden, Mark Lipkin and John Klingenstein. Drayton was named a MacArthur fellow from 1984 to 1989, which gave him more time and money to develop Ashoka. By 1991 its budget was $2.2 million; it's now $11 million.

Ashoka has funded more than 1,000 projects, from India to Mexico. Each joins the organization's worldwide network of like-minded social entrepreneurs, exchanging ideas and practical experience. Alumni include Mohammed Yunis, member of Bangladesh's Grameen Bank whose "microcredit" loans of less than $60 have made it possible for thousands of poor women to build their own homes--a success story that attracted attention during Hillary Clinton's trip to South Asia in 1995.

A recent innovation is the combination of some Ashoka operations with McKinsey's expertise. In the slums of Sao Paolo, Brazil, an Ashoka entrepreneur named Leonardo Pessina was able to build high-quality housing at less than half the normal construction cost by getting the community to provide much of the labor. But managing a huge construction operation threatened to overwhelm even the committed Pessina. So McKinsey made available about 25% of its local staff as volunteers to manage the project. And the consulting firm received a major payback. "McKinsey has an understanding of the local housing market that it never had before," Drayton says. "It puts them in contact with some of the most powerful people in the community, and they got a lot of clout because they are working on a really big strategic change."

--By William Dowell