Teams of university students will compete to tackle Oregon’s social and environmental problems this fall through creation of problem-solving companies, or so-called social businesses.
Nobel Peace Prize winner Muhammad Yunus of Bangladesh — known globally as the inventor of microlending — will be on hand to inspire the Oregon students and present the prize to the winning team.
The aim is to develop creative, practical business responses to the most pressing local and regional problems, according to the Oregon University System, which is sponsoring the event.
“Instead of anticipating that government will solve everything, it’s about having business, philanthropy and entrepreneurship students come together and figure out solutions,” said Bridget Burns, Oregon University System chief of staff. “It’s such an exciting moment for this state.”
Yunus agreed to forgo his customary $125,000 speaker’s fee as long as Burns could find 1,000 Oregonians to attend the competition on Oct. 1 at the Oregon Convention Center. Gov. John Kitzhaber is scheduled to speak, and Secretary of State Kate Brown is the event’s master of ceremonies.
At least one University of Oregon team has signed up to participate.
Yunus pioneered the concept of using market forces in the service of the poor. He began a bank in 1983 in his home country that loaned small amounts without collateral to impoverished women to start or build businesses. He maintains that all human beings are without exception endowed with entrepreneurial spirit. His concept of micro finance spread around the globe.
Yunus advocates building small businesses that are not charities and that have a social or environmental objective, operate in a financially sound manner, return their investor’s principal (sans interest), treat the workforce well — and do it all with joy.
“Part of the benefit of running the enterprise is being subjected to market forces and having that response of the market and the discipline that comes from that — and being able to make adjustments in the work, in the operations, in the marketing, in the business, to best address the needs of the customers,” said Cindy Cooper, cofounder and director of the Impact Entrepreneurs program at Portland State University.
Yunus worked with international corporations on their social business lines: adidas made shoes that sell in developing companies for about $1.25 to protect children from diseases and injuries; French company Groupe Danone (Dannon in the United States) developed a low-cost yogurt to be produced in Bangladesh to reduce childhood malnutrition.
“A typical business might feel like profit is elevated to the most important status. Social businesses really don’t feel like that. Profit, people and the planet have equal status of importance,” said Amanda West, a UO graduate and cofounder of EcoZoom, a certified social “benefit” corporation.
The Portland-based EcoZoom commercializes stoves developed at the Aprovecho Research Center at Cottage Grove.
Four 31-year-olds — including a couple of UO MBAs and a planning and management graduate, together chipped in $40,000 in April 2011 to launch the business. The revenues so far are $1.6 million, West said, and the company had a $5,000 profit last month.
“I know it doesn’t sound like a lot, but for social businesses it’s even harder to turn profitable,” West said.
EcoZoom’s social purposes are to reduce lung disease and deforestation associated with the open cook fires that 3 billion people in developing countries still use.
EcoZoom would like the option of organizing under state law as a social benefit corporation, but Oregon’s law has no provision for that entity type. Traditionally organized businesses have a fiduciary responsibility to maximize profits for shareholders — even when that’s in conflict with the company’s social goals.
Eleven states, including California and Hawaii, have passed laws allowing the creation of so-called B Corp business entities. Two other states have similar laws in the works, according to B Lab, a Pennsylvania nonprofit agency that promotes the business form. The B Corp format allows the entity to deviate from the pursuit of profit.
“Legally, you can have a commitment to the triple bottom line, so legally you can make decisions in the best interest of personal impact, environmental impact and financial impact,” West said.
Absent an enabling law in Oregon, EcoZoom chose to get B Corp certification from B Lab, which requires demonstrated focus on the social or environmental goal and workplace and community activism.
This hybrid business/charity form appeals to young entrepreneurs, West said. The old idea was a business person would “learn, earn and return.” That’s learn the ropes in school and in business; earn as much money as possible; and then, return by contributing to the community at retirement, she said.
“Our generation is more about having impact when you’re in your career,” West said. “This is where our generation wants to take business. For a long time, we’ve seen all the negative effects that business can have.
“We’re interested in making an impact in the world but also in making a profit. We’re not necessarily taking a vow of poverty to make an impact on the world.”
Last year, Georgia was the first state to stage a social business competition. In October, at Georgia Tech in Atlanta, teams from 38 colleges and universities presented their business plans based on Yunus’ social business principles.
Entrants took aim at domestic violence, adult illiteracy, unemployment and lack of housing. The winning entry, from a nine-student team from Southern Polytechnic State University at Marietta, was a micro lending business, dubbed Restoration Trust, that would make small loans to victims of domestic violence to rent apartments or buy cars, or other things to help them start fresh.
“It made the students really think about all the aspects of starting an organization,” Donald Ariail, an accounting associate professor who advised the students. He said the concept of social business resonated with the team. “They were very enthused about it. That’s why they won actually — because of their enthusiasm, as much as any thing else,” he said.
Since the contest, four of the nine students have gone on to launch a nonprofit organization to make small loans to women in a YMCA domestic violence shelter. They couldn’t quite make the for-profit lending work, Ariail said.
“It’s difficult to find investors for a social business who were ready to give us money,” he said.
In Oregon, so far, about 14 teams — including representatives from all seven public universities — have signed up to compete, and Burns expects more by the Monday deadline.
Two UO teams have signed up so far, a team of undergraduates and another made up of MBA students.
UO MBA student Mikaela Hicks said socially oriented business plans are right up her alley because she’s on the UO’s sustainable business track. “Businesses have the power to create positive impact on profits, planet and people,” she said.
She’s on a five-member team that’s dreaming up a venture for the competition. “Right now were homing in on some ideas, trying to see if they’d be viable,” Hicks said.
Social Business
Nobel Peace Prize-winner Muhammad Yunus defines social business by these seven principles:
1: Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society, not to make a profit
2: The company will attain financial and economic sustainability
3: Investors get back their investment amount — no dividend is given beyond the original investment
4: When investment amount is paid back, profit stays with the company for expansion and improvement
5: The company will be environmentally conscious
6: Work force gets market wage with better-than-standard working conditions
7: Do it with joy
The Challenge
The Oregon Social Business Challenge is a competition of teams vying to create the most effective business
When and where: 10 a.m. to 3:30 p.m. Oct. 1 at the Oregon Convention Center in Portland
Deadline: Monday for teams to register and submit business plans
Information: www.ous.edu/socialbusiness
