It was a rather hot summer day in Salem. I was sitting in front of a manager in the main branch office of the Indian Bank. He was a typical public servant with a non-committed kind of a body language.

I had a spiral bound Areca leaf cup plate manufacturing unit project report in my hand. Velmurugan was sitting next to me. We needed 80,000 rupees as a loan to start the unit.

I explained him the fundamentals of the project, and how we could break-even within a year. I was all in the report. He was hesitating to open it.

“Do you have any collateral?”, he was pointing the question to Velmurugan.

“You see, we don’t want to give any loans to people in Samudram village. They have taken loans before and almost all of them have defaulted. They are not credit-worthy”

Velmurugan is from Samudram, which is where we were hoping to set up the unit.

We walked out of the bank. The meeting lasted ten minutes.

Its almost been a year and half since then. We funded Velmururgan from the prize money from winning the Imagine Cup. The unit is up and running.

I was in the train this morning reading ‘The price of a Dream – The Story of Grameen Bank’. The default rate among the borrowers of Grameen Bank is one percent. It is also true for many other microcredit organizations, through out the world, including rural Tamil Nadu.

P.S. I’m really looking forward to a panel discussion tomorrow with David Bornstein, the author of the book and other Reynolds Fellowship recipients on the topic of microcredit.

I take a class this semester with Prof. Paul Light, which deals with the emerging trends in the non-profit sector, including Social Entrepreneurship and Social enterprises. Part of the class, involves us writing a weekly memo, on a assigned topic by Prof. Light. The topic a couple of weeks back was ‘What is Social Entrepreneurship’ ?

I took the liberty of writing him a poem. I titled it ‘Being Human’ .

Prof. Light,

People say this is an important time in history,
Were they saying the same a hundred years ago? It’s a mystery,
The world is changing; it is different than what it was a little while ago,
Its true nobody likes to maintain status quo.

What has this got to do with Social Entrepreneurship you may ask?
In a changing world the reality is stark,
While human progress has touched the lives of a lucky few,
For the majority of the rest, a bright future is necessarily untrue.

While the governments don’t care and businesses are choosey,
Non-profits do intervene, but sometimes they are very lazy,
We can sit back and say, hey, let it be,
There are a few who imagine a better world they want to see.

It’s been around for years, the concept is not new,
But, the problems are many, the solutions too few,
‘It’s a cartel of good intentions’, but with an open membership,
Someone just ended up calling it Social Entrepreneurship.

The topic has been the hardest to define,
I wonder why, with so many people on the line,
May be because Social Entrepreneurship is very common,
If we look deep inside, we will realize it’s just being human!

- Santhosh Ramdoss
(With crazy intentions of one day becoming a poet)

It has been almost a year since we first visited Mr. Velmurugan at his village in Salem district. I was personally moved by his struggle, and we were determined to set-up the pilot unit in his village.

We made our first plates just a month ago! My colleagues Sara, Deepu and Anita were the lucky ones to visit the unit at Samudram village.

Its a great beginning, but we still have a long way to go.

There are different schools of thought with regard to economic development in rural India. Until now, most programs and resources have been dominated by a subsidy driven model, with limited results. Of course, we in ProGreen strongly believe in a market driven model. However, the challenge is the empower the rural communities to gain sustainable livelihoods driven by market forces.And then, a few days ago I heard about Elango, a Social Entrepreneur and the Panchyat head of a small rural community in Tamil Nadu. Ilango seems to have perfected a self-relaince driven model called ‘Network Growth Economy’. I strongly recommend Ilango’s Power-point which you can download from Thoughts in Tamil blog:

When production and consumption both become localised - speedy and indefinite production at any price, disappears. So does Market dependency.

The network villages share their produce between themselves and supplement each others’ production and processing

I guess there is no single revolution. We needs lots of great ideas. What we also need is a truck load of inspiration. Thanks Elango!

We were sitting at the site coordination office of SPARC, at Dharavi. SPARC is a Mumbai based non-profit working towards rehabilitation of Mumbai’s slum dwellers through local community organizations. The office is in the ground floor of a recently constructed housing complex, which previously used be a slum, now converted with help from the state government and local community organizations.

As we get into the office, an old man walks in. He had walking sticks, was almost shirtless and had bandages tied to his legs. He approaches the coordinator sitting there and hands him some documents, and starts conversing in Tamil. The coordinator, quite a young guy, could not understand a word. So, I became the interpreter.

Turns out Ramalingam, who is probably more than 60, hails from Thirukovil in Southern Tamil Nadu. He came to Mumbai 40 years ago with his family and since then has been begging in the streets of Mumbai. The little hut where he and his family currently live is scheduled to be demolished by the municipality in the next couple of days. However, he has been allotted a house, in one of the newly constructed apartment complexes to rehabilitate slum dwellers at Vashi naka. He had the keys for his new apartment. He was there at the office, because he was told by his neighbors that SPARC would also pay him some money for the shifting, given that Vashi naka is quite far from where he lives right now. However, he had to return empty handed, SPARC had no resources under that program, to pay for his shifting. Well, at least he got the house.

Later than afternoon, we went in-roads into Dharavi to see some more projects. I still could not understand why someone like Ramalingam, would leave his nice town or village to come to a city like Mumbai and live in the worst conditions possible. Was it extreme poverty or the lure of the big city? I heard that 60-70% of families living in Dharavi are people who migrated from Southern Tamil Nadu! Interestingly, Dharavi is also swarming with economic activity. A recent Time Magazine article estimates that the slum generates a GDP of $1 billion a year. And yet, people living in the worst possible conditions.

That afternoon reinforced my belief that creating rural livelihoods is an important step in preventing such large scale migration. Probably one day, Ramalingam’s children would want to come back to their little town.

I came across this thought-provoking article, Non Profit and For-Profit: Blurring the Line, written by Howard Husock, who is the director of the Manhattan Institute’s Social Entrepreneurship Initiative, an award and research program, and a research fellow at the Hauser Center for Nonprofit Organizations, at Harvard University.

The artile does make us question the basic premise of ProGreen and ideals on which we were founded.

Indeed, not only is Adam Smith right that, by definition, all private business fulfills social needs (or goes broke trying), but so too, virtually any enterprise can be made to sound as if it’s serving a good cause.

When it started, for instance, Wal-Mart might well have claimed to be “bringing a full range of product choices to previously underserved rural consumers.”

Social enterprise, in other words, is, at best, more rhetoric than breakthrough; at worst, it is a corruption of the basic Adam Smith idea of private enterprise.

Social enterprises may not be a breakthough idea after all. And, I do agree there are many social problems that cannot be addressed by for-profit social enterprises and the only approach is philanthropy and non-profits.

However, when it comes to economic development of the poor, especially in India, both non-profits and the Government have not done much in the past few decades.

And with ProGreen, I have always believed that conceptualizing the business plan and winning the competitions was the easy part. Putting the plan to work, as we are slowly beginning to realize, is a whole new ball game. Eve, Howard has a word of caution.

Perhaps, but making a profit is no mean feat and may look only superficially easier than the challenge faced by traditional nonprofit groups, with their relentless need to raise money. The sheer terror and urgency of repaying investors or satisfying shareholders simply cannot be minimized. Put another way, one bottom line is a lot.

We are finalizing the deal with the machine supplier - J Paper Cups for the pilot unit at Samudram village. Slowly the boundaries between ProGreen's social mission and business goals are dissappearing.

The supplier, who promises to supply us machines of highest quality, was never willing to be flexible on the price. As like any other business, we kept pushing. Finally, they offered a price reduction, not being sympathetic to our social goals, but simply on the promise of future business.

It feels good, to do business, especially when you know for sure that you are not just maximizing Financial Return on Investment, but also the Social Return on Investment (SROI). 

Thomas Friedman in his syndicated column in New York Times, recently wrote about the changing face of outsourcing - Outsourcing, Schmoutsourcing! Out Is Over(subscription only, but you can find the same piece in the print version of the Indian Express, 20th May)

In the article, Friedman mentions his recent interview with Ramalinga Raju, CEO of Satyam. Satyam is currently piloting a project in two villages for outsourcing non-voice BPO work from rural areas. The project is expected to expand to 150 villages.

This emerging trend stands to prove that the ProGreen BPO cooperative is a viable proposition. Not only does it address many of the key issues face by the BPO sector, liking rising employee costs and high attrition but it also effectively addresses rural poverty.

I guess its just a matter of time before rural outsourcing becomes mainstream in India. Great ideas catch up soon.

ProGreen is hoping to pilot its project within the next one year!

We are in the final phases of making out investment in the pilot project, at Samudram village in Salem district. The unit will be run by a local entrepreneur, Mr. Velmurugan. It has been almost a year since Mr. Velmurugan first spoke to us. Although the cornerstone of the ProGreen model is to facilitate formation of micro-cooperatives, and not to be involved as a funding agency (a bank or a micro-finance institution is better equipped to do the same), we had to relax those norms, in setting up the pilot project. After repeated attempts, we were met with dead-ends in our effort to arrange a small business loan for Mr. Velmurugan. So, we decided to extend our resources – cash prize from winning GSEC and Imagine Cup.

The other day, I and Mr. Velmurugan were discussing the modalities of setting up the unit. He has been doing quite a bit of research on the local demand for Areca Cups & Plates. The Salem area has a large number small manufacturers involved in producing Areca Cups & Plates. Given that there have been little efforts in developing a sustainable market for these products; there has been significant price undercutting. Mr. Velmurugan was mentioning a recent incident where, initially a supplier had agreed for Rs. 1.20 per plate. Another supplier squeezed in to supply at Rs.0.90 per plate. I know based on the cost structure involved in making these cups and plates, the second supplier should be employing underpaid laborers, working for sixteen hours a day.

My belief in social entrepreneurship revolves around developing sustainable businesses, competitive in the real world, and primarily maximizing the Social Return on Investment. For instance, Mr. Velmurugan has to pay reasonable wages to his employees. His belief in social change through employment generation in his village is as strong as ProGreen’s belief in the model.

So, will the pilot project make in the real world? In this cut-throat world of business, is it possible to make profits as wells as maximize Social Return?

Well, when I, Sara, Anita and Deepak started working on ProGreen, we never believed it was easy. In fact, the tougher it gets, the better it is.

We have been on the look out for committed funding opportunities and grants.  A quick update on the status of various funding opportunities that we applied for:

Echoing Green

The most competitive fellowship where more than 100 applicants are filtered down to less than 12 grants awarded every year. One of our mentors, Mr C V Madhukar is a Echoing Green 2005 fellow. His organization Parliamentary Research Service (PRS) is an independent, not-for-profit initiative that seeks to promote wider debate on upcoming legislative issues in Parliament.

The most competitive fellowship where more than 100 applicants are filtered down to less than 12 grants awarded every year. One of our mentors, Mr C V Madhukar is a Echoing Green 2005 fellow. His organization is an independent, not-for-profit initiative that seeks to promote wider debate on upcoming legislative issues in Parliament.ProGreen did not make it through the first round for 2006 fellowship. We will keep trying.

Youth Social Enterprise Initiative 

We recently applied for the YSEI fellowship. ProGreen is seeking funding to initiate the rural BPO cooperative.

Well, the good news is that we are through to the final round. We are there with 30 odd finalists from the Asia Pac region. All we can do now is to keep our fingers crossed!

Click here to access the YSEI webiste.