Panelists Encourage Non-Profits to be Savvy

Not-for-profit international development organizations must learn to think like for-profit businesses in order to be effective in reducing poverty in the developing world, according to panelists that spoke yesterday at an event organized by the Social Enterprise Club (SEC).

“These organizations need to develop business savvy in order to be self-sustaining and efficient,” said Erika Eurkus, of the Boston-based non-profit group, Accion International.

The panelists told roughly 40 students that for-profit management and marketing techniques were compatible with the objectives of non-profit organizations.

Accion International, an organization that provides micro-loans to small businesses, called “social enterprises” in the micro-lending industry, has successfully used effective business practices to provide more than $4.6 billion dollars to more than 2.7 million entrepreneurs.

The average loan is about $500—a figure that mainstream banks are hesitant to extend.

These monies are used by people with no credit history and no collateral to start small ventures such as opening hair salons or starting a small handicraft businesses.

Most of Accion’s debtors are in the poorest areas of Latin America, according to Eurkus.

Eurkus said that when the first such loans were made in the 1960s, Accion International’s management did not expect any of the debtor countries to return the loan.

To date, 97 percent of groups and individuals have returned their loans.

Judy Logback, founder and director of Kallari, said that micro-loans allow villagers to preserve their natural resources, which would normally be used up in short-sighted yet necessary attempts at income generation.

Kallari is a program aimed at helping indigenous Ecuadorians make and market their traditional handicrafts.

“One of the goals [of the program] was to make income from the forest without cutting down the trees,” she said.

The handicrafts project in Ecuador raised the incomes of participating families by 30 percent after one year, according to Logback.

She said the project has been so successful that Kallari has a waiting list of 15 villages that are hoping to join the program.

Both Logback and Eurkus said that because micro-finance organizations are extremely effective at developing communities economically, there is a demand in the field for people with private sector business experience.

Eurkus even suggested that audience members begin their international development careers in the private sector first.

Lauren E. Cozzolino ’04 said she learned about the importance of business expertise first-hand.

“I’m a government concentrator, but after being abroad in Hong Kong and spending my summer travelling through Cambodia, I realized how much business pushes international development and I’m taking more economics classes now,” she said.

SEC, which sponsored the panel, hopes to get more Harvard students interested in business to apply their skills to social work, says Director of Operations and event organizer Francisco Aguilar ’05.

SEC President Jason S. Lee ’05 said that his club sees an increase in demand among students for volunteer experiences in social enterprise.

Lee said the SEC is planning an internship program that will place 8 to 10 undergraduates onto consulting teams at the New Sector Alliance, a Boston-area non-profit consulting firm.

The students will advise non-profit organizations and hopefully, said Lee, come back to campus with the business savvy required to assist undergraduate non-profit organizations before continuing to careers in social enterprise.