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In the wake of the 2008 financial flameout, most business people are, to put it mildly, downbeat. Banks aren't lending, consumers aren't spending and the prospects for the rest of the year seem grim. All of which makes social entrepreneurs, well, intensely—even passionately—optimistic.

"This is a slam dunk," says Willy Foote, the founder of Root Capital, which provides loans to rural businesses in Latin America, Africa and Asia. "The Wall Street meltdown provides a chance to think about how we transition from a financial system that is complex, opaque and anonymous to one that is direct and transparent."

The world seems ready for such a change. In the middle of one of the farthest-reaching financial collapses in history, U.S. President Barack Obama came into office faced with the challenge of delivering on his promise of change. People are tired of business as usual. The exasperation is palpable, but so is the hope that this time, we can and will do things differently. Social entrepreneurs have always believed this, and for many, it's their moment to shine.

"In a world where change is escalating exponentially, the only way we'll make it is if everyone has the mindset of a social entrepreneur," says Bill Drayton, a pioneer in the field and founder of Ashoka, which sponsors international leaders in philanthropic business. "The current upheaval is a great opportunity to flip the switch. We need to make everyone a change-maker."

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Root Capital announced today that it has launched a comprehensive Growth Capital Campaign that will significantly increase its capacity to serve rural grassroots businesses in developing countries by establishing a sustainable social enterprise and fully self-sufficient lending program by 2013. The five-year $63 million campaign includes a unique combination of Philanthropic Equity and Debt Capital and will accelerate the organization’s ability to impact global poverty by linking rural small and growing businesses with capital markets. Specifically, the campaign will allow Root Capital to triple its loan portfolio, enabling it to lend $121 million each year to more than 350 grassroots businesses, representing one million households.

Root Capital, a nonprofit social investment fund that is pioneering finance for rural communities, provides capital, financial training and market connections to grassroots businesses – such as farmer and artisan cooperatives – that build sustainable livelihoods and transform rural communities in poor, environmentally vulnerable places. Since its launch in 1999, Root Capital has provided more than $120 million in loans to 235 small and growing businesses, representing 360,000 individuals in 30 countries throughout Latin America and Sub-Saharan Africa. It has maintained a 99% repayment rate from its borrowers and a 100% repayment rate to its investors.

“We are excited about this opportunity to scale our impact on global poverty and to provide our investors and funders with a tool that transparently documents our progress towards sustainability,” said William Foote, Founder and CEO. “In addition to increasing our direct financing and training services, we will also be in a position to better influence local financial institutions to adopt our lending model, further increasing our impact.”

With funding from The Rockefeller Foundation, Root Capital developed the Offering in partnership with the Nonprofit Finance Fund. "Rarely does a philanthropic investment so clearly lead to such highly leveraged and fully self-sustaining impact,” said George Overholser, Founder and Managing Director of NFF Capital Partners at Nonprofit Finance Fund. “Upon completion of this Growth Capital Campaign, Root Capital will be able to leverage the same amount of philanthropic equity to directly serve five times the number of small-scale producers than they currently serve.”

Root Capital expects to gain support for the Growth Capital Campaign from a variety of investors, including foundations, corporations, socially responsible investment firms and individuals. Funders and investors already committed to the Offering include The Kendeda Fund, The Rockefeller Foundation, and the Skoll Foundation. In addition, The Prudential Insurance Company of America is in the final stages of its commitment process.

Judith Rodin, President of The Rockefeller Foundation, stated, “We are so impressed by Root Capital’s unique business model and strategic growth plan that we wanted to be one of the first investors in their Offering. We hope other investors will join us in supporting the critical work Root Capital is doing in the emerging investing industry. By taking its business model to scale, Root Capital will demonstrate that impact investments can aid philanthropy in catalyzing sustainable economic growth in rural communities around the world.”

The Skoll Foundation, a partner of Root Capital’s since 2005, is investing in the Offering with both Philanthropic Equity and Debt Capital. “By empowering small and growing businesses with the financial support and skills needed to succeed, Root Capital has demonstrated that it has a systematic and sustainable approach to reducing global poverty and environmental degradation,” said Sally Osberg, President and CEO of the Skoll Foundation. “We are proud to be one of the anchors of their Growth Capital Campaign and look forward to our continued partnership.”

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Godrej Consumer Products Ltd. is looking for acquisitions worth up to $1 billion abroad as the Indian soap and hair color maker wants to sell its products in countries like China, Brazil and Nigeria, Chairman Adi Godrej said.

"We won't go for anything very tiny, but if the acquisition is over $15 million, we would look at it," Mr. Godrej told Dow Jones Newswires in a recent interview. "On the upper side, we would look at something up to maybe a billion dollars."

He said the company would also look at acquisitions in countries like Indonesia, the Philippines, Thailand, Egypt, South Africa, and Mexico. "We would not go into developed countries by and large, and we would not like to go into developing countries with a small population."

It is targeting companies offering hair color and other hair-care products internationally, Mr. Godrej said. Also, it will look at buying "any good brands or businesses in personal or household care" in India, he added.

Godrej Consumer - whose products include soaps, detergents, deodorants, talcum powder, hair color, shaving cream and diapers - has been making international acquisitions in the past few years.

It acquired Keyline Brands, a U.K.-based provider of personal-care products, in 2005. It also bought two South African firms - hair color company Rapidol in 2006 and hair accessory maker Kinky last year.
Godrej Consumer Products Ltd. is looking for acquisitions worth up to $1 billion abroad as the Indian soap and hair color maker wants to sell its products in countries like China, Brazil and Nigeria, Chairman Adi Godrej said.

"We won't go for anything very tiny, but if the acquisition is over $15 million, we would look at it," Mr. Godrej told Dow Jones Newswires in a recent interview. "On the upper side, we would look at something up to maybe a billion dollars."

He said the company would also look at acquisitions in countries like Indonesia, the Philippines, Thailand, Egypt, South Africa, and Mexico. "We would not go into developed countries by and large, and we would not like to go into developing countries with a small population."

It is targeting companies offering hair color and other hair-care products internationally, Mr. Godrej said. Also, it will look at buying "any good brands or businesses in personal or household care" in India, he added.

Godrej Consumer - whose products include soaps, detergents, deodorants, talcum powder, hair color, shaving cream and diapers - has been making international acquisitions in the past few years.

It acquired Keyline Brands, a U.K.-based provider of personal-care products, in 2005. It also bought two South African firms - hair color company Rapidol in 2006 and hair accessory maker Kinky last year.

Mr. Godrej said new acquisitions could be funded through debt, equity or both. "If the acquisition is big, we may have to borrow money and use our surpluses."

Godrej Consumer had already raised 4 billion rupees ($79.2 million) through a rights share issue in the current financial year, primarily to fund possible acquisitions.

"For some of our (Godrej group's) other businesses, we would look at, for example, household insecticides. That's a strong business for us and we would look at acquisitions there," Mr. Godrej said.

The group has interests in real estate, agriculture products, consumer durables and home appliances and gets 25% to 30% of its total revenue from consumer goods.

It sells household insecticides through a joint venture with Sara Lee Corp., confectionery and beverages through a unit with Hershey Co. and poultry products through its venture with Tyson Foods Inc.

Mr. Godrej declined to comment on a recent media report the group is likely to buy out the 51% stake of Sara Lee in their joint venture, Godrej Sara Lee Ltd.

The demand for consumer goods is normal despite the slowing global and Indian economy, Mr. Godrej said.

"The urban consumption in FMCG (fast moving consumer goods) is running very strong. Rural is running even stronger," he said. "There is no slowdown."
Mr. Godrej said new acquisitions could be funded through debt, equity or both. "If the acquisition is big, we may have to borrow money and use our surpluses."

Godrej Consumer had already raised 4 billion rupees ($79.2 million) through a rights share issue in the current financial year, primarily to fund possible acquisitions.

"For some of our (Godrej group's) other businesses, we would look at, for example, household insecticides. That's a strong business for us and we would look at acquisitions there," Mr. Godrej said.

The group has interests in real estate, agriculture products, consumer durables and home appliances and gets 25% to 30% of its total revenue from consumer goods.

It sells household insecticides through a joint venture with Sara Lee Corp., confectionery and beverages through a unit with Hershey Co. and poultry products through its venture with Tyson Foods Inc.

Mr. Godrej declined to comment on a recent media report the group is likely to buy out the 51% stake of Sara Lee in their joint venture, Godrej Sara Lee Ltd.

The demand for consumer goods is normal despite the slowing global and Indian economy, Mr. Godrej said.

"The urban consumption in FMCG (fast moving consumer goods) is running very strong. Rural is running even stronger," he said. "There is no slowdown."

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In 2004 two Americans, Matt and Jessica Flannery, returned home from a research trip in East Africa gobsmacked by the resourcefulness and entrepreneurship capacities displayed by the poor in the rural areas they had visited.

The Flannerys discovered, much to their surprise, that being poor didn't double for being helpless and, more importantly, how far small loans of about $100 could go in facilitating and encouraging further resourcefulness of small businesses in the fight against poverty.

Of course, micro-finance is not like buying a coke, so the Flannerys galvanised an ambitious plan that would promote sustainable development through linking small businesses in rural Africa to potential money lenders in the developed world.

Before long, Kiva was born as the first citizen-powered micro-finance scheme; lenders and entrepreneurs were featured from all over the world, taking the rock out of Bono's Liveaid and GCAP poverty alleviation efforts, and making concerts and white band awareness campaigns to cancel debt, increase aid and grow more trees in the developing world campaigns seem like schmaltzy fetishes of the bored.

Without the glam of Hollywood endorsement, Kiva has been quietly connecting ordinary concerned citizens to aspirant entrepreneurs in the Third World needing start-up or pimp-up cash for their business.

"The idea of Kiva is rooted in democratising microfinance; the average person with just $25 can assist an entrepenuer and have the level of information regarding where that money goes," said Fiona Ramsey, director of Kiva's public relations.

Visiting Kiva online is akin to entering a sort of bio-social networking site; instead of selecting a mail-order bride, adding a Facebook friend or discussing a new gadget with a like-minded enthusiast in a geeky tech forum, Kiva allows the "socially minded" to browse profiles, journals and select exactly whom you want to assist almost anywhere around the globe.

"Part of our vision and our philosophy as Kiva is to focus on the language. So this means instead of painting a picture of what people expect poverty to look like, we focus on things like family, business and vocation," said Ramsey.

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When the corporate world is engaged in a debate over finding feasible solutions to come out of the current economic crisis, management guru Prof. C K Prahlad suggests innovative business models like Nano, Jaipur Rugs, Amul etc to move out from the crisis.

While encouraging business leaders to adopt innovative ideas by referring to some of the success stories of top Indian companies, Prof. Prahlad said, “India has the ability to become a hub of innovations. The business models adopted by some of the Indian companies have repeatedly proved that through innovation profit can be maximized; and they have ensured that the quality product can be delivered to masses at low prices.
 
For instance, Tata’s Nano, Airtel, Amul Jaipur Rugs, Aravind Eye Care, Jaipur Foot and many others are the result of the innovations. One thing is common amongst all the above-mentioned names, and that is the conceptualization of their business model as per the needs of the people at the bottom of the pyramid.”
 
He further said, “Business leaders should take lessons from the success of these names as they set new trends for new-generation business leaders to come. They must understand that profit is not only made by fixing high prices and providing luxury goods, rather one can make profit by reasonable quality products at a price which is affordable for the majority of the population.”
 
Talking about Jaipur Rugs, Dr Prahlad said, “In just a few years, Jaipur Rugs has grown to become one of the leading providers of hand-woven rugs from India. It has 40,00 artisans working in jaipur. It is importing wool from New Zealand and Australia, and selling the finished products to many overseas countries including the United States. Through its vertically integrated business structure, it is able to control products from conception to delivery. This method allows it to offer an exceptionally high quality and consistent product.”

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Nobody likes to say "No, Mr. President." So three years ago, when Costco CEO Jim Sinegal got a call from shareholder Dan Cooper, a partner in Chicago's Fox River Financial Resources, asking if he'd have lunch with Rwandan president Paul Kagame, he agreed. That meeting in New York led to a presidential stop at Costco HQ near Seattle. Which led to Sinegal's promise to visit Rwanda. "I made it in a moment of weakness," he says, "before I realized how long it takes to get there." He ended up taking his whole family, and today Costco is one of the two biggest buyers of Rwandan coffee beans -- about 25% of the country's premium crop, by Sinegal's estimation. Without Cooper's introduction, "no way would this have happened. I knew the Rwanda story, but I wasn't intimately involved," Sinegal says. "It took more elbow grease to get this started up, but it has been very profitable. Good for us and good for them."

(NextBillion.net editorial note: Thanks to Elizabeth Hooper for the news suggestion.)

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At a recent private brainstorming session at United Nations headquarters in New York, Ban Ki-moon, the secretary-general, heard a uniformly grim assessment of the devastating impact the global financial crisis will have on the developing world.

What began as an economic crisis was in danger of turning into a social, humanitarian, political and security meltdown that could spin out of control in the most vulnerable regions, his experts told him.

The message they want him to take to donor countries is that by shoring up foreign aid levels they would be helping to revive their own sinking economies.

While attention on the financial crisis in the developed world has focused on the need for bank bail-outs, domestic stimulus packages and rescue plans for failing industries, gatherings of officials and aid experts ahead of next month’s Group of 20 summit in London are highlighting an even graver emergency.

“It’s obviously a tragedy that people in rich countries are losing their jobs and their homes,” says Kevin Watkins, a senior UN development adviser. “But in poor countries, the rising poverty could result in vulnerable children losing their lives.”

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The Wall Street Journal -- online.wsj.com

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"No! No! No!" Oxford business professor Linda Scott does not use Avon products. In fact, she says with a smile, "One of the worst things that ever happened to me is that a friend of mine started selling Avon." But she believes her research in South Africa could prove a fascinating hypothesis: that becoming an Avon lady could help poor women in developing nations knock on prosperity's door.

Scott is a cultural historian-turned-marketing professor who first got interested in studying Avon as she mused about the rise of the American beauty industry and how it affected feminism at the turn of the 20th century. Avon saleswomen "went into factories and rural environments, and they sold through social networks of mostly poor, mostly young women," she told me on the sidelines of the Skoll World Forum of Social Entrepreneurship in Oxford. "It worked very well for Avon--and very well for the women."

One hundred years on, "the infrastructure you have in the developing world as well as the position of women in society is not that different," Scott says. "So I wondered whether Avon would work for these women. Can women make money consistently, sustainably, and significantly? What if this were a legitimate avenue for poverty alleviation?"

In Scott's own telling, that was a big if. Two years ago, she contacted Avon CEO Andrea Jung with her query, and Jung gave the greenlight for Avon's Johannesburg-based staff to cooperate with Scott's research. (The company provides access to its sales force, and the U.K.'s Department for International Development and the European Social Research Centre provide funding.)

Her preliminary findings, gleaned from hundreds of hours of interviews, surveys, and focus groups, suggest that becoming an Avon lady might work. It could even be better than microfinance--"much more accessible," Scott says, in part because of Avon's venerable distribution model and how it suits the ways that members of a community interact in South Africa.

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OXFORD, England--(BUSINESS WIRE)--Today at the Skoll World Forum on Social Entrepreneurship Monitor Group, one of the world’s leading advisory and consulting firms, releases “Emerging Markets, Emerging Models,” a first-of-its-kind report analyzing the actual behaviors, economics, and business models of successful “market-based solutions”—financially-sustainable enterprises that address challenges of global poverty. Compiled in an effort to use fact-based research to move beyond stereotypes, anecdotes, and common assumptions about the potential of market-based solutions, Monitor’s findings highlight actual data from global working models.

“Five years after C.K. Prahalad introduced the concept of The Fortune at the Bottom of the Pyramid, Monitor Group has carried out the first critical examination of how these emerging market-based solution models are functioning,” said Michael Kubzansky, Global Account Manager, Monitor Group. “This report provides strong evidence that engaging the poor as customers and suppliers presents an exciting – and significant – opportunity to establish new paradigms to bring genuine social change in economically sustainable ways.”

During the course of its research, Monitor conducted more than 35 field investigations, primarily in India and supplemented with research covering 19 countries across the world, but focused the research on India, which offers an advanced laboratory of social enterprise approaches and proved to be an especially fertile source on model effectiveness. Conclusions were based on more than 600 in-person interviews with low-income customers and small suppliers, and detailed interviews with – and research on – over 270 social enterprises in India.

Key findings of “Emerging Markets, Emerging Models” include:

• The key to success is the right business model. But business models that function well in developed and emerging markets, especially when dealing with affluent middle-income customers, are unlikely to work as well for low-income markets. The best business models in low-income economic markets – whether serving customers or engaging suppliers – often need to organize the full value chain end-to-end.
• New entrants and small enterprises are more likely than large corporations to lead the development of market-based solutions in low-end markets. Large companies have other sizable, appealing opportunities in emerging markets that are not as challenging to serve. Of the organizations observed, over two-thirds were either small and medium enterprises, or NGOs.
• Non-commercial or “soft” funding plays an important role in low-end markets and helped many of the successful enterprises examined in this report to reach scale.
• Meaningful scale is achieved in different ways but invariably takes time, especially if large corporations are not participating. Of the organizations surveyed, over 80 percent were not at or near scale. On average, most social enterprises require at least a decade to reach significant scale and only 18 percent of those organizations observed have been in operation for that long.
• The most common mistake among unsuccessful market-based solutions involves confusing what low-income customers or suppliers need with what they want. People living at the base of the economic pyramid should be seen as customers and not beneficiaries.

"Coupling thoughtful analysis with an insider's perspective on a range of business models, this new report from Monitor Group stands out as a landmark in furthering our understanding of both the great potential and lingering challenges inherent in taking market-based solutions to scale," said Antony Bugg-Levine of the Rockefeller Foundation, an official sponsor of the report.

Monitor Group will also be holding a two day conference in Delhi, India May 18 - 19 to specifically discuss Indian-based findings of the report. Those interested in attending will be able to register starting on April 6 at www.mim.monitor.com.

In addition to the Rockefeller Foundation, sponsors of “Emerging Markets, Emerging Models,” include: ICICI Bank, IDFC, IFC, Omidyar Network, Orient Global, The David and Lucile Packard Foundation, PATH, Sir Dorabji, Tata Trust, Swiss Agency for Development and Cooperation and TPI.

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