As part of our Origin Stories series of interviews with social entrepreneurs, we talked with Drew Tulchin, Managing Partner at Social Enterprise Associates, about his experience in social entrepreneurship. A transcript of our interview is below.
Compass Partners: Could you tell us a little bit about your background and how you became interested in social entrepreneurship initially?
Drew Tulchin: Sure, and then there is more information on my background and my bio on my company’s website. I first started my professional career in VISTA (the U.S. domestic equivalent of the Peace Corps) and then I was in AmeriCorps as a Team Leader. I worked in a number of education efforts in fundraising and in special events before going to get an MBA. I didn’t know it at the time but it was to do social enterprise – to help apply business thinking and business activities to achieve social betterment. I’ve been doing this now, social enterprise, probably 15 years even though it certainly hasn’t always been with that name.
CP: So when you were in business school, you said that you were studying social enterprise but you didn’t really know it, or it wasn’t really called that at the time. What did you envision yourself doing when you were at business school?
DT: Well I didn’t study social enterprise, as no MBA program I knew of offered that as a course of study. I went to school so I could do social enterprise. It wasn’t available as a curriculum. My goal was to go and learn business and the power of the marketplace, and to use that to leverage triple-bottom-line efforts and non-profits who are trying to earn income. For example, one of the things I did after I graduated with my MBA is I helped raise private investment for a microfinance organization, and we won the Global Social Venture Competition and then used that business plan to raise $1.2 million to do microfinance in Nicaragua and Honduras.
CP: What does Social Enterprise Associates do and what services do you get the most requests for?
DT: We are a boutique management consulting firm. We do a fair amount of work in the triple-bottom-line. We work in microfinance, helping non-profits to do earned income and also have private sector activities. Most commonly, we do business plans, do market / feasibility studies, help folks raise capital – particularly impact capital or impact investing. We do product development, and operational implementation. It’s a continuum of services. Typically, we like to work with the entrepreneurs and their organizations to help them to advance what they need to do. I think that it is very important to be flexible and not dogmatic about this new emerging field and try to help people where they are at, so that we can all move forward together.
CP: So do you do any work measuring the social return on investment?
DT: Sure, we do a lot of SROI work. We also do impact assessment and impact measurement. To me, this is an ongoing evolving field of study. It doesn’t have to be a hard science, it can be evaluative. Impact can also be used for marketing or demonstrative purposes. I like tools like Calvert Foundation’s calculator, which they have online are helpful for everyone, which is important so that the entire field advances on its knowledge and capabilities in this area.
We’ve done a lot of SROI. We had a multi-year project with a public health foundation to help them develop uniform mechanisms to measure their activities. We have also done impact measurement in microfinance, what is called social performance, to help network organizations with them. And we’ve also done things at an association level and we’ve helped small organizations and large ones.
CP: In calculating SROI, what are some of the challenges you face? I’d imagine the calculations are kind of context-specific.
DT: I think the biggest part of SROI – the math is easy – the biggest part is having organizational leadership care and pay attention to such efforts. For management and the people who use it on a daily basis to use it in the programmatic activities and in planning. Measurement for its own sake is really just an exercise, but to adapt it to your programmatic activities and to use it as a feedback source to do a better program is much harder and requires more attention – a lot of people don’t like it. They feel threatened by it. The other element is to communicate impact and SROI in a basic format so that stakeholders and others involved can understand what it is you are doing. Some people get really into the science very deeply, and I think they lose their ability to then communicate its value to other people.
CP: That’s very interesting, I guess my impression was that doing the math is kind of difficult, but I can see why there might be organizational barriers.
DT: Well, it’s not [difficult] to make the measurements. It is harder to learn what the measurements are saying, to look for an organization to then do things differently. For example, if you look at a bunch of events that you’ve done, and you apply your SROI tool to it, and you see that some event that you thought was effective for say, public education, or some other metric, and you find out that it wasn’t as effective as you thought. That might change the organization to adapt to a different strategy, which is tough, and change is difficult. Not everyone wants to do that.
CP: You have a lot of experience working with microfinance institutions and you did some work with Grameen Foundation. What are some of the biggest challenges for microfinance institutions that you have come across in your work and that you see on the horizon?
DT: A couple things: first, in addition to microfinance in itself, what I find very important is for asset development in general for people who are either excluded or have challenges accessing affordable finance. It’s more than just building a microfinance institution. Basically, your typical microfinance institution is just a bank. It’s a bank for poor people, so it’s much more interesting to look at what people are doing to either have inclusive financial services or to have asset development and build wealth for poor people and that’s a much wider, but also a more important, scope.
I think it’s important to take a financial skillset, basically being a banker, and look at how those services – access to affordable finance – can help all people and make it a universal opportunity. You really are looking at how do you run an effective organization, and the difference between an effective non-profit organization and an effective microfinance organization is the same thing. Good ones can be more efficient with the capital that they have and therefore do more, bring on more people, and serve more clients more affordably.
That said, a requirement that is universal in my opinion, and which a lot of people skip, is basic operations and basic good management. Some people go to some kind of magical other beyond and I don’t think that’s a recipe for success. I think, luckily, we have been spending more attention to these things now. There’s capital, when before capital was much more of a struggle. The model has been proven, so the whole idea of the value of microfinance and inclusive financial services doesn’t have to be explained anymore. And, I think we’re really looking at more than just the basics. Things like adopting technology to get further and cheaper services for people in society, social performance, and client protection to make sure you doing this in a way that’s going to help clients that you can demonstrate and show the value of is important.
Then, I think getting to serve more people with more services is important. Every person I should have the right to have insurance. They should have the right to have other financial services that many of us in the global north just take for granted. A lot of college kids probably get, or at least used to get, credit cards offered in the mail. To just have that available to people on a regular basis so they can improve their lives, grow a business, or send their kids to school. It’s just a reasonable thing and it provides a rising tide that can lift all ships.
CP: Switching gears a little bit, our Fellows are just freshman in college. What’s one habit you think inspiring entrepreneurs would do well to pick up?
DT: Are you talking about these young people as social entrepreneurs themselves or as folks who are trying to educate themselves so they can contribute to what social entrepreneurs are building?
CP: I think more the later – trying to educate themselves to either eventually become social entrepreneurs or to contribute to social enterprise.
DT: Yeah, I feel strongly this is a highly viable industry and will continue to be so. Just as people go to school to do pre-med or banking or consulting, you should be able to go to school now to do social enterprise. Especially if people are beginning their college career, you have four years. People should be expansive in the beginning of their college careers and they should experiment and try new things, and see if you like stuff.
I had a lot of friends in college who started one major, but then either discovered an interest or lack of interest. Really challenging yourself to take classes you might not take otherwise to see what interests you and what can expand your field of knowledge, rather than just taking stuff that is immediately in front of you.
I think another important factor is getting out of the classroom, joining clubs, getting off campus, and joining things in the community, particularly where social enterprises and people who need to be served by social enterprises are going to be. Most schools now have volunteer centers, they have civic engagement centers, and to choose something you care about, whether it’s a type of person or type of activity, and getting involved and making a contribution there – that’s really important.
Thinking about the type of activities you like to do and getting good at something is valuable for advancement. I don’t really care what it is, but become knowledgeable. Whether that’s a geographic area, whether that’s doing a type of skill, whether that’s finance or writing, become an expert in those things in which you are passionate about.
CP: What’s next for Social Enterprise Associates? What are you working on these days and looking forward to working on in the future?
DT: Going forward, we are continuing with our consulting. There is an increasing need for greater efficiency and also diversification of funding for a lot of organizations. We are going to continue helping folks to raise capital and to look at using the power of the marketplace to go much further because philanthropy is not enough. Philanthropy is just too small. In the U.S. there’s $40 billion given away by foundations each year and that is a small fraction of the amount of money that is on Wall Street or in banks, so it’s much better to go after a larger pool of money to try to group together on things that we value.
Helping to provide opportunities for the next generation of leaders, so we can get more into this industry, is valuable. And avoiding silos, as Jed Emerson talks about with the “blended value” proposition, is needed. We’re going to increasingly have to get out of one organization that only provides one product or just does health. You’re talking about communities with extensive needs, whether that’s a for-profit company offering its services and products to provide a value service or quality product, or whether it’s a non-profit that can offer and serve people and help them with their lives. They can’t just be one-trick ponies.
You can find more information about Drew, Social Enterprise Associates, and their work at their website. They have a number of valuable publications that anyone interested in social enterprise may find useful.