Social start-ups may prosper in downturn

Every now and then, entrepreneurs drop out of the rat race. That happened quite a bit during the last downturn. People turned instead to social entrepreneurship — creating businesses designed to improve social welfare. We can expect that to happen again during this downturn.

Maybe it’s already happening. The Stanford Social Innovation Review journal held an Online Giving Marketplaces conference on Wednesday, focusing on how charities are using the Internet to change the face of philanthropy. Eric Nee (pictured left), organizer of the conference and editor of Social Innovation Review Journal at Stanford, said he expected about 60 people and more than 220 showed up.

“Silicon Valley is tech savvy, but there is recognition in the nonprofit worlds that technology can be used pretty effectively to increase giving, reach new donors, and bring things that are lacking like transparency,” Nee said. “What’s interesting is this isn’t just a U.S. phenomenon now.”

Social entrepreneurship already has its poster child. Premal Shah, president of micro-loan site Kiva, gave an update on his fast-growing startup. It’s now generating $1 million in funds every seven days. (In April, the rate was $1 million raised every 12 days). The company takes that money and makes $25 micro loans to entrepreneurs in developing countries. Since its founding in 2005, it has proven extremely popular, winning over advocates such as Oprah Winfrey, Bill Clinton and sponsors such as American Express. Last month, more than 700,000 visitors hit the Kiva web site. The company has more than 400 volunteers. Shah says the target is to raise $1 billion in capital in the next five years.

The growth comes from the “radical transparency” of the Internet, Shah says, because lenders can verify who they’re giving money to through the photos and reports that Kiva posts on its site. Here are some of the online nonprofits that appeared or spoke at the conference:

Betterplace, founded 2007, Berlin. Has more than 500 projects available to be funded by donors and includes testimonials from members who can vouch for the authenticity of the projects.

Conexion Colombia, founded 2003, Bogota.

DonorsChoose.org, founded 2000, New York. Teachers ask for donations for schoolroom supplies and donors can contribute.

Give India, founded 2004, Vancouver, Canada. Hub for a variety of causes in India.

Global Giving, founded 1997, Washington, D.C. A market that connects donors and those in need worldwide.

Greater Good SA, founded 2004, Capetown, South Africa. An online marketplace for charitable causes in South Africa.

Help Argentina, founded 2003, Buenos Aires, Argentina. A charitable hub for causes in Argentina.

MicroPlace, founded 2008, San Jose, Calif. Micro-finance site where investors can invest money for a return.

Mission Fish, founded 1999, Washington D.C. Raises money for nonprofits on eBay. It’s raised more than $91 million to date.

Modest Needs, founded 2002, New York. Makes donations to needy families who face emergency expenses. It’s made donations for 5,766 families to date.

Net4kds, founded 2003, Amstelveen, Netherlands. Makes donations to underprivileged children in developing worlds.

Rangde, founded 2008, Chennai, India. Extends micro credit to those who need it.

Volunteer Match, founded 1994 (see history). Matches volunteers with projects.

Wokai, founded 2006, Beijing, China. Extends micro finance to those who need it in China.

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