Everyone A Changemaker

Everyone a Changemaker
Social Entrepreneurship’s Ultimate Goal
by Bill Drayton
As published in the Winter 2006 edition of
The MIT Press

Ashoka is a global association of the world’s leading
social entrepreneurs. It helps them both get started and succeed
over their long lifetimes causing large scale, very much needed
pattern change. They address every area of human need – from
human rights to the environment, from full economic citizenship
to empowering young people. Small investments produce huge
results. Five years after their startup launch, between 49 and
60 percent have already changed national policy and around 90
percent have seen independent institutions copy their innovation.
Working with these social entrepreneurs, Ashoka builds
communities of innovators who work collectively to transform
society, and to design new ways for the social sector to become
more productive, entrepreneurial and globally integrated. There
are now over 1,750 Ashoka leading social entrepreneurs, and
Ashoka serves over 60 countries.
2006 is Ashoka’s 25th anniversary year!
The MIT Press
Reprinted with the permission of Innovations journal. To
find out more, please visit www.mitpress.mit.edu/innovations.

Bill Drayton
Everyone a Changemaker
Social Entrepreneurship’s Ultimate Goal
Rodrigo Baggio grew up in Rio de Janeiro loving computers. As he matured into an extraordinarily tall, thin man with
a hugely wide smile, he became a computer consultant. However, from early on, he was one of the few in his generation
who noticed—with concern—that the young people growing up in the favelas on the hills overlooking his middle-class
neighborhood had no access to this digital world.
Because he has the great entrepreneur’s tenacity of observation and thought as well as action, he decided he had to
take on the digital divide—well before the phrase came into currency—and he has been pursuing this vision relentlessly
ever since. While beginning to work toward this dream as a teenager, he learned just how motivated and capable of
learning the young people in the favelas were. And also how competent the favela community was in organizing. This
respect underlies the central insight that has allowed Rodrigo to have a growing multi-continental impact.
Rodrigo provides only what the community cannot: typically computers, software, and training. The community
does the organizing, finding space, recruiting the students and faculty, and providing ongoing administration. The result is
a uniquely economical model, and also one where, because the investment strengthens the broader community, it is self-
sustaining and a foundation for other initiatives long into the future.
Rodrigo’s chain of hundreds of community-based computer training
schools now serves hundreds of slums across Latin America and Asia. These
schools now have 700,000 graduates.
I got a sense of Rodrigo’s power when he came to Washington shortly after
being elected an Ashoka Fellow. Somehow he convinced the Inter-American
Development Bank to give him its used (but highly valuable) computers.
Somehow he convinced the Brazilian Air Force first to warehouse and then
to fly these computers home. And then he somehow managed to persuade the
Brazilian customs authority to allow all these computers in at a time when Brazil
was trying to block computer imports.
Rodrigo Baggio’s students in a Brazilian favella.
Several years later, I got a further sense of how his mind worked, when I
asked him why he was starting his work in Asia in Japan. Japan, he said, was the
only large Asian source of computers where he could imagine getting people to give them to him. Therefore, as his first step,
he had to demonstrate the value of his program to the Japanese in several of their own slums.
That is how entrepreneurs work. Having decided that the world must change in some important way, they simply find
and build highways that lead inexorably to that result. Where others see barriers, they delight in finding solutions and in turning
them into society’s new and concrete pat erns.
That much is easy to observe. However, there is more to it. Somehow, an unknown, young, lanky Rodrigo, the head
of a new and unknown citizen organization, persuaded the managers of one after another of society’s big institutions to do
things they never would have imagined. He knew they were the right and logical things to do. Somehow they sensed that
inner confidence and found it surprisingly persuasive.
What were they sensing? Rodrigo’s words and arguments no doubt helped, but few people are willing to step out
beyond the safely conventional merely on the basis of good arguments.
Rodrigo was persuasive because his listeners sensed something deeper.
What Rodrigo was proposing was not just an idea, but the central logic of his life—as it is for every great
entrepreneur. He mastered and came to love the new digital world from the time he was a young boy. More important,
his values from early on drove him to care about the poverty and inequality he could see on the hillsides rising
behind the middle-class Rio in which he was growing up. His values and his temperament had him taking on the
digital divide before the term was invented.
As a result, when Rodrigo sat across the table from the much older, powerful officials he needed to move, they were
confronting not just a good idea, but deeply rooted and life-defining values: non-egoistic, kindly determination and commitment.
This values-based faith is the ultimate power of the first-class entrepreneur. It is a quality others sense and trust,
whether or not they really fully grasp the idea intellectually. Even though they would not normally want to step out in front
of the crowd, a quiet voice tells them to trust Rodrigo and go with his vision.
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© 2006 Tagore LLC

Bill Drayton
Any assessment of Rodrigo’s impact that stopped with his idea, let alone his business plan, would not have penetrated
to the core of his power. Our field has been impoverished by too many assessments that never get to the essence.
Nor is Rodrigo’s most important impact his schools or the life-changing independence and mastery he provides his
students. Consider the impact Rodrigo has on a community when he introduces his program. It is not a school created by
the government or outsiders. It is a school created by, funded by, managed by, and staffed by people in the community.
The students are responsible for learning and then making their way. Think how many patterns and stereotypes are
crumpled by these simple and very obvious facts. The psychological impact is a bit like India emerging from 50 years of
falling behind to suddenly being recognized as the new challenger at the cutting edge of the most advanced part of the
world’s economy.
Accompanying this disruption of old patterns of action and perception is another contribution, and I believe it is
the greatest one of Rodrigo and every entrepreneur: the idea of catalyzing new local changemakers into being. Unless the
entrepreneur can get someone in one community after another to step forward and seize his or her idea, the entrepreneur
will never achieve the spread that is essential to his or her life success.
Consequently, the entrepreneur presents his or her idea to the local community
Ten years ago, the probability in the most enticing, safe, understandable, and user-friendly ways possible.
of an idea from Bangladesh
Of course, the entrepreneur’s own life story is in itself a beacon encouraging
hundreds of others to care and to take initiative. This also increases the number
affecting a community in
of local changemakers.
Brazil, Poland, or the U.S. was
Moreover, when these local champions then build the teams they need to
very limited. Now it is common launch the idea they have adopted, they are providing not only encouragement
(the best-known example
but also training to potential next-generation local changemakers.
As the field of social entrepreneurship has grown and multiplied and wired
being Muhammad Yunus’s
itself together across the globe over the last 25 years, the rate of this plowing
impact on the global spread
and seeding at the local level has accelerated dramatically. Ten years ago, the
of microcredit) and becoming probability of an idea from Bangladesh affecting a community in Brazil, Poland,
or the U.S. was very limited. Now it is common (the best-known example being
more common every year.
Muhammad Yunus’s impact on the global spread of microcredit) and becoming
more common every year.
As the number of leading pattern-changing social entrepreneurs has been increasing everywhere, and as the geographic
reach of their ideas has been expanding ever more rapidly, the rate of plowing and seeding therefore has multiplied. As have
the number of local changemakers.
This whole process is enormously contagious. As the number of large-scale entrepreneurs and local changemakers
multiplies, so does the number of support institutions, al of these make the next generation of entrepreneuring and changemaking
easier. Not only do people not resist, but in fact, they respond readily to this change. Who wants to be an object when they
could be changemakers, when they could live lives far more creative and contributory and therefore respected and valued?
As important as Rodrigo’s impact is on the digital divide and on the lives and communities he serves, I believe this
second dimension of his impact is far more important—especial y at this transitional moment in history.
The most important contribution any of us can make now is not to solve any particular problem, no mat er how urgent
energy or environment or financial regulation is. What we must do now is increase the proportion of humans who know that
they can cause change. And who, like smart white blood cel s coursing through society, wil stop with pleasure whenever
they see that something is stuck or that an opportunity is ripe to be seized. Multiplying society’s capacity to adapt and change
intel igently and constructively and building the necessary underlying col aborative architecture, is the world’s most critical
opportunity now. Pat ern-changing leading social entrepreneurs are the most critical single factor in catalyzing and engineering
this transformation.1
EVERYONE A CHANGEMAKER
The agricultural revolution produced only a small surplus, so only a small elite could move into the towns to create
culture and conscious history. This pattern has persisted ever since: only a few have held the monopoly on initiative because
they alone have had the social tools.
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Everyone a Changemaker
That is one reason that per capita income in the West remained flat from the fal of the Roman Empire until about 1700.
By 1700, however, a new, more open architecture was beginning to develop in northern Europe: entrepreneurial/
competitive business facilitated by more tolerant, open politics. The new business model rewarded people who would step
up with better ideas and implement them, igniting a relentlessly expanding cycle of entrepreneurial innovation leading to
productivity gains, leading to ever more entrepreneurs, successful innovation, and productivity gains.
One result: the West broke out from 1,200 years of stagnation and soon soared past anything the world had seen before.
Average per capita income rose 20 percent in the 1700s, 200 percent in the 1800s, and 740 percent in the last century.2
The press reported the wars and other follies, but for the last 300 years this profound innovation in how humans
organize themselves has been the defining, decisive historical force at work.
However, until 1980, this transformation bypassed the social half of the world’s operations.3 Society taxed
the new wealth created by business to pay for its roads and canals, schools and welfare systems. There was no need
to change. Moreover, no monopoly, public or private, welcomes competition because it is very likely to lose. Thus,
the social sector had little felt need to change and a paymaster that actively
discouraged it.
Hence, the squalor of the social sector. Relative performance declining at [S]ociety cannot
an accelerating rate. And consequent low repute, dismal pay, and poor self-esteem significantly increase
and élan.
the proportion of adults
By the nineteenth century, a few modern social entrepreneurs began to appear. who are, and know they
The anti-slavery leagues and Florence Nightingale are outstanding examples. But
they remained islands.
are, changemakers and
It was only around 1980 that the ice began to crack and the social arena as a whole who have mastered the
made the structural leap to this new entrepreneurial competitive architecture.4
necessary and complex
However, once the ice broke, catch-up change came in a rush. And it did so
pret y much al across the world, the chief exceptions being areas where governments underlying social skills
were afraid.
until it changes the way all
Because it has the advantage of not having to be the pioneer, but rather of young people live.
following business, this second great transformation has been able steadily to
compound productivity growth at a very fast rate. In this it resembles successful
developing countries like Thailand.
Ashoka’s best estimate is that the citizen sector is halving the gap between its productivity level and that of business
every 10 to 12 years.
This rapidly rising productivity means that the cost of the goods and services produced by the citizen sector is falling
relative to those produced by business—reversing the pricing pattern of the last centuries that led to the much-criticized
“consumer” culture.
As a result, as resources flow into the citizen sector, it is growing explosively. It is generating jobs two and a half to
three times as fast as business. There are now millions of modern, competing citizen groups, including big, sophisticated
second-generation organizations, in each of the four main areas where the field has emerged most vigorously: Brazil-focused
South America, Mexico/U.S./Canada, Europe, and South and Southeast Asia. (The field is also growing vigorously in
Africa, the Middle East, East Asia, and Australia/New Zealand, but these are much smaller clusters.) All this, of course, has
dramatically altered the field’s élan and attractiveness. This is where the job growth is, not to mention the most challenging,
value-rooted, and increasingly even well-paid jobs. Just listen to today’s “business” school students.
Given the results-based power of this transformation of the citizen sector, more and more local changemakers
are emerging. Some of these learn and later expand the pool of leading social entrepreneurs. To the degree they succeed
locally, they give wings to the entrepreneur whose idea they have taken up, they encourage neighbors also to become
changemakers, and they cumulatively build the institutions and attitudes that make local changemaking progressively easier
and more respected. All of which eases the tasks facing the next generation of primary pattern-change entrepreneurs.
This virtuous cycle catalyzed by leading social entrepreneurs and local changemakers is the chief engine now
moving the world toward an “everyone a changemaker” future.
No matter how powerful this dynamic is, however, several other changes are necessary if society is to navigate
this transition successfully:
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Bill Drayton
l Most important, society cannot significantly increase the proportion of adults who are, and know they are, changemakers
and who have mastered the necessary and complex underlying social skil s until it changes the way al young people live.
l Although it is normal for support areas like finance to lag behind change in the operating areas they serve, the
emergent citizen sector is now at significant risk unless it can quickly engineer major structural changes in both its institutional
finance sector and the broad grassroots sources of support in its post-breakeven zone.
TRANSFORMING THE YOUTH YEARS
There are wel over 400 Ashoka leading social entrepreneurs whose primary goal is get ing society to do a far bet er
job of helping al children and young people to learn and grow up successful y. Each has a powerful, proven, society-wide
approach. (Between 49 percent and 60 percent of those elected by Ashoka have changed national policy within five years of
their startup-stage election.)
However, each of these approaches is a partial answer. It is built around one insight or principle, works through one
delivery system, and addresses one or two client groups. Ashoka’s “mosaic” process brings al these powerful elements together,
draws out the few universal principles that open major new strategic opportunities for the key decision makers in a field (e.g.,
in this case, those who run schools and youth programs), and then markets these
principles. In effect, these mosaic col aborations promise our community the
ability to entrepreneur together, an advance that produces far bigger impact than
anything the sum of our solo ventures could achieve.
Roughly two-thirds of these 400-plus youth-focused Ashoka entrepreneurs
have learned the same three powerful principles. Because they need human
resources to implement their vision and cannot realistically get more teachers,
they turn to young people. That young people are a huge, and in fact usually the
only significant available human resource is the first insight. The other two follow
logically: first, the unconventional assumption that young people are or can be
competent; and second, the idea that one must transform youth communities
Youth Venturer Jason Upshaw trains
neighborhood young people in bike repair leading (e.g., in schools) so that they become competent at initiating and organizing, and
to bikes and jobs.
then train and reward their young people in these skills. Applying these three
principles in hundreds of different ways and across the globe produces strikingly
similar and powerful results: motivated students, better academic results, and young people who are experiencing being in
charge. And a very different feel to those schools and programs from the moment one walks in.
Whether these social entrepreneurs discovered and developed these principles to solve their staffing problems and/or
with broader educational purpose, collectively they have created a most powerful set of tools to transform the youth years.
Moreover, the repeated success they have had in large-scale and highly diverse applications of these principles leaves one
with enormous confidence in the power and practicability of these principles.
Ashoka’s young people’s mosaic also identified another principle that fits closely with this first cluster: anyone (or
any group) who does not master the complex social skill of guiding his or her behavior through applied empathy will be
marginalized. Since this is the enormously cruel, destructive state of perhaps 30 percent of the world’s people, helping
young people master empathy is proportionately important.5 One of the best ways of doing so is by encouraging them to
build teams to contribute important changes and/or services. If their team is to succeed, they must master teamwork, which
in turn rests on applied empathy.
Ashoka began developing its mosaic process and the pioneer young people’s application in 1990. It was, however,
only quite recently that Ashoka realized that its ultimate purpose, an “everyone a changemaker” world, is an unreachable
fantasy unless the youth years become years of practicing being powerful and acquiring the required underlying skil s: applied
empathy, teamwork, and leadership. This realization suddenly puts the mosaic’s core principles in a new light: They are as
powerful as they are in large part because they are so key to unlocking this historical transition.
If young people do not grow up being powerful, causing change, and practicing these three interlocked underlying skil s,
they wil reach adulthood with a self-definition that does not include changemaking and a social skil set that largely precludes
it. Just as one must develop strong emotional foundations in the first three years of life or suffer for a lifetime, young people
must master and practice these social skil s and the high art of being powerful in and through society while they are young.
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Everyone a Changemaker
Consider how sophisticated the learned skill of applied empathy is: As we contemplate each action, we must
comprehend how it will impact everyone at several removes around us and long into the future—and then guide our behavior
accordingly. Our world now requires that skill as the ticket of admission to most simple levels of society. A dependably good
person can no longer rely only on rules because they are increasingly in conflict, changing, or have yet to be developed.
Those without this complex skil wil be marginalized. Moreover, mastering it is only the first step toward learning teamwork
and leadership. Like bal et, these skil s require extensive and real practice.
The children of elite families grow up at home and usually in school being expected to take initiative and being
rewarded for doing so. This confident ability to master new situations and initiate whatever changes or actions are
needed is in essence what defines the elite. Entering adult life with confidence and mastery of empathy/teamwork/
leadership skills is what ultimately has given this small group control of the initiative and therefore of power and
resources for millennia.
However, the other 97 percent grow up getting very little such experience with taking initiative. Adults control the
classroom, work setting, and even sports and extra-curricular activities. And this situation, coupled with society’s attitudes,
drums home the message to this majority: “You’re not competent or perhaps even responsible. Please don’t try to start
things; we can do it far better.” Teachers, social workers and others are comfortably in control; and, in fact, most school and
other youth cultures are not competent and do not train and support and respect initiative-taking. Instead, the peer group
culture, not surprisingly, is resentful and in the worst cultures, quite negative.
Do these inarticulate, frustrated youth cultures bring analogous prior situations to mind? Over the last century,
many other groups—including women, African Americans, those with disabilities, even colonial peoples—had to
make their way from debilitating stereotypes and little prior practice in taking the initiative to becoming fully
accepted, capable contributors. These groups, although very different from one another, had to travel strongly
similar human and community transformation paths.
Young people are the last big group to set out on this journey. They are also different; but, in the underlying psychological
and organizational transitions ahead, they can learn a great deal from the experience of these other groups.
Building on the history of these earlier movements and also on the accumulated experience of hundreds of leading
social entrepreneurs working with young people, Ashoka and many partners6 have prototyped and are beginning to launch
at scale the equivalent of a women’s or older person’s movement for young people.
Although this movement must ultimately change how everyone thinks about and relates to young people, it is young people
and their peer communities who wil have to change most and who have the most to gain. Therefore, as with al the earlier similar
transformations, it is essential that they be central actors—both in actual y shifting to the new pat ern (because the best learning
comes from action) and in championing the change (because people in any class are most likely to hear and trust peers).
This emergent movement will be far bigger than Ashoka, and once it is past the next six to ten intensely entrepreneurial
years, it will require extensive operating management that is culturally inappropriate for Ashoka’s “collegial/intrapreneurial”
essence. Ashoka has therefore created an independent but close partner, Youth Venture. Working closely with Ashoka’s
young people “mosaic” team, it has the lead in major spread and emerging operating work.
How to launch and build such a movement?
Ashoka, Youth Venture, and their partners are following a strategy that exercises enormously powerful jujitsu-like
leverage; leverage that works on four mutually reinforcing levels. They are summarized in Table 1.
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Bill Drayton
Table 1. The Movement’s Jujitsu: Four Levels of Leverage
Actions
Impacts
In any school, community, or country each year, ½ of 1 per- By leading, these young Venturers become lifelong leaders. They
cent of the young people have a dream and create a lasting
have mastered the essential skills of empathy, teamwork and
venture.
leadership-and irrefutably know it.
Each venture engages a team (typically 3-5 in the core group Everyone learns what teamwork, that they can lead, and how to do
plus 20 who tutor, coach, broadcast, etc.)7
so. This further multiplies the next generation’s proportion of “natu-
ral” leaders.
1% of a school or youth community launches Ventures with As Venturer peer groups recruit and sell their work, they can both tip
on average 25 participants. Over two years: 20% to 25% of their school or neighborhood youth culture and also will wear down
the whole institution are Engaged, likely “tipping” its youth old attitudes and logistic barriers (e.g., space, insurance).
culture.
Society questions the current disempowering pat ern,
Everyone redefines the youth years and lives them as a time of ex-
builds a women’s/disability movement for young people.
pected initiative,competency, and contribution.
YouthVenture participants provide role models and
champions. The press joins in.
Each of these four levels in Table 1 needs the others. But they will not snap into place together or everywhere in
society instantly. This makes the job facing the pioneers much harder than it will be for their successors; and it requires a
phased, several-stage strategy.
The central challenge is getting to the scale where the synergies between these four levels—and across schools,
neighborhoods, and regions—kick in and become irreversibly self-multiplying. Ashoka/Youth Venture, recognizing this is
the heart of the matter, has been experimenting with a dozen different avenues and is gaining increasing traction. Here are
some examples:
l
Partnering with national organizations with many chapters (e.g., the Girl Scouts) or broad reach (e.g., Youth Services
America).
l
Co-venturing with public-spirited corporate partners, including experimenting with engaging staff, local units, and
key customers as nominators, Youth Venturer Al ies, and local organizers. (Most recently with Staples in Europe and Latin
America).
l
Communicating the stories of Youth Venturers broadly and encouraging others through media partners (including
a growing relationship with MTV in the U.S. and Mexico).
l
Using Internet avenues to recruit, help, and network Venturers, Allies, and local Partners.
l
Extending Youth Venture’s online “Virtual Venturer” program, which allows young people to become Venturers
even in communities without an established organizational presence.
l
Replicating the successful United Way model developed in North Central Massachusetts.
After two years, almost all the schools have multiple Youth Venture teams; the area’s community college gives
college credit for high school Venture work; and virtually all young people in the area experience multiple Venture
models. Four other local United Ways are moving to follow, hopefully followed by many others and also community
foundations.
l
Partnering with a subject matter segment of the citizen sector (e.g., the environment) to support Youth Venture
teams in its field as a means of seeding future leadership.
l
Building a network of stand-alone, volunteer-led local Youth Venture organizations akin to the vast majority of
Scout, 4-H, and Little League groups (experiments underway in four metropolitan areas).
l
Breaking through with groups of schools, e.g., those served by an Ashoka Fellow or where we can get support from
the leaders of a school system. This is more school system leveraged than working school by school although we welcome
individual schools as long as the leadership comes from them.
l
Building links to youth communities (e.g., punk rock bands, debate groups) built around a common interest and that
cut across institutions and geography.
l
Getting to scale locally: Using all avenues in a few medium-sized metropolitan areas or small provinces or states
(e.g., New Hampshire).
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Everyone a Changemaker
Although the movement is far up the learning curve, all that means is that the pace of experimenting/learning
is accelerating and broadening. It needs many more partners who are excited by this movement-building challenge
of accelerating to scale, and who will join in experimenting, adapting, and pushing.
And it needs to communicate its alternative vision for the youth years and ultimately for a rapidly multiplying proportion
of the population who have the power to change things.
As the number of young leaders increases and spreads, this job becomes easier and easier, not least because such
Venturers usually gain confidence once they see that, in addition to being the founders of a newspaper or a program to
help new immigrant youth or a peer-to-peer counseling service, etc., they are pioneers in an historic moment.
NEEDED: NEW SOCIAL FINANCIAL SERVICES
Citizen organizations of all types and sizes urgently need a new social financial services system.
Where can two 15-year-old African American girls go when they need $900 seed funding to launch a teen-to-teen
late-afternoon confidential telephone hotline? Or a 14-year-old who needs $800 startup and working capital to buy T-shirts
to imprint and sell in order to fund an Ecuadorian support group of young people with diabetes? Or a group of boys who
need funds to seed what eventually will became a successful effort to build a municipal skateboard park?8
They cannot go to a foundation or a government agency. They typically cannot even open their own bank account.
What if their parents cannot or will not pay? Or if it is important to the young people to do it on their own (so they can do
it their way)?
As we have just seen, society’s core interests are in making it easy, not impossible, for young people to take
initiative and build ongoing services. But our existing financial services institutions fail us.
This is only one of many such failures of today’s social financial institutions.
Going to the other end of the sophistication scale, consider how the structure of government grant agencies and
foundations makes it extremely difficult for either institution to serve leading social entrepreneurs. The people try hard, but the
structural barriers are formidable and firmly set. Again, given how central social entrepreneurs are to what is society’s greatest
historical opportunity now, this failure is extremely costly.
What leading social entrepreneurs need and what today’s dominant social financial institutions—governments and
foundations—can provide conflict point by point:
Social entrepreneurs need social investors who will value new ideas. The most important innovations cut across
the disciplinary and organizational boundaries created to solve old problems. Governments are bound by narrow, rigidly
and impermeably bounded “stovepipes” defined by legislation and refined ever more narrowly by the organizations and
regulations that follow. Foundations are captive to internally formulated “strategies,” their institutional stovepipes, and
staffs who typically follow specialist lateral career paths. Moreover, a program officer confronting a crosscutting idea will
have to learn more, think harder, and consult and share decision-making much more than when facing a familiar idea that
neatly fits his or her program. (Can you imagine what would have happened to the digital revolution if its entrepreneurs
had to fit similar strategy/stovepipe straightjackets created by Deutsche Bank or Bank of America?)
Social entrepreneurs need and deserve loyalty. Their work is not a job; it is their life. And they are, day by day
and year after year, central to the iterative process of creation that is the essence of the value being built. But making and
sustaining the commitments that would constitute loyal partnering requires judgment, very-long-term perspective, and true
understanding of entrepreneurship—all of which are difficult for large institutions to muster.
Social entrepreneurs need medium- to long-term and often substantial investments. They must test and refine an idea
(an inherently unpredictable process), learn how to market it and cause many other institutions to change (also resistant to
tight scheduling), and then build an institution and movement. Almost all governments and foundations, guided by their own
internal one-year budgeting imperatives, provide one-year funding.
Social entrepreneurs need support in building strong, major institutions; governments and foundations avoid the
“overhead” this would entail.
To some degree, it is natural for change in financial and other support services to lag behind a transformation of the
operating institutions. There is, however, considerable risk that these financial institutions wil not adapt adequately or at al .
Unlike business financial firms, neither governments nor foundations must respond to their clients.
Governments are sensitive to political stimuli, but these synapses often do not come from the clients being
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Bill Drayton
served. Development agencies are an extreme case: Their end clients have no leverage; it is the contractors who do. In
this case, the resulting misalignment of incentives may be worse than in the typical foundation case, where clients are
as a rule no more than supplicants.
There are further systemic reasons why governments and foundations fail the citizen sector. Their structure keeps
them from seeing and often from serving whole classes of potential clients well. Moreover, because they are not subject
to competitive discipline, they do a poor job of rewarding high performing citizen groups and closing or merging poorly
run ones. Society’s resources are, consequently, allocated poorly. Worse, the citizen sector cannot become as productive as
business as long as this undisciplined condition continues.
A notorious example is the dramatic variation in performance between the numerous microcredit institutions in the
Chicago area. Some have almost perfect payback rates and low general administration and sales ratios. Others perform
dismally. So far, the institutions investing in these funds barely seem to notice.
However, commercial competitive microcredit investment funds could not afford such inattention. A fund that
invested in any of the losers would end up with a lower return for its investors and only one or two stars (out of five) on the
Morningstar mutual fund rating service.
If the incumbent institutions seem unlikely to transform themselves to provide the types of services a rapidly
evolving and increasingly diverse citizen sector now needs so urgently, where can the sector look? To the enormous, highly
competitive, client-focused for-profit financial industry. It provides business a kaleidoscopic diversity of services that are
minutely fitted to client needs and that change, if anything, faster than the clients.
The first for-profit financial firms that recognize that there is a huge, highly at ractive new business waiting to be born here
and that open it up wil profit handsomely—and make a profound contribution.
There are many factors coming together now that make such a move timely.
[S]ociety’s core interests are in The citizen sector is now both very large and the fastest growing sector of society. It
making it easy, not impossible, also has many large, solid institutions.
At the same time, there is huge existing, and more latent, demand for
for young people to take
quality social investments, with varying mixes of social and economic return and
initiative and build ongoing
in different subject mat er and geographic areas. There also is huge actual and
services. But our existing
latent demand for engagement in the social sector. People want access to quality
financial services institutions
personal opportunities ranging from volunteering and internships to ful careers
for themselves and their families and friends. They also want to spot and land
fail us.
the new business/social opportunities that are now developing. A smart bank will
develop a web of products and services that wil al ow its bankers to serve every
investor client’s individual needs with a tailored package of varying mixes of financial, social, and engagement values.
Along with my colleagues in Ashoka’s Business Entry program, I have identified roughly 40 building-block financial
and service products that, when combined orchestra-like in varying combinations and with varying pricing, can offer banks
and other financial institutions a very large, profitable new business. This business will enable these institutions to bring huge
value to a very wide range of clients—from teen beneficiaries of a skipping trust9 to a high active net worth entrepreneur
ready to sell his/her business and redeploy both resources and career.10 The strategy here is to demonstrate just how profitable
and attractive this business is to new clients. The immediate work is to develop and refine the building block products in the
crucible of the full product-development process and, most critical, to direct client feedback.
This is not about a new product. Or even a number of new products. It is about building a major new business that wil link
varying types and classes of investors with diverse investee needs through equal y diverse (and varying over time) channels. At one
time the banks did not invest in art or even real estate. Now those areas are integral, and clients expect them.
The transaction costs of government and foundation grant-making, taking into account only the direct (not opportunity)
costs to donor and donee, now run 20 to 45 percent, roughly 10 times what is normal for business finance.11 This difference
offers huge scope for financial firms to find efficiencies and capture some of the savings through fees.
Although some components of this new business’s product orchestra will be labor intensive and custom-tailored,
it is critical to have a large number of high-volume component products. Large volumes are necessary to drive down
per-transaction costs, which is essential for modest or merely wealthy investors and competitively key even for the
sophisticated very wealthy.
The now-huge socially responsible investment industry achieved this scale chiefly by investing in subsets of existing
financial stocks and bonds that exclude objectionable (e.g., tobacco, arms) securities. The new commercial microcredit
innovations / winter 2006
10

Everyone a Changemaker
funds that have been introduced over the last few years are the first major example of the next step: the for-profit finance
industry profitably providing direct investments in citizen-sector work to the broad public. They are able to do so because
there are 120 to 150 large, safe, well-established microcredit lenders, with clear, stable track records, in whose securities
these funds can invest large sums safely without incurring significant expense (relative to investment) in case-by-case due
diligence reviews.
Although this success is enormously encouraging, it is far, far from enough. It illustrates the principle, but it cannot
provide either the volume or the choice the huge latent demand needs, let alone what is required to build a substantial
business for the industry overall.
Therefore, a critical part of the Ashoka strategy to encourage for-profit finance firms to enter the social financial
services business is to catalyze the development of many, very large, reasonably uniform and safe, and therefore securitizable,
new classes of social investment. The single most important source of these new investment opportunities flows from our
gracefully named business/social “hybrid value-added chain” (HVAC) work. This work originated in another major “mosaic”
collaboration, this one across roughly 400 Ashoka social entrepreneurs whose work is focused on ensuring full economic
citizenship to everyone. A good many of these working toward this goal have found powerful leverage in reconnecting
business with the newly entrepreneurial/competitive citizen sector through new value
added chains involved in design, production, distribution, servicing, and parallel
supports including finance. The new, more productive value added chains draw The transaction costs of
for each step in the chain whatever each side can contribute most effectively and government and foundation
efficiently. However, this work has typically been limited to one product or service
in one country; and these early cases were held back by the relative immaturity of grant-making, taking into
the citizen sector organizations at the time.
account only the direct
Ashoka’s HVAC strategy is to get four very different products/services (not opportunity) costs to
quickly to the point where the customers, businesses, and citizen groups are
all benefiting enormously from the new cooperative value-added chains. Once donor and donee, now run
the businesses in an industry see one of their competitors gaining important 20 to 45 percent, roughly
new markets and making significantly higher profits, they cannot afford not to ten times what is normal
follow. The same is true for the organizations that compete with the pioneer for business finance.11 This
HVAC citizen groups, once they see how much their competitors are benefiting
from large, stable, nonpolitical, new revenues and their new, unique ability to dif erence of ers huge scope
provide valued new services to their clients. This competitive dynamic is key for financial firms to find
to the jujitsu that allows Ashoka, a small force, to set in motion so large and efficiencies and capture some
irreversible an historical change.
of the savings through fees.
Setting this same, huge structural change in motion in four very different
industries will make it clear that something far bigger than an industry-specific
innovation is at work. The HVAC principle will apply to most, probably all, areas of human endeavor. Once this framework
becomes clear and is widely grasped, everyone can begin looking for possible applications to their areas of work.
A key example: many a smart management consultant wil make partner by building his/her firm’s HVAC practice. They
wil seek out such high-yield opportunities, bring them to potential clients, and then do the required design and institutional
adaptation work. Because they wil do this work regularly, they wil be able to build practices serving managers who do not
have this experience. This response is key because it wil institutionalize the catalytic work Ashoka now has taken on.
Business schools and business writers will also be key players in helping spread awareness of the HVAC idea and in
reporting on and helping to systematize the knowledge underpinning the field as it develops. There is also extensive work
for the emerging institutions of the citizen sector to do here.
Sketching the story of one HVAC on which Ashoka is working will help make this change more concrete:
Over most of the planet small farmers do not have access to drip irrigation equipment. It is not profitable for the
piping and irrigation firms to serve them. The companies’ costs are too high for the poor rural economy, and the companies
do not understand or trust the small farmers or their environment.
In Mexico, a partnership between Amanco (the leading piping company in Latin America), Ashoka, and local citizen
groups is now beginning to demonstrate how to close this gap.
Over the last decade, large, competent citizen groups have developed to serve small farmers. Their cost structure
is that of the “other Mexico,” that of the poor and of the rural areas. They understand and have the trust of their clients.
innovations / winter 2006
11

Bill Drayton
Moreover, the sector has increasingly mastered relevant skills ranging from large-scale/low-cost organizing to knowing
how to help poor people save reliably.
These now large, skilled, economic citizen groups can provide the missing bridge between the company and a huge
untapped new market, between the farmers and access to a technology that will provide them with more income, more stable
income, water conservation, and environmental benefits.
Everyone benefits enormously.
The farmers earn much more, more securely.
The environment benefits, and the country produces more, more reliably.
The first citizen groups to join are the only source, at least for a while, that can provide these benefits to their farmer
clients. This gives them a huge competitive advantage vis-à-vis both government and other citizen groups. Moreover, they
get the same markup that businesses playing similar roles in bigger markets receive—a huge (especially relative to their cost
structure) and growing revenue flow that is also independent of governments and foundations.
Amanco will be the first into this market and should settle in long term with a significant share, even recognizing
that competitors will follow. The company has established key relationships and is quickly coming up the learning curve to
mastering this new market, which is making it harder and harder for others to catch up quickly.
Nonetheless, competition wil come. Citizen groups that said no when Ashoka first
approached them, fearing the risks (and in some cases feeling uncomfortable partnering
with business), are watching and beginning to wonder where they can find such a deal.
Business wil probably respond even more quickly. In a second HVAC area, slum
reconstruction, a major global competitor to the company with which Ashoka began
this work decided it had to jump on this new approach four months after the first HVAC
col aboration began if it was not to fal behind in accessing this huge new market.
Each of the HVACs creates very large, reasonably uniform financing needs
across the globe. These eminently financeable needs in turn become a critical source
of the attractive new products needed to fuel the new businesses waiting to be born in
the for-profit finance industry.
Street improvements in the Agua Fria
To the degree these needs come from a business/social marriage, they wil be even
settlement of northern Guadalajara
more at ractive to the finance industry and to many clients. This wil reduce the price discount
where Ashoka and Cemex’s Patrimonio
Hoy program has speeded and cut the
that risk-averse investors at ach to anything unfamiliar. It also builds in a further acceleration
cost of housing.
of learning and therefore of productivity growth for both business and citizen sectors.
Learning will accelerate further as the two sides overcome the differences in
style, language, and clothing, and the mutually suspicious stereotypes that developed over the last several centuries of
deepening division. The people on both sides will bridge these gaps, not because doing so is socially nice, but because
it is essential for their respective core interests: business wants these markets, and the citizen groups want to deliver
these goods to their clients and gain financial and political independence.
The HVAC delivering drip irrigation to smaller farmers generates two sound lending opportunities:
The large, stable, competent citizen groups providing the bridge between company and farmers need bridge financing
when starting up until they reach breakeven.
Far bigger is the need to help the farmers obtain credit so they can buy this substantial capital asset. Loans to farmers
for drip irrigation should be at ractive to lenders for two reasons: (1) there is security and (2) the farmers wil stop making
many other payments long before this one, given how central this equipment is to their economics. Once the mechanisms are
developed, such loans could quickly become a gigantic financial product class given that capital equipment and many mil ions
of modest farms are involved.
The same pattern holds true for the urban slum reconstruction HVAC, where Ashoka’s work is also far advanced.
Similar logic but somewhat different specifics will produce yet more financing opportunities in one HVAC after another.
Each requires extensive financial engineering and then marketing; but the cumulative effect, especially as the competitive
jujitsu in each area kicks over, will be a tsunami of large-volume, low-unit transaction cost, profitable for everyone, and
offering new investment opportunities.
Getting the for-profit finance industry to enter the social financial services field is entirely critical if the citizen
sector is to obtain the inventive, adaptive, responsive, and efficient institutional services it so urgently needs.12 Investor
innovations / winter 2006
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Everyone a Changemaker
demand does not create the bottleneck. The chief obstacles are: first, inadequate flows of high volume, diverse, attractive
investment opportunities; second and simply, insufficient imagination to see so large a strategic opportunity.
If anything, the need for profound change is even greater when it comes to how the citizen sector supports itself
once groups pass beyond the early years when institutional finance is key.
Citizen groups, very much like businesses, have a three-stage life cycle. They start with a self-financing “garage”
incubation period. Then they gear up for a time of service and product testing and refining and also of institutional formation
that often requires significant institutional investment. Eventually they move onto a “post-breakeven” mature phase,
where citizen base or grassroots resources coming in must at least equal expenditures. Outside the U.S. and a handful of
other countries, this citizen base is entirely inadequate.
This inadequacy poses a profound strategic risk to both individual groups and the citizen sector overall. As we have
seen, the sector is now large and growing explosively. Foundations cannot touch this scale of need. Governments, if they
were not increasingly under pressure to retrench, could provide the needed resources. In many cases they would like to do
so, both to ensure the provision of needed services and to reestablish control over the citizen sector. This is, of course, a
danger the groups and the sector cannot afford to run. Dependency on government was precisely what caused the sector to
fall so far behind business from 1700 to 1980.
The only alternative is to build the sort of broad base of citizen support that underlies every sector of society that does
not have the power to tax and that has become secure and steady: business, religion, trade unions, social clubs, even the
schools of samba that enable poor neighborhoods in Brazil to prepare and mount Carnival groups every year.
This base has four main components: people’s time, money, information in and out, and captive businesses. The mix
that works will vary by field and institution. However, any institution that cannot find a mix that works for it is unlikely to
survive long.
The chal enge here is not to get Brazilians or Poles to be more generous. They give generously now, but only to groups that
ask, and ask intel igently—be they the churches or the schools of samba.
The citizen sector is new. In most countries it is just now reaching the stage where there are a significant number of
reasonably stable, mature, clearly focused institutions ready to build such broad citizen bases. The challenge, then, is closer
to home. It has to jolt the citizen sector itself to grasp that it must and can go out and build this new sustainable, long-term
foundation.13 And, at the same time, to help it learn how.
WHERE WE ARE GOING
The daily news is chronically dispiriting, a reportage of follies that seem to be taking place in a world without a
compass.
That is probably so in part because this is a time when deep historical tides are moving with unprecedented speed
and force.
The millennia when only a tiny elite could cause change is coming to an end. A generation hence, probably 20
to 30 percent of the world’s people, and later 50 to 70 percent, not just today’s few percent, will be changemakers and
entrepreneurs. That world will be fundamentally different and a far safer, happier, more equal, and more successful place.
To get there, we must end the infantalization of young people. They and the rest of us must enable al young people to
be ful y creative, initiatory, and powerful changemakers.
We must also build the wisest possible financial and other institutions so that, as these young people become adults,
the new citizen sector will draw them fully into an “everyone a changemaker” world.
We invite reader comments. Please send an email to
<editors@innovationsjournal.net>.
innovations / winter 2006
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Bill Drayton
1. As Ashoka has come to understand this more clearly, it has clarified its ultimate goal. Challenged several years ago by eBay’s Pierre Omidyar,
Ashoka came to understand, given its understanding of these historical forces it came into being to serve, that its ultimate goal is an “everyone a
changemaker” world. Before that, it had talked chiefly in terms of the intermediate goal of building an entrepreneurial/competitive citizen sector.
2. Interview with economist Will Baumol in his office. See also, William J. Baumol, The Free-Market Innovation Machine (Princeton
University Press, 2002).
3. The “social” or “citizen” half of the world’s operations includes education (students, faculty, organizations), health, environment, emergency
relief, rural and slum development, human rights of all sorts, and all the other areas of human and environmental needs–except when these needs are
served by the business other half. Eventually the distinction will fade as the accidental division created over the last three centuries of rapid business
productivity growth and social-sector stasis erodes. Ashoka and a growing number of other citizen sector organizations ask that everyone stop defining
us as not government (NGO) and not business (“nonprofit”), respectively, the European and American first reactions to our newly emerging sector. It
does not make sense to define half of society by what it is not. We suggest the use of “citizen sector” and “citizen organization” instead. One or more
citizens caring and organizing to provide a service or spark a change are the active ingredients. And, as this paper articulates, our most important impact
is our “everyone a changemaker”—aka citizen—role.
4. Ashoka was conceived in the 1960s to serve this historic transformation, but it only began work in 1980 when it perceived that the time was
ripe.
5. Canadian Ashoka Fellow, Mary Gordon, and her Roots of Empathy program, is one example of the innovation building in this area. See Mary
Gordon, Roots of Empathy: Changing the World Child by Child (Thomas Allen Publishers, 2005).
6. These partners in the U.S., for example, range from the Girl Scouts to Staples, from MTV to a growing number of local United Ways and
schools.7. Youth Venture’s experience in the U.S.
8. These are typical of the sort of venture Youth Venture has found among teens in the U.S.
9. A skipping trust gives income from capital for a generation, but not the capital. Skipping a generation, the principal is distributed to the
grandchildren of the person who created the trust.
10. Ashoka is engaging with partner institutions to pioneer/demonstrate this new business. As this product and business development work
proceeds and partners agree, it will report on these developments at <www.ashoka.org>.
11.William F.Meehan III, Derek Kilmer, and Maisie O’Flanagan explain the reasons for this, in Investing in Society, Stanford Social
Innovation Review (Spring 2004): “For starters, [government and foundations do] not have cost efficient transaction processes, when compared to
for-profit benchmarks. In the for-profit capital market, companies spend between $2 and $4 raising capital (e.g., legal, marketing, and administrative
expenses)—for every $100 they raise. In the social capital market, however, nonprofits spend between $10 and $24 for every $100 they earn through
fundraising (e.g., obtaining donor lists, sending direct mail, or making phone calls). Nonprofit chief executives, meanwhile, spent between 30 and 60
percent of their time pursuing donations with such ‘soft costs’ unevenly accounted for in fundraising costs. Foundations and government grantors,
meanwhile, spend about $12 to $19 on administration (including general overhead and reviewing grant applications) for every $100 they allocate.
Federated givers, those intermediary organizations such as the United Way and Jewish Community Federation that collect individual donations
and then allocate dollars to charities, spend approximately $13 million for every 100 to cover their expenses. That means that in the social capital
market, the cost of raising capital consumes roughly 22 to 43 percen t of the funds raised, a dreadfully inefficient process.”
12. Ashoka is also pursuing several other, complementary strategies. One is its new Social Investing Venture (SIV) program. The SIV
program seeks out leading entrepreneurs anywhere in the world who are championing major structural change in social finance. It helps them get
started and succeed and will work to enable them to share and collaborate with one another, with leading operating social entrepreneurs, and with
thought leaders in the social investment field.
13. Ashoka’s Citizen Base Initiative is pursuing three specific strategies to help tip the citizen sector’s perception and behavior. See
<http://www.citizenbase.org>.
Photo credits:
Cover:
Top left - John Maier, Jr., The Image Works
Bottom left - Janet Jarman www.janetjarman.com
Back Cover:
Middle right - Janet Jarman www.janetjarman.com
Bottom left - Janet Jarman www.janetjarman.com
Inside:
p.5 - John Maier, Jr., The Image Works
p.23 - Kris Herbst, Changemakers.net
innovations / winter 2006
1

Bill Drayton
Chair & CEO
Ashoka: Innovators for the Public
Bill Drayton is a social entrepreneur. As a student,
he was active in civil rights and founded a number of
organizations, ranging from Yale Legislative Services
to Harvard’s Ashoka Table, an interdisciplinary
weekly forum in the social sciences. He graduated
from Harvard with highest honors and went on to
study at Balliol College in Oxford University, where
he attained his M.A. with First Class Honors.
He is also a 1970 graduate of Yale Law School and has been a
professor at both Stanford Law School and Harvard’s Kennedy School
of Government. In 1970 he began his career at McKinsey and Company
in New York. From 1977 to 1981, Mr. Drayton served in the Carter
Administration as Assistant Administrator at the U.S. Environmental
Protection Agency where he launched emissions trading (the basis of
Kyoto) among other reforms.
After his term at the EPA ended in 1981, he returned to McKinsey
half-time and launched both Ashoka and Save EPA and its successor,
Environmental Safety. At McKinsey, he helped the firm develop tax and
regulatory design work and then its use of industry strategy (an increasingly
useful first step to company strategy). With the support that he received
unexpectedly when elected a MacArthur Fel ow at the end of 1984, he was
able to devote himself ful time to Ashoka. Mr. Drayton is currently the
Chair and CEO of Ashoka: Innovators for the Public. He is also Chair of
Youth Venture, Community Greens, and Get America Working!
Mr. Drayton has won numerous awards and honors. Most recently in
2005, he was selected one of America’s Best Leaders by US News & World
Report and Harvard’s Center for Public Leadership. In the same month
he was the recipient of The Yale Law School Award of Merit, the school’s
highest honor. In 2004, he received the National Wildlife Federation’s
Conservation Achievement Award International. Mr. Drayton has also
received the Vanguard Award for Contributions and Achievements in
Nonprofit Law from the The American Bar Association, the Common
Cause Public Service Achievement Award, and the National Public
Service Award from the National Academy of Public Administration and
American Society for Public Administration.