Wednesday, January 24, 2007


Here is a great article in LA Times ealier this week on Newtwork Philanthropy--about a shift in thinking within private foundations, especially those with tech money. The article focuses on Pierre Omidyar and Jeff Skoll of Ebay fame.

Skoll is doing very intersting work to fund feature films with a purpose (Fast Food Nation, Inconvenient Truth, Good Night, and Good Luck, etc.). Omidyar's passion is microfinance.

I am especially interested in the ways in which they are willing to turn things on their head. Often a small shift in perspective produces exponentially larger results. This what intrigues me so much about leverage - small change, big results. The trick is to find the right point.

Omidyar is convinced he has found a point of leverage in shifting microfinance's emphasis on non-profit funding to profit. Making micro-finance profitable on a global scale is far easier said than done. But without capital markets, you can't scale operations to address the fundamental need.
Omidyar found the first big application for his platform at a dinner for Mohammad Yunus, the Nobel Prize-winning economist who invented microcredit and founded the Grameen Bank. Most of the world's microlending, Omidyar learned, is done with nonprofit cash. The more he heard about it—the high success rates at getting people permanently out of poverty, the low default rate on small business loans—the more he believed it was a viable business opportunity. He wondered what it would cost to bring microloans to every poor family in the world, based on the Grameen Bank's experience. After a few rough calculations, he figured it was probably $50 or $60 billion.

"You're like, that's a lot of money," he says, and it is—if it has to come from foundations. But private capital is functionally limitless. Look at it that way, he says, and "$60 billion is nothing."
see, its all a matter of perspective.


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