Austrians Spearheading Social Entrepeneurship

In their thoroughly researched and acclaimed book on philanthrocapitalism (sic) (alternatively titled How Giving Can Save the World) Matthew Bishop and Michael Green present a lucid portrait of a new vital force that could help address some of the world’s most intractable problems. They describe it as "social entrepreneurship," using capitalist enterprise to lift people out of poverty.

This is not a new idea, they remind us; in ancient societies, the rich were expected to give, although Aristotle saw philanthropy "as the way that the rich should serve the state, not humanity."

The authors take us on a historical spin, providing insights into how Christianity shook that Greco-Roman civic perspective with the idea of the Good Samaritan, until soon the Catholic Church became established as the official channel for assisting the poor. However, early Christian teaching on poverty linked to a spiritual value had little to do with social reality.

"It was only with the rise of secular power in the hands of the new capitalist classes that philanthropy became a question of the administration of wealth," the authors hypothesize. They argue that the first flowering of modern philanthropy emerged with the birth of capitalism during the Renaissance when there was a thoughtful search for lasting solutions to social problems.

In their book, Bishop and Green also refer to David Rothkopf who, in his 2008 bestseller Superclass, contends that the growing distance between a global elite and everyone else is not sustainable. "Who will make the first moves for change this time," he asks, "and what forms will changes take?"

Two events with global implications that took place in Vienna during the last few weeks may provide the framework for considering an Austrian response to those questions. The most recent of these was on 12-13 May when Andreas Treichl, CEO of the Vienna-based Erste Group Holding and head of the ERSTE Foundation met with Nobel Peace Laureate Muhammad Yunus and held talks with about 1000 participants at the Launch of the Social Business Tour in the Twin City Vienna-Bratislava.

The event, organized by ERSTE Foundation’s Social Programme, featured a two-day session where panel discussions were conducted as "Social Business Labs" for aspiring entrepreneurs who vented their ideas with experienced practitioners and prospective partners.

The event included a visit to "The Hub Vienna" in the 7^th District, a beautifully restored loft run by young people who refer to themselves as Emersense. They describe it as "a place where passionate people who see and do things differently can enjoy flexible access to fully equipped working and networking spaces for social business activities."

Explaining the motive behind the "Social Business Tour" through the CEE, Treichl emphasized how the Erste Bank began 190 years ago as a form of social business: a savings bank established by an association of people concerned with those who could not afford banking services. "Erste Bank has a special obligation, because it was set up for the unbankable poor", he said. "We continue that obligation to show that it is possible to bridge politics and the private sector in order to address the needs of those who are not being taken care of, neither by the state nor by business." He asserted "a firm belief in the capacity of people in the region to improve their own lives, and to move themselves out of poverty and social exclusion."

Yunus, founder of the Grameen Bank and patron of the "Tour," presented his social business concept in a stimulating dialogue with Treichl and with representatives of new and established private enterprises and public sector institutions like the Social Ministries in Austria and Slovakia. "You first have to want to solve a social problem, like I did initially when I set up at Grameen as a village bank," Yunus started. "We operate like any conventional bank does," he continued. Then he made his points: "More importantly, our staff knows that we are not in the business of making dividends. To be sure, we make a profit that must be reinvested, as in any social business, and that enables us to address the social problem(s) that we need to resolve."

More than 30 years engagement that led to the Nobel Peace Prize makes Yunus, ipso facto, the Great Guru of Social Business. But he confessed: "I wanted to become everything else, never a banker." Teaching economics at a university towards the end of the 80s, he had witnessed how his homeland of Bangladesh went through crisis after crisis.

"I was shocked and felt desperate seeing loan sharks taking advantage of the very poor. Once I figured out what banks did, I decided to do the opposite," he revealed. "I targeted the poor, not the rich; the women, not the men; the village, not the city; asked for no collaterals; no lawyers; and established a basis of trust from day one."

The celebratory Networking Event, a key aspect of the "Tour", was co-hosted by Austria’s Federal Minister for Social Affairs Rudolf Hundstorfer who also discussed intensive collaboration with Grameen Creative Lab and Bonventure in Germany and Ashoka in the United States.

Just two weeks earlier, the First Globalizer Summit hosted the presentation of the 2010 Essl Social Prize of one million euros to American Bill Drayton, who was to be feted along with 25 Fellows from Ashoka, an association of leading social entrepreneurs that Drayton set up in 1981.

Founded in 2008 by Martin and Gerda Essl, the Essl Social Prize is considered the first and the largest worldwide in funding social initiatives by entrepreneurs in the private sector. This year’s ceremony and banquet were held in Vienna’s Hofburg Palace on Apr. 17th, having outgrown the Schömerhaus headquarters of the family business bauMax AG, a market leader in retail home improvements in the CEE region. They need have moved; Eyafjalla intervened, spewing toxic volcanic ashes that grounded visitors from far-flung cities, and the Redoutensaal became the scene of quiet splendour to the dampened ceremonies – echoing the sound of silence in the skies.

Martin Essl presented the Award on behalf of his wife and four children, articulating a faith in Christian love and human values and the need to recognize that business projects can have a critical impact at different levels of social engagement. The Protestant Essl family awarded their first Social Prize to a Jesuit priest, Georg Sporschil, who founded Concordia, an international project originally based in Romania by which a thousand street children have been housed and are given home care.

Authors Bishop and Green tell us that when American philanthropists as the Carnegie, Rockefeller and Vanderbilt families were making an impact in what was recognized as the golden age of philanthropy, they had the advantage of a European heritage within a Protestant ideal and spirit. It is this same heritage that has now seemed to come full circle in Europe.

What’s new in this story? Drayton began with a small group of entrepreneurs in India, now enlarged to about 2,500 who operate in over 70 countries. Essl and Treichl are joining forces with Drayton and Yunus in a bold vision to reverse three centuries in which for-profit and non-profit sectors had been walled off from one another. Looking for bridge opportunities, they are minding a global gap: that for-profit industry could solve funding problems in the non-profit social sphere.

The Erste Group plans to make up to €10 million available for social enterprises in the CEE region that will be implemented by good.bee, the ERSTE Foundation’s platform for social banking.

This will not be easy to implement in the current crisis climate, and one can’t help wondering how many and what kinds of investors and lenders social entrepreneurs will be able to lure to work with them.

"Social entrepreneurs will have to do a balancing act, not only as role models but also like modern-day heroes," ventured Caritas Vienna Director Michael Landau.