On Thursday, July 25th I arrived in Somoto, Nicaragua – a town where unemployment is rampant and poverty is high. It was a hot, humid day, and we had driven about three hours to get there. A group of interns, including myself, were accompanying Agora Thriive Program Managers to host an information session on their impressive new business model that would help combat poverty in Nicaragua. Essentially, Thriive Capital purchases machinery/equipment for low-income entrepreneurs that have gone through a rigorous selection process. Instead of paying Thriive back for the new equipment, the entrepreneurs are expected to pay the equivalent of the machinery back to the community through several ways: capacity building workshops for the poor, donations of purposeful products, and/or addressing other social needs identified by Thriive and the entrepreneur. Additionally, Agora Thriive provides limited consulting services to these small businesses through partnerships with local and international universities.
I listened as each entrepreneur discussed challenges to the survival of their businesses, and essentially to their livelihoods. One entrepreneur mentioned that the youth did not want to work, and that nonprofit organizations have inadvertently created a culture of receiving without giving or working. He also mentioned that sometimes older individuals fear that young people will take away their jobs. Another entrepreneur stated that the interest rates on bank loans were too high and not sufficient enough to grow or maintain their business. I was also surprised to learn of the struggles that many of these entrepreneurs had to overcome before becoming the entrepreneurs who stood before me; many had faced homelessness, drug addiction or alcohol abuse. We were in a room full of impressive and humble individuals that cared about improving their community and investing in their youth. Most importantly, they understood the realities of surviving in the Nicaraguan business environment. Afterwards I conversed with one of the entrepreneurs, who said something so powerful that it will live on with me forever. But before I get to that part of the story, let’s start at the beginning.
Before starting my internship, I completed the Sustainable Global Enterprise Immersion at Johnson, an opportunity made possible by the partnership between the Cornell Institute for Public Affairs (CIPA) and Cornell’s Center for Sustainable Global Enterprise. I was interested in learning more about public private partnerships and how different organizations endeavored to make a social, environmental, and economic impact while generating some type of profit. The SGE immersion not only built my knowledge base but it also gave me the confidence and “hands on” project experience to explore opportunities within the social business space. Now it was time to find an internship!
After some initial research I realized I wanted to explore summer internship opportunities in the social business sector. I joined the SGE club and through one of their job postings, I was able to secure an internship with Agora Partnerships, an Accelerator that provides impact entrepreneurs with access to human capital, social capital, and financial capital through consulting services and other programs. In Nicaragua Agora partnered with Thriive Capital in order to provide services to a lower income target market. This internship appealed to me because I could gain valuable international work experience, make a valuable social impact, and better understand the “realities” that exist in the second poorest country in the Western Hemisphere. Additionally, as a Hispanic-American of Salvadorian ancestry that spent most of his life in the US, I thought this would be a great opportunity to explore my roots and my culture. After a good discussion with Professor Mark Milstein, I felt comfortable making my decision to join Agora for the summer.
Before I left for Managua, Nicaragua, I spent a few weeks in Washington, DC and in New York City for training and for Agora’s Impact Investing in Action Conference, where social entrepreneurs, investors, and other professionals from across the world came together to discuss insights relating to the social business sector and how best to attract investments. The training session gave me an accurate snapshot of a sector that is young, energetic, and not heavily populated. After the training, I moved to Nicaragua for two and a half months and I worked to recruit impact entrepreneurs for the Agora Class of 2014 Accelerator. I also developed a proposal to raise funds for the Agora Thriive program. It was both exciting and challenging to work in an entrepreneurial environment alongside a number of talented staff and interns.
So what happens when you put a Brazilian, a Salvadorian-American, a Bolivian, an Englishman, and an American, all interns, all under one roof in the middle of a developing country? You get a lot of fun-filled weekends with travels to volcanos, beaches, and cities across Nicaragua. We were able to slide down Cerro Negro, the youngest volcano in Central America. We also had the opportunity to test our physical limits with a thirteen hour hike up and down Concepción, an active volcano, situated in Lake Nicaragua.
More importantly, we were also able to gain many insights into the social business sector. For example, the demand for investments that generate social impact and a positive financial return has risen greatly especially by Generation Y or “Millennials” (often referring to those born after 1980). This generation seeks a stronger sense of social fulfillment, and they are beginning to amass great wealth through new ventures and startups. I also learned about the value of impact metrics, or metrics that describe the positive difference that a social business or organization has on a community, country, or region, such as the number of women employed, greenhouse gas emissions, and water use. Global Impact Investing Rating System (GIIRS) and Impact Reporting and Investment Standards (IRIS) are helping social businesses and related entities to capture this information, to make this industry more transparent, to share best practices, and to search for inefficiencies.
Although this field is very attractive, there are many challenges that need to be recognized before entering this sector. For example, it is very difficult for a for-profit organization to simultaneously make an impact and maintain financial sustainability. As organizations grow, the number of stakeholders, capital expectations, and the demand for resources also increase. This can sometimes cripple a business that solely focuses on social impact, or it can push a social business to stray from its original mission. Another challenge is the scalability of social businesses or their ability to offer products and services across new markets because of high risk and razor sharp profit margins.
Finally, the biggest challenge relates to finding strong sources of revenue for accelerators, social venture funds, and other related organizations. Currently, individuals from each of these groups raise funds through donations, foundations, government grants, and crowdsourcing. Without these sources of revenue, organizations in the social business sector are unable to survive. Because of the turbulent economic environment, it has been very challenging to raise these funds. Many of these organizations are still trying to find a sustainable revenue model that does not focus so heavily on donations or grants. It would be very valuable if one these organizations could find a way to work with the private sector to diversify their revenue streams.
This was truly a valuable experience, but it would have been incomplete had I not had the chance to connect with the beneficiaries of Agora’s programs. We often focus too much on reading case studies, articles, and reports, and implementing projects, and unfortunately we lose touch with those we seek to impact.
As I noted earlier in the entry, after the Agora Thriive information session ended, I had the opportunity to network with some of the entrepreneurs. I sat down with an entrepreneur, who had applied to the program last year but had not been selected. We talked about death, and how everyone fears it. She told me that everyone in this world has a reason for existing, and that no one deserves to die alone, without having felt that someone loved them at some point in their lives. Everyone deserves to be loved because love is more powerful and sustainable than any product or donation you can make to a community.
This was a very powerful message that grounded me and pushed me to think more about how and why I had come to Nicaragua. It reminded both of us of a powerful Mother Theresa quote with which I will end this entry: "We think sometimes that poverty is only being hungry, naked and homeless. The poverty of being unwanted, unloved and uncared for is the greatest poverty. We must start in our own homes to remedy this kind of poverty.”