How creating opportunities helps make social change

Impakt's Paul Klein on why small actions informed by those directly experiencing the problem is the most effective approach.

By Paul Klein

The time difference between west Tennessee and Kathmandu is eleven hours and forty-five minutes. That’s why I was in the lobby of the La Quinta Inn in Memphis at 2:15 a.m. to have a conversation with Nepal’s sole billionaire, Binod Chaudhary, the chairman and president of the Chaudhary Group, a conglomerate that owns businesses operating in categories ranging from finance to consumer goods to hospitality.

“We believe that the biggest reward is when we see a man in a simple village or mountain become an entrepreneur, start employing people, start producing goods or services, that’s all we want,” said Chaudhary. His comment made me realize why businesses haven’t been successful enough in this area: expectations of change are unachievable, use of capital for the purpose of social change is archaic and almost no attention has been paid to solving social problems by creating employment for vulnerable populations.

At the outset of the new decade, here’s a new approach for how corporations can have more impact by doing this important work differently.

“Hockey stick” results happen in less than 1% of businesses and are virtually non-existent in social change. Today, too many businesses oversimplify what’s needed to address complex societal problems and overestimate the potential impact of their actions. A more effective approach involves taking small, innovative actions informed by people who are directly experiencing the problem. By testing a promising stakeholder-informed concept, businesses have the opportunity to learn along the way and ultimately have programs with much impact. McCain Foods’ recently announced “Farms of the Future” initiative is a great example. The goal of the program is to advance sustainable farming practices by working closely with local farmers to help demonstrate their scalability and their economic viability.

Businesses need new ways of deploying capital for the purpose of social change. Today, the most effective approaches are being led by institutional investors, family foundations and pension funds. The Rockefeller Foundation’s Zero Gap initiative is funding United Nations Sustainable Development Goals (SDGs) by providing early-stage support for innovative finance mechanisms, such as blended capital vehicles that include grant and program related investments. By combining philanthropic funds with investment capital, businesses can have more social impact and create new opportunities to benefit from a return on their investment. For example, The Chaudhary Group, alongside the Chaudhary Foundation. is investing in youth-initiated micro enterprises that have great potential but lack collateral and capital.

The gap between people seeking work and employers seeking workers is unacceptably wide. Creating meaningful employment for vulnerable populations should be recognized as the new common denominator of the most effective social change. “How do you address some of the more crucial social issues?” asked Mr. Chaudhary. “The lack of jobs and making jobs, making sure these people get some money, so that it improves the livelihood, it goes without saying.”

Initiatives such as bringing job training to the workplace, providing new employees with on-site social supports, and offering educational programs like language classes should be considered. This isn’t a new idea. During the industrial revolution in the early 1800s, factory schools were created in which workers were trained in classrooms within the factory walls. More recently, companies like Canadian garment manufacturer Coppley have used “vestibule training” to ensure employees who are new to Canada are able to succeed. At Impakt, we’ve recently established the Impakt Foundation for Social Change, a new non-profit organization with a mission of using our experience with initiatives such as HireUp and The Tailor Project to create new pathways to employment for different groups of people, like youth who’ve experienced homelessness or newcomers to Canada.

Having a successful business is difficult, creating impact with a social change organization is difficult, and doing both at the same time is extremely difficult. In this context, results that seem underwhelming may in fact be quite successful. When we developed HireUp, we expected thousands of youth to secure jobs through our platform and were disappointed when the actual number was closer to 200. That being said, people who knew more than we did about the challenge of employing vulnerable youth thought our results were far better than they’d expected.

The new decade is here and there’s never been a better opportunity for business to make a difference in society. This starts with a commitment to take action. “It’s just a question of how much you’re prepared to extend yourself, how much you’re prepared to bring important issues to the central stage of your life and organization,” said Chaudhary. I couldn’t agree more.

Paul Klein is the founder and CEO of Impakt, a B Corp that helps corporations benefit from solving social problems.