In the summer of 2005, Miles Gilburne and Nina Zolt had long talks over dinner in their Washington home about what to do next. For more than six years, Gilburne, a former AOL executive, and his wife, Zolt, a former lawyer, had supported a philanthropy that used books and online tools to enhance skills of inner-city students.
The program, which Zolt directed, had been moderately successful. Students liked writing online about books and sharing their ideas with Internet pen pals, including adult mentors. Many teachers embraced the project, called In2Books, and participating students outscored their peers in standardized tests.
Still, the costly venture grew only gradually, classroom by classroom. The couple had put US$10 million into the charity, a "meaningful portion" of the family wealth, Gilburne says.
"It was enough money that I did lie awake at night thinking about the size of the checks," he recalls.
As philanthropy, the couple's efforts, however worthwhile, weren't sustainable. But their vision of using the Internet for communication and collaboration to improve education has taken on a new life -- as a business.
Today, the once-struggling venture has morphed into a primarily for-profit enterprise. And the striking transformation of In2Books is emblematic of a larger trend: Charities are changing their spots and making use of some of capitalism's virtues.
The process is being pushed forward by a new breed of social entrepreneurs who are administering increasing doses of bottom-line thinking to traditional philanthropy in order to make charity more effective.
To make a fresh start, Gilburne attracted like-minded angel investors, and at the end of 2006 the group bought a for-profit company, ePals Inc, to expand on the original mission and support the foundation. The ePals company has grown and now offers classroom e-mail, blogs, online literacy tools and Web-based collaborative projects on subjects like global warming and habitats.
EPals says 125,000 classrooms around the world are using at least some of its free tools, reaching 13 million students, and its ambition is to become a global "learning social network."
National Geographic is to announce this week that it is investing in ePals, based in Herndon, Virginia, and will supply educational content for the ePals learning projects.
Worldwide distribution should get a lift from Intel, which will soon ship its Classmate laptops, designed for students in developing nations, with the ePals icon on the screens. And ePals is also offered for use on the low-cost computers from One Laptop Per Child, a nonprofit group trying to bring the content and experience of the Internet to children in developing countries worldwide.
Various versions of efforts like this are appearing across the philanthropic landscape as business-minded donors, epitomized by Bill and Melinda Gates and their foundation, have treated their charitable contributions more like venture capital investments. They seek programs that can be catalysts for broad changes in fields like health, education and the environment; they measure performance and results; and they encourage nonprofits to become more self-sustaining.
Yet to have the greatest possible impact, a further step down the capitalist road is sometimes needed, analysts and others in the field say. Muhammad Yunus, the microfinance pioneer and Nobel laureate, calls this next step the "social business."
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