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What's Next: Jim Fruchterman

Incentives Driving Change

People respond to incentives. If we want the world to change for the better, we need to keep incentives in mind. This doesn’t just mean financial incentives. Social incentives such as cultural norms or peer pressure can be powerful forces on human behavior. Social entrepreneurs excel at building incentives into innovative solutions for global problems by working with communities as active partners in change rather than passive recipients of beneficence.

Philanthropists and foundations are now more open to new approaches. By giving funders positive feedback for taking bold action and big risks, we create incentives to take more risks. If some of the old approaches have not worked, we don’t need to encourage funders to keep funding them. Simply talking more about social engagement creates an environment where more and more people get active.

If we give respect to those who choose to dedicate their energies to social issues, we encourage them in their commitments and bring new people into these movements. Paying nonprofit employees enough to take care of their families allows them to make this an increasingly viable career choice.

One example leaps immediately to mind. I recently visited the two founders of Waste Concern in Dhaka, Bangladesh. These social entrepreneurs got started by creating jobs for the poor collecting organic waste, and composting this into fertilizer. Their project has been quite successful, but like most social entrepreneurs they had major challenges finding the capital to expand.

Now they are experiencing unprecedented growth. Why? It turns out that their work can generate carbon credits, and Waste Concern has become adept at monetizing their social work through carbon credits. The addition of carbon credit dollars suddenly tips the scale so that capital is flowing in to expand their work: more than $10 million. Not only will this improve the environment, but it will also create many jobs.

There are countless opportunities like this one around the world. Let’s do all we can to keep incentives flowing, both social and financial, to encourage more of the activities that will make our globe a better place to live!

Jim Fruchterman is the founder and CEO of Benetech

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