Pareto Efficient

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Step #2: Choosing the method — Becoming a Social Entrepreneur

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This is the second part of a two part series entitled “Becoming a Social Entrepreneur”.  Be sure to Pick your Poverty Niche before reading this post.

Now, we much choose the most effective way to battle the problem(s) affecting your niche.  Then, we’ll find organizations and other vehicles that we can leverage to put our resources to work.  We will be using the entrepreneurial poor of Kampala and Gulu, Uganda as an example in this post because that’s my niche.

First things first; many people start their quest for solutions by attaching themselves to an organization without fully understanding the methods which the organization deploys.

For example, if we like an organization that helps the entrepreneurial poor in Uganda.  That’s great we know who they help, but, we may not know how do they help?

Do they:

  • give them money
  • give them supplies
  • give them vocational training

I strongly recommend remaining organization agnostic in the beginning of your quest for solutions to the problems facing your poverty niche.  Even if you have already chosen an organization you want to work with, I encourage you to step back and run through the rest of this exercise.

  • First, compile a list of organizations that currently do work with your poverty niche.  If the list is less than 10, then cheat a little and find organizations that work with other poverty niches that are similar to yours.  You can use Charity Navigator, Facebook Causes, Mix,, or Google Search to research organizations by niche.  This task should take a few hours, but should be pretty easy.
  • Next, visit read their Charity Navigator profiles or their websites to figure out what methods or activities they use.  This task could take a few hours and may be a little more difficult.
  • Next, educate yourself about the pros/cons of different methods deployed by a variety of organizations.  This task is a bit tougher.  You’ll want to look for trusted websites.  Academic papers or white papers from large organizations are good.  Try to steer clear of opinion forums…If you find a great comprehensive content source please post the link in the comments below.

In our example, we chose micro-finance as our preferred method for helping the entrepreneurial poor of Kampala and Gulu, Uganda.  Below is our short list of pros/cons.


  • Micro-finance has been deployed across many cultures and countries since the 70s.
  • Very low default rate means the loaned money comes back to us and we can loan it out again.
  • Bottoms up distribution ensures more efficient resource allocation than top down government disbursements.
  • Micro-finance institutions (MFIs) are self-sufficient off the interest charged to borrowers.
  • The 2006 Nobel Peace Prize was awarded for work in this area – it has momentum.


  • Claims that loans are used to supplement lifestyle, instead of growing business.
  • Claims that loans intended for women are taken by their husbands.
  • Claims of unfair interest rates charged to borrowers.
  • Claims of some MFIs stealing the money.

Once you know more about what is being done, what works, what doesn’t, what’s sustainable, what’s not, etc; then you will be ready to start looking for specific vehicles or organizations that might match the method you have determined to be the best.

That’s the subject of a future post.


Written by thetyson

March 5, 2008 at 11:11 am