Tracking 'Social Entrepreneurs' Gets Easier

(page 2 of 2)

Vast Latent Capital

There have been similar efforts in the past but nothing came of them—either because diverse organizations couldn't agree on approach or the right technology wasn't available. "Now is the time to get moving on this," says Antony Bugg-Levine, a managing director at the Rockefeller Foundation, who's been testing PDMS. "There's a huge amount of latent capital that will move into this system if we can come up with the right metrics and measures of performance."

The PDMS project has been under way behind the scenes for two years, and about 15 investor or donor organizations are using a test version. It was headed by Brian Trelstad, Acumen's chief investment officer, and much of the grunt work was done by Marc Manara, an Acumen staffer. A breakthrough came when Salesforce.com Foundation, the philanthropic offshoot of software company Salesforce.com (CRM), committed to work with programmers from Google (GOOG) and Acumen to build the system and run it on Salesforce.com's servers. Managers from PricewaterhouseCoopers are helping to make it easy to compare data from different types of companies. The organizers hope that about 25 donors and investors will be using the fully functioning system by early next year to track upwards of 500 enterprises.

The system will provide a deep reservoir of vital stats. All listed companies will use the same financial accounting methods. They'll be measured based on seven basic metrics, including revenue growth, net income, the number of customers served, jobs created, wage growth, local suppliers supported, and additional money raised. Additionally, investors and social enterprises can customize the system to include their own goals and accomplishments.

Free to Nonprofits

The tracking application is available free of charge from Salesforce.com to nonprofits. For-profit organizations can get it at an 80% discount from normal rates. Acumen has raised money from the Skoll Foundation and other philanthropies to pay for developing the tracking system, which Acumen expects to cost about $700,000.

Acumen Fund has been using early test versions of PDMS for 20 months to track about 30 of the companies it has invested in. Already, the fund managers have made follow-on investments in some companies based on their outstanding performance. They also use it as an early-warning system. For instance, a few months ago Acumen managers noticed that an ambulance company in Mumbai, India, didn't have enough patients per day riding in some of its vehicles. Acumen sent a representative who helped the company, Dial 1298 for Ambulance, analyze its operations and shift things around to make more efficient use of vehicles and personnel. "They came up with a beautiful model that will make it possible to break even on every ambulance," says Sweta Mangal, chief executive of the ambulance outfit.

While there's still a lot of technical work to be done on PDMS, its supporters are convinced that, over time, the system will have a major impact on the social sector. And the more organizations that join, the better. Says Preston D. Pinkett III, head of Prudential Social Investments, the social investment arm of insurance giant Prudential Financial (PRU), which has more than $500 million invested: "It leaves me with a sense of hope that we can create an industry that produces a big flow of capital to do a lot of good in the world."

Hamm is a senior writer for BusinessWeek in New York and author of the Globespotting blog.