By Nancy Moffit and Sharon L. Crenson
From microfinance to network creation, Wharton alumni are fostering growth and opportunity worldwide.
Rosalind Copisarow had begun to see her work as invisible. Most of her waking hours were spent in front of a computer screen churning out cash-flow projections on deals financing the extraction of oil and gas from the North Sea. It was 1983, and Copisarow, WG’88, G’88, was a 25-year-old commercial banker in Citibank’s oil and mining department.
“I never saw a single thing we financed—women weren’t allowed on the oil rigs anyway—and I never touched or felt or had any idea of the impact, good or bad, of anything I worked on,” she says of that time.
This feeling that her work was disconnected from real life planted the seeds of Copisarow’s ultimate defection from commercial banking. It also began her dramatic personal journey toward something she now calls “soul work.” Today, at 47, Copisarow is Senior Vice President, International Operations, Europe, Asia & Middle East for ACCION International and a world leader in the microfinance industry. Prior to joining ACCION last year, Copisarow founded and ran microfinance organizations in Poland and the U.K., receiving numerous international awards along the way, including the Officer’s Cross of the Order of Merit in recognition for her services to the Polish economy and a special award from the U.S. Government, presented by then-First Lady Hillary Clinton.
In the pages that follow, the Wharton Alumni Magazine continues Copisarow’s story, as well as sharing the narratives of several other pioneering men and women, each passionate about work they say “feeds the heart.” Whether as a day job or second-shift volunteer work, these alumni are expanding Wharton’s impact by applying business skills and networks to open opportunities, expand education, and create livelihoods around the world.
Addicted to Helping the Masses
Copisarow has told the story of her move to microfinance dozens of times: The year was 1993, and she was stuck in a seat between two banking competitors on her regular British Airways flight from London to Warsaw. Forced to keep her work documents safely inside her briefcase, she began reading the Financial Times, and came across a story about Grameen Bank, a microfinance organization in Bangladesh. “I read about the more than a million women this organization had made unsecured loans to, some of the poorest people in the world, and that the repayment rate was 98 percent,” she said. “It was astonishing.”
By this time, Copisarow was vice president and country officer of J.P. Morgan’s Poland branch, where she had been working to bring market economy principles to post-Iron Curtain Poland. It was an exhilarating time for Copisarow, who by then had her MBA and MA from Wharton/The Lauder Institute, spoke four languages (English, French, Spanish, and Polish), and had a dozen years of investment banking experience.
“It was very exciting because everything there was a first in Poland,” she says. “We did the first Euro Bond issue, the first project finance, the first syndicated loans, the first of every kind of financial structure to get things off the ground. It was high-level adrenaline. Things were moving very quickly; construction was rapid. But while I was walking to meetings in Poland, I would always see very poor people on the streets. And I was very aware of the people in the countryside who were being left way behind while huge developments were going up in the main cities. In spite of all the progress, the gap between rich and poor was widening.”
When she read about Grameen Bank, the little voice that had nagged her throughout her career became louder. Microfinance could be an answer for the poor in Poland.
As fate would have it, Copisarow found herself seated next to Poland’s then-finance minister, Leszek Balcerowiz, at a J.P. Morgan-hosted dinner a few weeks later. She asked him if he had heard of Grameen Bank. He responded that he thought it was an amazing success story. Copisarow then heard herself asking Balcerowicz what he would think of a “crazy foreign woman” bringing the microfinance concept to Poland. He replied that if she was willing to give up her fast-track banking career to do that, he would support her in every way he could.
Microfinance had by this time shown itself to be a highly successful tool in the poorest countries worldwide. Could it be equally useful for a transition economy such as Poland, Copisarow wondered?
“I certainly never imagined that I was capable of setting up a company,” Copisarow says. “Until that point, I had worked for huge companies as a cog in the middle levels. I also didn’t know anything about the micro-business market. Even the Polish people I talked to told me I was crazy—that the Poles didn’t even trust each other, let alone a foreigner. But I saw in Poland this extraordinary spirit of striving and hoping and believing and I couldn’t believe that people had totally lost the ability to trust each other. In the end, I thought I would just give it a go, and if it failed, very little would have been lost.”
But it didn’t fail. In July 1994, on the back of the Bush administration’s SEED Act (1989), which provided special support to Eastern European countries through the creation of independent American Enterprise Funds, President Bill Clinton announced the Polish-American Enterprise Fund and USAID would provide $24 million to launch a microfinance institution in Poland. Copisarow was its founder and CEO.
Within five years, Fundusz Mikro was able to break even with 35 branches in every major town and city in Poland and $45 million in loans to 40,000 people, creating over 10,000 new jobs. And Copisarow, by then “utterly addicted” to microfinance, was ready to go home to London, where she hoped to adapt her model to serve the poor in the most developed economies. “I felt that I had really finished the work that I had set out to do,” she says, “which was to create a Polish institution for Polish people run by Polish people. I didn’t want to overstay my welcome.”
She founded Street UK, a British microfinance organization, in 2000, a process that was anything but easy. The government had little initial interest in the venture, which was ultimately backed by charitable foundations and several sympathetic banks. Street UK’s progress was further stymied by Britain’s tax and benefits system, with many potential clients stuck in an informal economy “no-man’s land” between receiving benefits and running a legitimate small business. In an effort to begin a real dialogue with policy makers and regulators, Copisarow created StreetLab, a research and advocacy initiative, to work alongside Street UK conducting pilots with controlled groups of clients and recommending specific policy changes. She also created StreetServe, a full back-office service for other microfinance and community loan funds in the U.K. StreetServe is now not only Street UK’s main source of revenue, but has also improved the cost-efficiency and transparency of performance of the industry as a whole. Meanwhile, StreetLab’s work has contributed to a number of significant improvements to the U.K.’s tax and benefits system, consumer credit regulation, and enterprise-related policies.
Today, a year into her new post at microfinance pioneer ACCION, Copisarow hopes to bring her vast microfinance experience to the poorest regions of intermediate countries, nations like China and Turkey with thriving, sophisticated cities but thousands still living in extreme poverty in rural areas. “I will begin to look not just country by country, but city by city and market by market,” she says. Her plans include going into the poorest areas of the Middle East, Africa and Asia and Eastern Europe.
Created in the 1970s by a number of parallel initiatives, including ACCION International’s in Latin America and Opportunity International’s and Grameen Bank’s in Asia, the microfinance industry has become increasingly prominent in recent decades. Today, microfinance institutions are active across the globe and the industry itself has become a competitive market, emerging from its low-key non-profit origins into the mainstream financial industry.
“A great aspect of the success of this industry is that it’s one of very few that has the capacity to shift from a solely non-profit activity to mostly for-profit,” Copisarow says. “The significance of this is absolutely huge. You now have a very complex and tricky array of providers from huge global banks to non-profit foundations.”
The challenge for industry leaders like Copisarow, she says, is to respond to the needs of these private sector players. “We are rethinking the microfinance industry by trying to incorporate it into commercial banks—which already have the infrastructure, the back-office, the branches, the staff, the capital—and help them serve micro-entrepreneurs as an additional client group,” she says. “If we can do this, we reach many more people more quickly and more cheaply than by building NGOs from scratch and reinventing everything.
“The work has become absolutely fascinating,” says Copisarow, who was born in France but grew up in the U.K., studied human sciences as an undergraduate at Oxford and grew up in a family where giving back was a routine part of life. “The whole effort is toward maximizing outreach and minimizing the transaction costs of these tiny loans. The more we can keep these costs down, the wider the group of financial institutions interested in providing them will be.” With an estimated market of 500 million households worldwide and only about 15 million households now being served, “there is a huge potential still untapped, and so much good to be done,” she says.
Financing Better Schools in Low-Income Neighborhoods
SARA VERNON STERMAN
In 1999, the Wissahickon Charter School was just a dream. In a modest Philadelphia living room, its founders talked of a curriculum that focused on environmental studies and service and that took full advantage of the natural beauty of neighboring Wissahickon Park. Today, the school serves 425 students in grades K-8 who learn in a clean and modern facility. Classrooms are spacious and vast hallway windows allow natural light and woodland views, brightly painted walls are covered with students’ many works of art, and a blue tile “river” winds its way through the main corridor.
Across many of Philadelphia’s poorest neighborhoods, a scatter of new charter schools like the Wissahickon Charter School have taken seed since charter school legislation was passed in 1997. For many, Sara Vernon Sterman, SW’97, WG’99, has served as a vital catalyst.
Sterman is Managing Director of the Community Services Lending Group at The Reinvestment Fund (TRF), a Philadelphia-based non-profit that has developed a successful model for underwriting charter schools as well as childcare and social service organizations. “My arrival coincided with this opportunity to create a new financing product for charter schools, which were just beginning to take shape when I came to TRF in 1999,” Sterman says. “It was uncharted waters—nobody knew much about charter schools at that point, and they were seen as too high-risk for most lenders. They had very little collateral, for instance, no credit history and untested management teams.”
Despite these challenges, Sterman forged ahead. And today, “charter school financing is by far the largest part of my unit’s budget and a substantial part of what TRF does today,” Sterman says. In all, The Reinvestment Fund has financed 29 charter schools, serving over 15,000 students in the last seven years. And with more than $53 million in charter school loans and a 0% loss rate, TRF has developed a national reputation for turning the risk associated with such financing into success stories. Recently, Sterman’s unit was awarded a $10 million grant by the U.S. Department of Education to expand charter schools in the Mid-Atlantic region, one of just five such grants awarded nationally and one of only two $10 million grants. The grant will be used to establish a $60 million TRF Charter School Growth Fund (TRF Growth Fund).
Unlike public schools, charter schools must locate their own facilities, a process that is often complicated and costly. The TRF Growth Fund will offer financing and technical services in construction management and energy efficiency planning in order to cut the overall project costs that come with charters. It will also deliver organizational and business assessments to help stabilize the start-ups and will allow for significant expansion of the charter school movement in Pennsylvania, New Jersey, Delaware, Maryland, and the District of Columbia. “In states like Maryland, where the fledgling charter school movement is only beginning to take hold, we expect demand for such funding to only increase in the next few years,” Sterman says.
Like Copisarow and her role in expanding the credibility of microfinance worldwide, Sterman has legitimized charter school financing for more mainstream lenders. “There are so many instances where TRF has gone into an area that traditional lenders are not ready to tackle,” she says. “After we are successful, things have opened up. We have played an important part of charter schools being able to access financial markets that initially would have been closed to them. Without our being willing to take the first baby steps with these organizations, this would not be the case.”
And for Sterman, the daughter of a career business executive father and a counselor mother, this intermediary role is a perfect fit. “I don’t want to be in the classroom right now myself, but I absolutely believe in quality education. And in order for quality schools to exist they need access to financing. I absolutely believe in quality childcare, and they need access to financing in an accessible way. It’s very easy for financing to be very intimidating to people. I’m not a lingo person. What I really want to do is make the process as accessible as possible.”
Sterman, 38, had no clear career path in mind when she graduated from UNC Chapel Hill with a degree in history, just a vague sense that whatever path she took, her work should “feed her heart.”
She stumbled into the newly created Teach for America program in 1990 and began a two-year teaching commitment in New York City elementary schools, where she found herself ill-equipped to handle some of the realities of life for today’s city kids, “everything from kids not having proper dental and medical care to non-English-speaking, first-generation immigrant kids.”
And as she watched Teach for America grow and change during an additional teaching stint in Washington, D.C., and a program management position back in North Carolina, she began to see the need for strong management skills at non-profit organizations. “It was the constant need to fundraise, literally payroll to payroll on occasion, that created a sense of instability and uncertainty for employees,” she says today. “Idealistic young people probably thrive in that kind of environment—I did because it was a noble cause—but it’s not the way you build a lasting organization.”
And so she began pursuing her master’s in social work from Penn and her MBA from Wharton, finishing both degrees by 1999 and thinking that perhaps one day she would serve as an executive director of a non-profit.
It was the time of the Welfare Reform Act, when legislation set a timetable that States had to follow to reduce their welfare rolls and mandatory work requirements were set for anyone on welfare. Suddenly, childcare became a national issue as thousands of women with children entered the workforce. “I began wondering what all of these women were going to do,” Sterman says. “How were they going to find quality childcare that they could afford?” To find some answers, she began a research project for Philadelphia Citizens for Children and Youth (PCCY), a study that examined subsidized childcare programs in Philadelphia and the impact of waiting lists on low-income families and their ability to hold jobs.
As luck would have it, Sterman found a kindred spirit in Wharton classmate Sharon Kershbaum, C’92, WG’98, who introduced Sterman to The Reinvestment Fund, where she had just completed an internship. Deluged with calls from childcare organizations seeking loans to expand, TRF was looking for a summer intern to write a business manual for childcare providers. With her recent work with PCCY, Sterman fit the bill perfectly.
And so began Sterman’s relationship with TRF, a Philadelphia-based organization that makes loans, equity investments, and grants for affordable housing, small business, community services, commercial real estate, workforce development, and energy conservation projects in four states. “I love where I work, the people and the organizational culture. The organization keeps changing. It never gets boring and it attracts really bright and socially motivated people. It challenges my head and feeds my heart.”
Taking Microchips to Microcredit
Iqbal Quadir, G’83, WG’87, was working for an investment banking firm in New York City when an “a-ha!” moment hit him. It was 1993 and the company had recently installed a network that freed employees from passing their work around on floppy disks. Of course, that kind of connectivity means a computer glitch can shut down a business faster than the Federal Reserve can raise interest rates.
Just when Quadir’s group was beginning to work more productively, more creatively and faster, his computer network crashed, virtually shutting him down with it.
For some reason, that wasted day reminded him of one decades earlier in his native Bangladesh, back when the country’s war for independence raged. There were no telephones, no reliable way to make contact from village to village, and for a time, even the minimal boating access the village relied on was shut down.
One day, his parents sent their son on a 10 kilometer walk to another village with a pharmacist. They needed medicine. But after walking all morning, 13-year-old Iqbal arrived to find the pharmacist gone, off to a town where he could replenish his medical supplies. Back the boy walked, a wasted day. All for lack of a telephone to call ahead.
Sitting in front of his disconnected computer in New York 22 years later, a realization dawned: If connectivity meant productivity, then it must be a weapon against poverty. That started the wheels turning on an amazing micro-lending partnership that eventually would bring 200,000 phones to Bangladeshi villages through GrameenPhone, serving 80 million people with an average of 400 people using each of those phones.
Back in 1993, a tight deadline loomed. Quadir quickly learned of the Bangladesh government’s plans to issue cellular phone licenses in 1994. That gave the budding entrepreneur just a year to gather investors and develop a solid strategy to bring phone service to a country where on average only two telephones existed per 1,000 people. Worse, virtually none of the nation’s 100 million rural inhabitants had access to a phone. That kind of luxury was generally reserved for the 20 million people living in urban areas.
That’s when Quadir’s Wharton education kicked in. After his undergraduate years at Swarthmore College, known mostly for its liberal arts focus, Quadir says Wharton was his first real introduction to business. Second, the school instilled in him a belief that business is an effective solution to problems faced by societies. And perhaps most importantly he learned that putting your money in the right places would lead to progress—and profits. In other words, putting money into a venture didn’t mean spending it—it meant setting up an infrastructure that would return even more money while advancing people’s lives. It’s the simplest of concepts, of course. Business people just call it investing. But this basic realization changed Quadir’s outlook.
“It’s a very important part of my growth,” he says.
Getting back to the telephone distribution problem, Quadir had limited resources. He needed to convince other people and institutions to ante up. He partnered with Grameen Bank, a trusted institution in Bangladesh that already specialized in micro-lending in some 35,000 villages.
Quadir proposed that Grameen make $200 loans to women who would use the money to purchase phones, then sell fellow villagers airtime. The fees would allow the women to pay back their debt to the bank and support themselves and their families. Quadir also convinced Telenor, the Norwegian telephone company, to invest in his company and build the network.
“In a way, I was a little chimpanzee who convinced these gorillas of my idea,” Quadir says.
It’s an interesting footnote that Grameen works almost exclusively with women on these loans. It found that these enterprising women are significantly more likely than men to pay back their loans. This has also worked well for the phones. Bangladeshi men go away from home to work, and the women left behind are the ones calling out to check on them. If a woman needs to make such a call, she is generally much more comfortable knocking on another woman’s door to use the phone than going to a man’s house.
GrameenPhone has become a raging success financially. A group of Americans who backed him originally—his friends like Joshua Mailman, Phil Villers, and Ben Cohen—collectively put in $1.65 million and got $33 million back eight years later selling their stake. In addition to the 200,000 phones distributed to villagers, GrameenPhone installed another 6 million throughout Bangladesh. Competitors have added an additional 4 million units since the government issued its licenses, and Quadir predicts that within a year, the companies will double the number of available telephones from 10 to 20 million.
That kind of connectivity, he says, makes the country much more attractive to other capital investments.
Selling his own shares in GrameenPhone made Quadir, 47, financially independent, and he’s using that status to build other socially conscious ventures. He created a foundation in America dedicated to development in Bangladesh. Each year the foundation awards the applicant with the best idea a $25,000 prize. Quadir also recently served as Entrepreneur in Residence at Wharton, completed a visiting professorship at Harvard University, and in January co- founded a program in development entrepreneurship at the Massachusetts Institute of Technology. He describes the new venture as a hub for students interested in entrepreneurship in developing countries or in low-income communities in the United States.
And Quadir himself is never far from his next big idea. Currently, he is working to install mini-power plants that use cow dung as fuel to provide electricity. Although Bangladesh is rich in natural gas, there is little infrastructure to distribute it.
So far, experiments in two villages succeeded in providing 20 households with electricity for six months. The next hurdle is a big one, however. While Nokia jumped at the chance to distribute their phones for Quadir’s first project, the generators he needs for his second effort are not yet in mass production.
No doubt they will be when Quadir is finished.
Creating Access for the Next Generation
Apurv Bagri’s passion about the societal good that can come from entrepreneurship is palpable even during a cross-continent telephone conversation. Wealth creation through entrepreneurship strengthens communities not just through job creation, says Bagri, AMP’93, but by creating a number of other intangibles as well—productivity enhancement; national competitiveness; improved quality of life; enhanced national education, training for new technologies that dramatically improve the quality of the workforce; enhanced efficiency of government services, and personal wealth creation leading to philanthropy. It’s a compelling argument, one that Bagri lives each day as the chairman of TiE, a fast-growing, not-for-profit networking and mentoring group that today has 45 chapters in the United States and nine other countries.
TiE, founded in 1994 as The Indus Entrepreneurs, was started by ethnic South Asian entrepreneurs in Silicon Valley. Today, the organization is reaching out to entrepreneurs from all national backgrounds and all industries, from modest startups to public multinationals. For a $100 fee, any entrepreneur can join, and is eligible to receive contacts and tips, entry to TiE Inc. events and mentoring from the organization’s charter members, whose ranks include such luminaries as Infosys founder and chairman Narayana Murthy, former McKinsey CEO Rajat Gupta, and C.K. Prahalad, the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of Michigan.
Based in London, Bagri founded TiE’s U.K. chapter in 2000 after meeting many of the organization’s founders during his travels to Silicon Valley. The chapter found its feet very quickly, and Bagri joined the TiE board in 2002. Bagri was recently appointed as TiE’s chair to continue the group’s goal to grow beyond its core North American and Indian markets. And Bagri, who with his father Lord Bagri, president of the London Metals Exchange runs Metdist, a large non-ferrous metals group, has himself served as mentor to an interesting hodgepodge of start-ups, from a software services company to a purveyor of health drinks.
“There are hundreds of thousands of entrepreneurs who have ideas and passion, but lack structure or an understanding about how to begin the path to entrepreneurship,” Bagri says. Getting off on the right foot is sometimes just a matter of making an introduction to the right person.
“The doors often don’t open just as you would like when you are a young entrepreneur,” he continues. “So we get them to see the people they need to see. We have access to hard-hitters and powerful decision makers across the world who can help spread the entrepreneurship gospel around the world.” Other times it’s much more complicated: coaching on loan proposals, funding, market strategy.
“TiE brings together successful people and uses them as a powerful tool to help transform the lives of others,” Bagri says. “We believe in wealth creation because wealth creation is a mechanism for a virtuous economic cycle—one that develops and helps society and the community at large.”
Scholars across the globe agree that collaborations between the poor, civil society organizations, governments, and large firms can create the largest and fastest growing markets in the world. Large-scale and wide-spread entrepreneurship, many experts argue, is at the heart of the solution to poverty.
Bagri was born in India but moved to London with his family in 1960, when he was a year old. Throughout his education in Britain and in Wharton’s Advanced Management Program, Bagri has remained committed to India, both from a business standpoint and a social and cultural one. “While I have grown up here and have very much a British and Western orientation, I have a cultural understanding, affinity, and affection for India which tempers a lot of what I do,” Bagri says. “In our family, we believe in going beyond financial contributions to charitable organizations. We believe in giving a significant amount of personal time.” In addition to TiE, Bagri sits on the boards of a host of other organizations, including the Royal Parks Foundation, the City University and the London Business School.
And while Bagri admits that his work with TiE consumes a huge amount of his personal time, he makes no complaints. “I probably spend 25 percent of my time on work for TiE, and this is time I have to find. But it has been the most extraordinary process I have ever been through. I’ve met people who are kings and people with very little. Each one has helped open another dimension to my understanding and appreciation not only of business but of life and people. Each one has a story and each one has taught me as much as I have taught them.”
A Hub for Social Impact Management
For social entrepreneurs, doing good and making money are not mutually exclusive. In the words of Ian MacMillan, Fred R. Sullivan Professor of Management and Director of the Sol C. Snider Entrepreneurial Research Center: “It’s a process whereby the creation of new business enterprise leads to social wealth enhancement so that both society and the entrepreneur benefit.” [For more on MacMillan’s research, see “Experimental Entrepreneurship: Removing the ‘Tin Cup Dependencies'”]
Wharton has been a leader in social entrepreneurship since Joseph Wharton first wrote his plan to educate leaders who would become “pillars of the State, whether in private or in public life.” The three-year-old Wharton Social Impact Management Initiative (SIM) brings together all the intellectual efforts, across the university, to find entrepreneurial approaches to social problems. As an umbrella organization, SIM aligns faculty, students, and external organizations to offer insight into innovative ways that public or private enterprises can find effective solutions for social issues.
Recent initiatives include an annual day-long conference on Social Impact Management and a new course on “Entrepreneurship and Societal Wealth Generation,” which aims to teach students that “many social problems, if looked at through an entrepreneurial lens, create opportunity for someone to launch a venture that generates profits by alleviating that social problem.”
The course takes a hands-on approach, requiring student groups to develop their own business venture plans, which will ideally become real-world businesses. In addition, Wharton students considering social entrepreneurship can access the SIM-sponsored Wharton Net Impact. Founded as Students for Responsible Business in 1993, Net Impact aims to promote social impact careers among the Wharton MBA community, in such key areas as social enterprise, non-profit management, international and economic development, socially responsible investing, and corporate social responsibility.
Writers Nancy Moffitt and Sharon L. Crenson are frequent contributors to the Magazine.