Keith Weigelt (Professor of Management)
The degree to which Wharton is involved in social impact issues is a result of efforts by students to integrate the concept into the School’s culture. It was over five years ago that students came to us and asked whether we could attract social impact projects as part of The Field Application Program (FAP). Many of our early projects centered on microfinance organizations. Given the lack of exposure many students had to this emerging discipline, students then asked for a course in microfinance. We were only too happy to accommodate their wishes which resulted in the establishment of Management 783 – Strategies for Financial Inclusion.
In the past five years we have seen student demand continue to develop and expand in the social impact field. We have tried to accommodate this higher demand by increasing the number and scope of social impact projects. Each year, the number of social impact projects increases. Last year FAP sponsored over 15 projects. In completing these projects, students looked at: museum retailing, microfinance funding, sustainability efforts, alternative energy, valuing social enterprises, developing farmers’ markets, and protecting historical sites in China. We also joined together with the Leadership Center to sponsor projects through their program.
We are committed to continuing our involvement in social impact as long as there is demand by students. Students’ efforts on these projects have enhanced Wharton’s reputation in the social impact field. Each year, additional socially responsible organizations hear about student efforts and ask to submit their projects. None of the social impact endeavors would be successful without the support of students.
Each year we are surprised by the growing interest of students in microfinance.
During our studies of microfinance over the past five years, we have noticed the emergence of trends within the field. The evidence clearly supports the sustainability of microfinance. We do not think there is any doubt that microfinance institutions (MFIs) have shown the ability to be financially sustainable. Microfinance is in the process of being accepted into the banking system. It is a new market that is growing and will keep growing, probably at a higher growth rate than more developed markets. It is certainly a market of opportunity. In a recent survey of 1300 MFIs, roughly 50% of them had a positive ROA. One estimate is that the median return on these MFIs was 13%.
But there are other forms of sustainability that bring more uncertainty. We hold some concern for the sustainability of the triple bottom line. As more for-profit players enter the space, especially larger commercial banks, will the idea of considering the impact of financial profit, social development, and environmental improvement continue? And, can it continue for the non-profits if for-profit organizations choose to focus solely on profit?
Often, students do not realize their impact because of their short time at Wharton. However, faculty members do see the long-term impact of student efforts. It was students who established the importance of social impact at Wharton and it will be students who must continue to push the frontiers of the subject at the School. The School’s interest in social impact is tangible proof that students can significantly affect the allocation of resources toward the social good. We hope students continue to integrate social impact into their culture. And, we promise to do all we can to support their efforts by offering projects and resources.
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