If Alan Khazei ever forgets why he set out to change the world, all he has to do is swivel around in his chair and survey the office wall behind him. There, in a golden frame, hangs a collage of snapshots from a 1995-1996 trip around the world that he and his wife, Vanessa Kirsch, took to meet other social entrepreneurs. The people in those photos believe in the same things that Khazei and Kirsch believe in. They've fought similar battles — for funding and for survival. And they've prevailed against great odds to reshape their respective corners of society. Included in the collage are Debashis Nayak, an architect in Calcutta who works with communities to preserve ancient landmarks; Ashraf Patel, a young Indian woman who heads a cultural-awareness program to bring Muslims and Hindus together; and dozens more.
Seeing their faces fills Khazei with a renewed sense of purpose. It reassures him not only that he chose the right path but also that he is not alone on that path. "We went on the trip looking for change agents — people involved in making a difference in all sectors: business, government, and nonprofit organizations," Khazei says. "We found that these were people with whom we shared common values, common desires, and common hopes — hopes for children, hopes for peace, hopes for what's possible in the 21st century. I came back from the trip even more committed to what we're doing."
Before their nine-month sabbatical, both Khazei and Kirsch had independently built visionary vehicles for social change in the United States. Khazei's brainchild was City Year, a sort of domestic peace corps that he cofounded with law-school buddy Michael Brown in 1988. The program had grown from 50 members in Boston to 1,000 members in 11 cities. Kirsch was no less accomplished. In 1991, she started Public Allies, a thriving national youth-service program based in Washington, DC. Both Kirsch and Khazei were looking for an answer to the question "What's next?" "We knew that what we were doing was extremely important work, but we felt like we were banging our heads against a wall," says Kirsch. "It's so hard to grow something. We thought that by taking a step back, we could ratchet up the work that we were doing — not only for ourselves and our own organizations but also for the nonprofit sector."
The trip around the world was one leg of a larger journey for both of them — a journey toward what Kirsch calls "high-impact" social change. "We want to make a big dent in history," she says. Their quest: to create a venture-capital mechanism for the nonprofit world — a system that would reward creativity and performance in the social sector with funding for growth. They want to help build the next generation of great, sustainable nonprofit enterprises. They aim to define the future for a new generation of social entrepreneurs.
In hindsight, it seems inevitable that Khazei's and Kirsch's lives intersected. Both were born into mixed-religion homes: Hers was Jewish and Protestant, his Catholic and Muslim. Both went to colleges in the Boston area — he to Harvard and she to Tufts. In 1988, she worked on Michael Dukakis's presidential campaign; he worked on Gary Hart's in 1984. And both had parents who inspired them. Kirsch remembers coming home from school to find her artist mother painting. "I loved watching her take a blank canvas and transform it," Kirsch says. "I would often run home from school so that I could paint with her. It gave me a sense of limitless possibility."
Khazei's immigrant father, who came to the United States from Iran, instilled in him the virtues of citizenship. "My father came from a country with a dictatorship, so he appreciated the value of democracy," Khazei says. "He said, 'The United States is the greatest country in the history of the world. It's the only country I could come to as a foreigner and be accepted and raise a family and contribute.' But he also raised me to have a critical eye. We Americans have these ideals that we don't always live up to."
Neither Khazei nor Kirsch knows how to take no for an answer. Shortly after Kirsch launched Public Allies, she got in her car and drove from Washington, DC to Chicago. There she waited outside a hotel to accost a program officer for the MacArthur Foundation. She offered the woman a ride to the airport, and on the way, pleaded her case. They parted with a noncommital "Come and see me the next time you're in Chicago" from the program officer. Weeks later, Kirsch road-tripped to Chicago again and called the woman. This time, Kirsch walked away with her first $25,000 grant. "She thought that Public Allies was extremely entrepreneurial," Kirsch says. "And probably crazy as well."
Kirsch is, by nature, a relentless battler. Dyslexic, she had to fight her way into college. "Everybody told me that I wasn't going to get into the school that I wanted to attend," Kirsch says. "I wrote to Tufts, 'Look, my scores are terrible. But I really want to go to Tufts.' It was a heartfelt letter. I just wanted them to know how badly I wanted to get in — and I did."
Khazei is no different. He wanted President Clinton to attend the festivities for City Year's 1998 annual convention. After all, it was a campaign stop at a City Year site that had inspired Clinton to launch the $250 million AmeriCorps program in 1994. But the president's staff said that he had no time for a trip to Boston. So Khazei pulled out all the stops, lobbying everyone he knew with a connection to the White House and calling on City Year corps members to pen more than 700 letters to the president. When the day of the event arrived, "Clinton was there. Apparently, he found time for a trip to Boston," says former U.S. Senator Harris Wofford, who befriended both Kirsch and Khazei years ago, and who now runs the AmeriCorps program. "Alan Khazei got Bill Clinton to attend by sheer force of will."
Khazei's dream of starting a national-service program germinated while he was still in college. "We'd have late- night discussions about how to change the world, and about how the United States is the richest country on the planet but it still has homeless people and illiteracy and gang violence," says Khazei. "Why do we have that disparity? For me, national service makes so much sense because it gets to the root of the issue. It gets people involved at a young age so that they will learn what's going on in a direct way. It turns on what I call people's 'justice nerves': If you are exposed directly to an injustice or a need, you want to do something about it."
Khazei went on to Harvard Law School because, as his father advised, he could always find work with a law degree if all else failed. But after graduating, he turned down lucrative law-firm offers. Instead, with classmate Brown, he founded City Year. Their hope was that City Year would spark a movement, taking hold first in Boston and then spawning parallel efforts in other cities. The premise was simple: that national service could become both commonplace and obligatory, a bridge between high school and college. Young adults (ages 17 to 24) from all walks of life would dedicate 1,700 hours a year to working together on service projects all over the city. In addition to a modest living allowance, they would get partial college scholarships.
City Year began with 50 participants and funding from Bain & Co. and Timberland, among others. Today, wearing their red parkas, khaki pants, and City Year T-shirts, young corps members have become a fixture all across the country, doing morning calisthenics in the plazas and squares of their host cities. Teams of members take on community projects such as cleaning up vacant lots, providing HIV education, tutoring and mentoring other students, and helping the elderly. Nationwide, this year's contributions will look something like this: more than 1.5 million service hours; more than 22,000 kids educated about HIV; about 970 outdoor spaces renovated; roughly 150,000 kids tutored and mentored; and almost 3,000 elderly provided with support services.
As City Year was getting off the ground, Kirsch was working for Peter D. Hart Research Associates, canvassing young people about their attitudes toward citizenship. Depressed by the gloomy results, which painted her Gen X peers as slackers and poor citizens, she decided to find out for herself if that picture was accurate. Living off of a bonus from work, Kirsch took a month off and drove cross-country, interviewing young people along the way. She found that in many cases, young people were interested in doing public service, but they didn't know where to begin.
Kirsch then discovered many nonprofits that needed assistance. They were worried about the future leadership of their organizations, but they didn't have the resources or time to recruit new blood. Kirsch envisioned a solution that would help young people, nonprofits, and their communities. "We needed to create an infrastructure and organization that would bring those resources together. We'd help nonprofits and young people, and we'd create a whole notion of national service, of citizenship, of buzz about its potential. And we would begin to change the way Gen X was defined."
Public Allies, started in 1991, places young people in 10-month paid apprenticeships with local nonprofits. "Allies" — the teenage participants — get anywhere from $1,300 to $1,500 a month (depending on which city they live in), plus an educational grant from AmeriCorps of up to $4,725. One day a week, they work on team-based projects, such as a citywide forum for high-school peer health educators and violence-prevention programs. The notion has caught on: With an operating budget of $4 million, Public Allies now places roughly 200 youths each year with organizations in nine cities.
City Year and Public Allies became models for the national public-service movement. Both programs acquired steady funding, a healthy dose of media coverage, and, arguably, reasonable success — and that's when the frustration began.
Around 1992, both Khazei and Kirsch began to feel crunched: They had outgrown their startup phases, but they lacked the resources to grow. Kirsch had more requests than she could meet to expand Public Allies into new cities. Paradoxically, though, "Some of the foundation people were saying to me, 'Vanessa, you're getting too successful. We can't fund you anymore,' " Kirsch says. "And I was thinking, 'Now, that makes a lot of sense.' Others were saying, 'Vanessa, you're raising enough money, and you're showing surpluses. We can't give you money.' And I'm thinking, 'If I were showing deficits, then you'd give me money. But you're not going to give me money because I did what I said I was going to do?' "
Khazei, though extremely proud of City Year's success, had grown more impatient with its limitations. "I want to see a million young people in service. City Year's great, I love it, but it's only 1,000 people. AmeriCorps is great, but it's only 25,000 people. The money's there now, and the president just vetoed a $792 billion tax cut. Well, if there's $792 billion for a tax cut, then there's $10 billion for national service. There has to be."
In April 1992, Wofford suggested that Kirsch meet one of the founders of a service program similar to hers in Boston. Wofford started egging Khazei on as well. "He told me, 'This woman started an organization called Public Allies, and it's really hot. She's going to blow by City Year. You've got to watch out because she's young, entrepreneurial, aggressive, dynamic, beautiful, and talented,' " Khazei says, mimicking Wofford's teasing warning. "And so I said, 'Well, I've got to meet this person.' "
Fate collaborated with circumstance at a June 1992 conference for social entrepreneurs in Concord, Massachusetts. "I was a little late, so when I came in, everyone was already seated for dinner," Khazei remembers. "There was this incredibly beautiful, energetic woman at one of the tables. She was glowing with positive energy, and there was an empty seat next to her at that table. And I thought to myself, 'I bet that's Vanessa.' And lucky for me, it was. I sat down at her table, and we started talking. And we hit it off. She talked about Public Allies and what she was doing and how she started it. I talked about City Year. We both talked about the political campaigns that we had worked on. We ended up staying up until 2 am. Dinner was long over, they'd closed down the bar, and everybody had gone to bed."
Soon after meeting, the two began a long-distance relationship. They kept it quiet, not wanting nonprofit-world gossip to overshadow their work. They commuted between Washington, DC and Boston, and scheduled flight layovers in the same city whenever their travels permitted. Their mutual travel agent was the first to guess. "He busted Vanessa," Khazei says, grinning. "He asked, 'Are you and Alan dating?' and she was shocked. She asked him how he knew, and he said, 'Because no one except you two ever requests layovers.' "
Breakthrough on the Beach
Two years after they met, Khazei and Kirsch decided that they needed to step back from their cherished nonprofit projects to seek out new ideas and perspectives. Drawing on the experience of matchmaker Wofford, who had traveled to India with his wife shortly after the two were married, Kirsch and Khazei decided that a pilgrimage around the world would be the perfect tonic for their stagnation. The nine-month-long trip served as a celebration of their engagement — and of their shared mission. "We thought that this would be a great way to start our life together — by traveling abroad, trying to meet change agents and future leaders and learn from them," Khazei says.
They were on a beach in Thailand, two and a half months into their travels, when it came to them: They would create a second-stage capital market for nonprofits. During their travels, Khazei and Kirsch interviewed more than 350 social entrepreneurs, businesspeople, and government leaders in 20 countries. And after seeing their own difficulties mirrored in their compatriots' experiences and witnessing how far American capitalism had reached into even the developing countries that they had seen, the answer seemed obvious.
"There's lots of startup money for nonprofit work," Khazei explains. "There's lots of money for the really big, established groups. But there's almost no money for those organizations in between — those who need bridge money to sustain and to grow."
Because of that lack of second-stage funding, nonprofits and philanthropists remain locked into the startup-phase mentality — rewarding need and new ideas rather than performance and tested models. "With all of the effort and money that goes into the nonprofit sector, why aren't we solving more problems?" Kirsch asks. "Because the system is broken. This is not an intellectual argument. I'm talking about thousands of people not getting immunized or thousands of kids not getting access to childhood-development intervention so that they can learn to read. It's about how to have the greatest possible impact; how to effect large-scale social change."
Back home in 1996, Khazei returned to City Year, aiming to seed the organization in 10 new cities within five years. Kirsch, who had left Public Allies, began to lay the groundwork for a venture-capital fund that would serve nonprofits. She approached the project as she had any other in her life: with complete obsession. "By the time I got back to America, I couldn't think of doing anything else. When people say, 'Oh, I think you're off here. Maybe the timing's not right,' I think, 'We're doing the right thing because I know it,' " Kirsch says. "There's such a higher drive for me, because I've listened to voices in Russia, the Middle East, South Africa, China, and Japan, among others, all saying the same thing. I don't want to sound mushy — but this is my calling."
Kirsch, with Khazei's help, spent a year researching the idea, assembling a think tank of students, professors, social entrepreneurs, and business leaders. Kirsch and a coworker bulldozed their way into the office of Harvard accounting professor Robert Kaplan, who had invented the "balanced scorecard" method of evaluating companies' nonfinancial performance. Within an hour, they had persuaded Kaplan to adapt his method for Kirsch's venture, New Profit Inc. Kirsch then struck a deal with the Boston-based Monitor Group to provide mentoring and strategy consulting for the nonprofits that her company would choose to groom — as well as office space for her four employees.
Then Kirsch started raising money — $2 million to date from investors including the Knight Foundation, Mark Nunnely of Bain Capital, and Chris Gabrieli of Bessemer Venture Partners. Initially, New Profit will provide four entrepreneurial nonprofits, chosen from among 40 applicants, with consulting and financial services worth up to $1 million over three to five years. The inaugural investments: Jumpstart, which matches college-age tutors with preschoolers; Citizen Schools, a group that fosters community involvement in public after-school education; Working Today, a union, of sorts, for free agents; and Codman Square Health Center, a Boston clinic that serves the disadvantaged. Mirroring the for-profit venture-capital paradigm, a New Profit representative will sit on the board of each funded organization to advise and monitor its progress.
Like Public Allies and City Year, New Profit is intended to be a test case. If it's successful, Kirsch hopes and expects to witness the organization launch a whole new sector — not nonprofit or for-profit, but new-profit. In the new-profit world, investors will demand a strict accounting of strategy, operations, and results. They will seek a quantifiable return on their social investments — not a financial return per se, but one that is based on measurable social progress. New Profit grantees that meet certain standards will be rewarded with additional funding; those that fall short of meeting those standards will ultimately be dropped.
Competition, in other words, will arrive in the nonprofit world. "American industry wouldn't be the entrepreneurial mecca it is if it weren't for venture capital. In venture capital, a lot of the new ideas get the big grants. People take big risks on new ideas," Kirsch says. "But the nonprofit sector is stuck with a conservative, banking mentality. Funders don't take big risks on big new ideas. There are a few people who generally control what gets funded. My goal is to someday have hundreds of venture-philanthropy funds to fill in that green space that hasn't been developed."
Cheryl Dahle (firstname.lastname@example.org) is a Fast Company senior writer. Contact Alan Khazei (email@example.com) or Vanessa Kirsch (firstname.lastname@example.org) by email, or learn more about New Profit Inc. on the Web (www.newprofit.com).
Sidebar: What's Fast
After spending roughly a year networking with other social entrepreneurs around the world, Vanessa Kirsch and Alan Khazei have a good sense of the future of civil society.
Get used to new profit.
"In the future, change agents will have to be comfortable in all different sectors, both public and private," Khazei says. "They'll have to be willing to work with the government, to work with nonprofit leagues, to work with businesses. We saw that everywhere we went. Even in China, which is communist and very much government-controlled, we found that there were people doing borderline nonprofit work."
Say goodbye to big government.
"The era of big government is over, and not just in America," Khazei says. "The issue of government corruption was everywhere. But it wasn't that people were against the government or ready to throw government away. They were recognizing that they needed more nonprofits and businesses involved in addressing issues."
Meet the new revolution.
"Social entrepreneurs will lead change as politicians led change in the 1960s," Kirsch says. "But it's a different kind of revolution. It's not a revolt in the streets; it's institution building. But we don't have a system to take any of those innovations to scale — yet. While we have social innovation that we believe in, and that has been proven, there's no system to take that innovation to scale. That's the next battleground."
That vision thing.
"America is in a transition period now," Khazei says. "Don't forget, for 50 years, when we were in the middle of the Cold War, it was very clear what our mission as a society was. And it was also very clear what the role of government was. Then the Cold War ended, and we didn't have an offensive mission. What are we trying to accomplish as a country? We have no idea. And the irony is that we sit atop the world. America is like a colossus: We have the resources to do so much. We just need to find the will."
A version of this article appeared in the December 1999 issue of Fast Company magazine.