$150 Million Gift To Stanford Puts It At Forefront Of Social Enterprise

Donors Robert, Stanford MBA ’60, and Dorothy King hope entrepreneurship will drive economic growth to help alleviate poverty in developing economies through a new institute at the Stanford Graduate School of Business

Over the years, Stanford’s Graduate School of Business has long been one of the few business schools in the world that has regularly turned out its fair share of social entrepreneurs. Now it may well become the B-school for global social enterprise.

An unprecedented $150 million gift—the largest in the business school’s history—will be used to create a new institute whose goal is to combat poverty around the world. The money and the new Stanford Institute for Innovation in Developing Economies propels the B-school—a place better known for producing investment bankers, consultants and entrepreneurs—into the forefront of a growing movement to alleviate poverty through non-profit and for-profit social enterprises.

A key component of the effort will be what Stanford is calling an “on-the-ground” initiative to help social entrepreneurs develop organizations that make products and services to help the poor. “It’s not just a think tank. It’s going to transform lives,” said Robert E. King, a 1960 Stanford Business School alum, who made the gift together with his wife, Dorothy.

Among other things, for example, the institute will teach and support students to create organizations similar to one launched by Daniel Spitzer, a Stanford MBA, who started a venture that grows hazelnut trees in Bhutan. The for-profit company, Mountain Hazelnut Venture Ltd., hopes to produce some 40,000 tons of hazelnuts, giving local farmers a lucrative export product and restoring trees to mountainsides stripped by logging.

“More than a billion people live on less than $1.25 a day,” said King. “That’s just not right.” King, 76, is the founder of Peninsula Capital in Menlo Park, CA., and an early investor in Chinese internet search company Baidu. The gift is among the largest ever for a business school and the biggest since David Booth gave $300 million in 2008 to what is now known as University of Chicago Booth School of Business. In 2006, Stanford’s business school received a $105 million gift from Nike Inc. cofounder Philip Knight to help construct its new campus which formally opened earlier this year.

The extraordinary size of the gift and its support of a purpose generally not considered in the mainstream of business school study should help establish Stanford as the world’s leading business school for social enterprise. For years, U.S. News’ rankings of the best business schools for non-profits have put Yale University’s School of Management first and Stanford second. The gift should make the school the undisputed world leader in this area.

Hau Lee, a Stanford professor who teaches supply chain management and was named the leader of the new institute, concedes the size and ambition of the gift “is a little overwhelming.” But the school is already searching for three new faculty members with deep expertise in developing economies to scale up its efforts in this area. Lee said he hopes to have them on board as early as next September.

“The majority of our graduates and most business schools will focus on consulting firms and multinational companies, but the entrepreneurial spirit we try to instill in our students can steer some—a small percentage—to work with local entrepreneurs for the betterment of the underserved economies,” says Lee. “That trend is happening. In the last couple of years, we have seen our own graduates go to India and other countries to build companies in irrigation systems and water purification. We hope this accelerates.”

Hau said some of the money would be used to fund research into developing countries that will ultimately lead to the development of new enterprise. He said the school also hopes to offer more generous stipends and travel money to MBA students to take on project work with local entrepreneurs to scale their organizations. Currently, Stanford has a program to encourage MBA students to devote one month out of three during their summer internships to work for NGOs and non-profits, but only a “few dozen” avail themselves of this program.

“It’s not because students don’t want to do it,” said Hau. “They have student loans and it’s hard for us to expect them to work in a remote part of China or elsewhere without pay. With this gift, we could provide reasonable stipends and travel money to do it. We are hoping to accelerate that in a big way.”

“We also hope that our alumni would be interested and involved,” added Hau. “Some of them are at mid-level in their careers and may be ready for a change and can play a part in this movement. They could serve as coaches and mentors for young entrepreneurs in developing regions.”

The idea for the gift apparently came out of home stays that the founding donors have offered to international students at Stanford for more than four decades. They witnessed first-hand the impact that education and entrepreneurship can have at both an individual level and a larger scale. One student, Xiangmin Cui, PhD ’97, introduced King to his friend Eric Xu, who joined internet engineer Robin Li to launch a Chinese-language search engine.