The first rule of starting any entrepreneurial venture is: Find a problem that needs solving. Detroit, as we all know, has some big social problems: poverty; crime; homelessness; abysmal literacy rates; rampant unemployment. It should hardly be a surprise, then, that a motivated young class of social entrepreneurs has sprung up in the city, and the successful startups they’ve created are gaining the attention of the region’s veteran entrepreneurs. The local boom in social entrepreneurship has even spawned a business incubator, Wayne State University’s Blackstone LaunchPad, and a capital fund, University of Michigan’s Social Venture Fund.

“Detroit is a great testing ground,” said Jeremy Schifeling, a fellow at the Social Venture Fund. “We want to make this city the epicenter of social impact.”

U-M’s Social Venture Fund, launched in September 2009, is the first student-run fund of its kind in the nation. Schifeling described its business model as having a “triple bottom line” of profit, environmental concerns, and social impact. The fund focuses its investments in four areas: health, education, food systems, and the environment and urban revitalization.

Housed at the Zell Lurie Institute for Entrepreneurial Studies, the U-M Social Venture Fund received more than 100 business plans for consideration during its first year of operation. Though most of the interest comes from startups in Southeast Michigan, it’s not exclusive. Thirty students from across campus, both graduate and undergrad and from schools as diverse as Natural Resources, Finance, Education, and Public Health, administer the fund, which has the capacity to invest $250,000 per company, though Schifeling says the typical investment amount is $50,000 to $100,000. The money in the fund comes from within the university, from high-net-worth individuals, and educational foundations.

U-M’s Social Venture Fund doesn’t just invest in companies—it also offers assistance in honing organizational skills and solidifying business plans. It’s a fairly ambitious program, especially considering that the folks running it already have full academic plates.

“It’s intense,” Schifeling says. “We’re trying to run a world-class fund in between classes.”

Quentin Love, Blackstone LaunchPad’s Program/Marketing Coordinator, knows a thing or two about student intensity. Funded by the Blackstone Charitable Foundation and modeled after a program at the University of Miami, the LaunchPad opened its doors a little over a year ago with the goal of being a comprehensive resource for student entrepreneurs at Wayne State. LaunchPad’s goal is to help the students develop “bulletproof business plans,” and to that end it offers workshops, networking events, and consulting sessions, as well as a brick-and-mortar location on campus for like-minded young innovators to gather and hash out ideas.

“We tell the students that we won’t run their business for them, but we’ll do everything we can to help them get it off the ground,” Love says.

One factor that sets the LauchPad apart is … Next Page »

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This is the fifth in a series of profiles of Y Combinator Winter 2011 (YC W11) startups.

“Keep the change.” You might say that to a taxi driver who’d delivered you speedily and safely to your destination, but it’s unlikely you’d ever say it to a grocery checkout clerk or a Nieman Marcus salesperson. Yet over time the change on your daily purchases can add up to amounts that would make a significant difference to some group, such as your favorite charity.

In fact, if you use your credit or debit card a few times a day, round up each purchase to the next dollar, and add up the difference, you’ll find that you’re racking up $20 in “change” each month, or $240 per year. At least, that’s the average that SwipeGood, a Y Combinator-backed startup based in Palo Alto, is seeing among its users so far. Its mission is to help people give that money to causes they believe in, and, in the process, to help stabilize the fundraising process for non-profit organizations.

SwipeGood co-founders (top to bottom) Steli Efti, Anthony Nemitz, and Thomas Steinacher

Call it “smallesse” (as opposed to largesse). Signing up with SwipeGood, which tracks your purchases and adds the appropriate roundup amount at the end of each month, is a no-hassle, easy-to-understand way to be a mini-philanthropist. At the startup’s website you can choose to send your change to any of more than 500 non-profit groups, from Kiva.org to KQED. Once you’ve chosen one, your money flows to the recipient automatically, providing it with reliable, subscription-style revenue of the type that’s all too rare in the non-profit world.

SwipeGood keeps 5 percent of the donations to fund its own operations. That’s a lot less than the 10 to 20 percent of the annual budget that goes toward marketing and fundraising at most non-profits, says Steli Efti, one of SwipeGood’s three co-founders. “We thought this would be a way to make fundraising more affordable, and to turn it into month-over-month recurring revenue,” Efti says. “Our whole reason for existence is to provide the simple and most elegant solution for giving.”

Efti and his co-founders Anthony Nemitz and Thomas Steinacher made up one of the 43 startup teams to finish the Winter 2011 term at Y Combinator this spring. Even before the incubator’s Demo Day on March 23, the company had raised $500,000 in seed funding from individual investors such as Bebo co-founder Michael Birch. “We were already making revenue then, so we are looking at a very long runway,” says Efti. “I think we could become profitable in a very short period of time.”

An ethnic Greek who was born and raised in Germany, Efti came to the U.S. three years ago with big dreams. His first startup, Supercool School, built a white-label online education platform that’s now used at 4,000 schools in 43 countries. He thinks SwipeGood, which is already seeing weekly growth in the double-digit percentages, can sign up 10 million U.S. households over the next five years—enough to generate donations of $2 billion per year. That would put it on a par with the Salvation Army, the nation’s second largest charity, which raised $1.7 billion in private support in 2010.

The very same consumers who would balk at donating a set percentage of each purchase to a charity are perfectly happy to give away their change, Efti says. “People are afraid of … Next Page »

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Boston entrepreneur Dana Lampert says he tests every new feature for his collaboration software, Wiggio, in a fourth-grade classroom.

“If they can’t do it, we don’t put it out,” he says. “We’re kind of the anti-SharePoint [Microsoft], the anti-Wave [Google]. We don’t want to just add bells and whistles. We really focus on user experience.”

Boston-based Wiggio offers group scheduling, polling, file uploading, and mass messaging (voice or SMS). Groups can use it to assign items on to-do lists, set up audio or video conferences, and edit documents. My colleague Wade profiled Wiggio in 2008, back when the startup was working out of the basement of its angel investor Bob Doyle’s home, and when it was largely targeting the college audience as users of its collaboration software. As Wiggio has evolved with new features and collaboration functions, it’s also attracted an audience far beyond academia, in the non-profit, small business, and political sectors.

Wiggio now has more than 700,000 users, and has been growing by 1,000 per day, says Lampert, the company’s CEO. Most of that has been organic, with college students taking the software to their internships, and employees using it to collaborate on volunteer activities they do in their spare time, Lampert says. Groups such as college fraternities and sororities and soccer teams were initially big users.

“We never billed Wiggio to be just for the education space,” he says. “It’s taken on a life of its own.” In the process, it also has captured the attention of users away from other software products that do individual tasks like to-do lists (Basecamp), file-sharing (Dropbox), video conferencing, Web conferencing (GoToMeeting), and document collaboration (Google Docs).

Wiggio launched its 2.0 version last month, after about seven months of development. It’s designed to provide a more seamless experience for people who need to collaborate around a one-time, ad-hoc event (like a media announcement or camping trip among friends), and to include those who don’t want to go to the Wiggio interface or create an account in order to collaborate. Wiggio communication in a group goes to a user’s e-mail account, from which they can reply to the threads, post calendar items, and upload files directly.

“We’re trying to make it so that people who want to live within Wiggio will see … Next Page »

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Can a company truly do well by doing good? That’s what San Francisco’s Experience Project hopes to find out with the official launch today of BroadCause. The site offers nonprofit groups free software tools to help with fundraising and administration, and makes money by selling marketing opportunities to corporations looking to promote awareness of their charity work.

BroadCause has been online in beta form for a few months now, and includes pages for more than 1,800 non-profits where supporters can broadcast comments to their Facebook friends or Twitter followers. If non-profits register and claim ownership of their pages, they get access to software that handles payment processing for donations, contact management and e-mail marketing, event promotion and ticketing, and support for fundraising events such as auctions.

At the same time, brands like American Express, Nestle, Paramount Pictures, and Sony are using BroadCause as a platform for their own initiatives. AmEx, for example, used the site to generate buzz on Twitter for its Members Project, which matches American Express card members with volunteer opportunities. The company’s BroadCause page promoted its pledge to donate $1 to DonorsChoose.org, an education charity, for every retweet of its volunteering message.

Such messages have a built-in audience at BroadCause thanks to ties to ExperienceProject.com, a 5-million-member community site focused on group discussion of life issues such as health and parenting. That site was itself born around a cause—the very first discussion group on the site back in 2005 was an online support group for patients with multiple sclerosis—and many of its members “have an incredible need to be part of some form of fundraising,” says Peter Jackson, CEO of Experience Project (who is no relation to The Lord of the Rings filmmaker).

Another case in point: When the Lifetime TV show “Army Wives” wanted to raise money for Blue Star Families, an organization of military spouses, Experience Project promoted the campaign on the pages of Experience Project groups like “I Am An Army Wife.” “We have the largest collection of military spouses online, and they raised $10,000 in the first hour,” says Jackson.

The “sweet spot” for BroadCause, according to Experience Project founder and “chief experience officer” Armen Berjikly, is “that area where a brand cares about its audience and its products deeply and is willing to give back, and wants to make awareness rise about that.” This awareness, he says, often comes back to benefit the companies’ bottom line—which is, of course, part of the point. “We see same-store sales, intent to try, intent to buy, all of those metrics go up positively when we start to promote a brand’s philanthropic efforts, which are often aligned closely with the products they sell,” Berjikly says.

BroadCause is an outgrowth of Twitcause, a service the Experience Project launched in 2009. At first, the company simply used the Twitcause account on Twitter to … Next Page »

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Technology Underwriting Greater Good, an organization launched last fall by Jeff Fagnan of Atlas Venture and Hemant Taneja of General Catalyst Partners, will hand out $10,000 to one of three non-profit organizations at its first annual “Spring Fling” fundraising event this Wednesday, June 9. With a self-declared mission to pursue “open source philanthropy,” TUGG mainly supports organizations helping inner-city and underprivileged teens. The groups competing for the $10K prize are Bikes Not Bombs, techBoston, and More Than Words.

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It’s day 6 of our 7-day auction to raise funds for two of our favorite causes, Science Club for Girls and Technology Underwriting Greater Good. So hurry to eBay, because as of this writing you’ve only got about 20 hours left to bid on the amazing Lord of the Rings Online Collector’s Edition boxed set, autographed by the game’s developers at Westwood, MA-based Turbine.

I explained the whole back story to the auction last week. In a nutshell, Turbine gave Xconomy the autographed set back in July as a memento of our visit, and we decided (with Turbine’s blessing) to auction it off and donate the proceeds.

Lord of the Rings Online is Turbine’s award-winning massively multiplayer game world based on the famous J.R.R. Tolkien novels. The boxed set includes two Windows program discs, a Music & Art Collection bound volume including “The Music of Mines of Moria” soundtrack CD, a premium cloth map of the game world, a Middle Earth poster, the Collector’s Edition Starter Guide manual, a product key and three free 14-day buddy keys, a quick reference card, and—perhaps coolest of all—a gold-plated replica of the One Ring (evil powers not included).

Bid now—click here to visit the auction page. To whet your appetite, here are a few pictures of the set and its contents:

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Do you love fantasy role-playing games? Do you enjoy collecting one-of-a-kind autographed artifacts? Do you like supporting good causes? Then this is your lucky week. Through the generosity of the good folks at Turbine, the Westwood, MA-based publisher of online fantasy games, Xconomy has obtained an amazing Collector’s Edition boxed set of Turbine’s most popular game ever, Lord of the Rings Online: Mines of Moria. This version of the award-winning massively multiplayer game world—based, of course, on the famous J.R.R. Tolkien trilogy—is signed by the actual developers who created the game. And we’re auctioning it off on eBay, with 100 percent of the proceeds benefiting two of our favorite local non-profit groups.

Click here to see the auction listing at eBay. The auction begins today and will conclude at noon Eastern time on Tuesday, November 17. We hope this unique item brings a good price—because we’re going to donate half of the proceeds to Cambridge, MA-based Science Club for Girls and the other half to Boston-based Technology Underwriting Greater Good.

Here’s the back story about this remarkable item. I visited Turbine’s massive headquarters facility back in July, and shortly afterward wrote a big feature article about the company’s decision to make one of its other online properties, Dungeons & Dragons Online, free to play. As a memento of my visit, the team at Turbine offered me the aforementioned autographed boxed set. I explained that as journalists, we can’t accept gifts from sources—but that we’d love to take the set and sell it for charity. Turbine enthusiastically agreed. (But the game has been sitting around my office ever since; I guess, like Gollum, I couldn’t bear to part with “my precious.”)

Aside from the program discs for Lord of the Rings Online (which spare you a lengthy download), the Collector’s Edition contains a variety of extras guaranteed to appeal to any fan of the genre. What makes this copy special, of course, is that the box cover has been signed in metallic-silver magic marker by about 20 of the developers involved in creating the game (see the photo below). But the stuff inside the box is pretty cool too.

The neatest item, to my mind, is the CD with the soundtrack music from the game. But Tolkien fans will also appreciate items such as the gold-plated reproduction of the One Ring, complete with Black Speech inscription, which, as everyone knows, reads “One ring to rule them all, one ring to find them, One ring to bring them all and in the darkness bind them.” (I tried it on, and for better or worse, I did not become invisible, see a fiery eye in the sky, or have delusions of ultimate power.)

Here’s the full rundown of the loot inside the Collector’s Edition:

• Two Windows program discs
• Music & Art Collection bound volume including “The Music of Mines of Moria” Soundtrack CD
• The aforementioned replica of the One Ring in velvet pouch
• Premium cloth map of the game world
• Middle Earth poster
• Collector’s Edition Starter Guide manual
• Product Key and three free 14-day Buddy Keys
• Quick Reference Card

Note that LOTRO is playable only from Windows PCs with broadband Internet connections, and that the game itself requires a subscription of $14.99 per month, separate from the cost of this Collector’s Edition.

A word about the two non-profit groups that will benefit from the auction: Science Club for Girls, founded in 1994, offers free after-school science literacy programs to K-12 girls in several cities around Massachusetts. Technology Underwriting Greater Good, founded this year by Jeff Fagnan and Dana Samuels of Atlas Venture and Hemant Taneja of General Catalyst Partners, promotes entrepreneurship and innovation programs for young people in New England. Bob profiled the organization last month.

They’re both great groups—so go and bid on the LOTRO Collector’s Edition now. You’ve only got until next Tuesday!

Here are a few photos of the Collector’s Edition. You can click on each photo to see a larger version.

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When we reported yesterday that the Broad Institute of MIT and Harvard was set to receive a whopping endowment of $400 million from Los Angeles-based billionaire philanthropists Edythe and Eli Broad, we noted that it was rumored that the institute—originally structured as an administrative unit of MIT—was also set to become independent of both MIT and Harvard. The Broad alluded very briefly to such a change in its announcement about the donation this morning. And now we can fill in more details, based on an FAQ made available today to Broad staffers, about how the institute is revamping itself as a stand-alone nonprofit with an independent board of directors and other major organizational differences from its first incarnation. But while it will become a separate legal entity, “in terms of how our scientific research proceeds, the Broad Institute is NOT separating from either Harvard or MIT,” the FAQ emphasized.

The organizational restructuring marks a major milestone for what began as an experimental model of collaborative research among MIT, Harvard and Harvard-affiliated hospitals. The new endowment—which adds to the $200 million that the Broad couple already granted their namesake institute—means that the institute, which focuses on the role of genomics in medicine and the molecular underpinnings of diseases, has the financial wherewithal to operate permanently and independently while maintaining research partnerships with MIT, Harvard, and other institutions.

According to the FAQ, “the transition to a permanent status requires that the Broad Institute become a stand-alone non-profit organization with its own Board of Directors.” And such a transition has long been on the table, according to the document:

From the day we were founded in 2003 there has always been the possibility that this transition to a permanent institution would happen, and now it has happened sooner than anyone projected. The discretion surrounding the legal deliberations was necessary to ensure that this transition be worked out as completely as possible before it could be widely known in order to prevent any false or misleading information from appearing, and to ensure timely and appropriate national and international recognition for the incredible and unprecedented generosity of the gift from Eli and Edythe Broad.

The FAQ also spelled out the benefits of becoming a stand-alone nonprofit:

This new status of the Broad Institute establishes it as a unique, identifiable, and permanent part of the Boston/Cambridge biomedical landscape. It also allows us to chart an even more aggressive course, and to move even more nimbly in pursuit of new scientific opportunities.

With many of the details and changes in administrative structure and leadership still being worked out, the institute told employees that the full transition to an independent nonprofit would not likely be completed until July 2009.

The Broad downplayed the move toward independence in its official news announcement, which states that MIT and Harvard will continue “to help govern the institute.” But while the FAQ makes a brief mention of Harvard and MIT having formal roles in the Broad’s new governing structure, and says that some of the its new board members will be drawn from its partner institutions, it suggests that the institute plans to run its administrative operations largely on its own.

As for the brain trust of Harvard and MIT professors who are considered members at Broad, the FAQ says that they will maintain their faculty appointments with their respective universities. But the transition to “stand-alone” status does mean that staff members of the institute who are now considered employees of either Harvard or MIT will become employees of the newly independent institute.

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If you’re concerned about global warming, what breakfast cereal should you buy to support the company with the best record on greenhouse gas emissions? Soon, you might be able to make informed decisions on issues like that right in the supermarket aisle.

“All you’ll have to do is to take out your cell phone, scan the barcodes and you’ll get back a score, a rating, for the companies’ performance,” says Stéphane de Messières, executive director and founder of Citizens Market, an early stage non-profit organization based in Cambridge, MA.

The vision of Citizens Market is to create a platform where average consumers can share information on which companies are the most socially responsible. They’ll be able to write online reviews of companies and products and rate their performance, in the same way people contribute to consumer review sites like Yelp.

But instead of concentrating on value for the money in a limited sense, Citizens Market will focus on broader aspects of corporations’ behavior, like environmental performance, labor practices or political lobbying. The user community will also rate each other’s reviews, giving greater weight to those postings that are deemed the most reliable. The big idea is to enable consumers to put their money where their heart is, by supporting companies and products that are in line with their personal values and avoiding others. The information in the database will be reachable on the Web or, eventually, via a special cell phone interface customized for shopping.

For de Messières, the idea behind Citizens Market started several years ago with a pair of jeans.

“I wanted to buy a pair of blue jeans and searched for hours on the Internet and found a manufacturer in USA with a good record, with union-made jeans. I thought that ‘this was it’ and ordered a pair. But when they came, they were the ugliest pair of jeans I ever put on in my life, and in the end I sent them back.”

“I said to myself, it shouldn’t be that hard to shop responsibly,” de Messières says.

This summer, Citizens Market will launch a Web-only beta version of the service, with the mobile functionality to follow later. Up to now, the project has been totally driven by volunteers, including de Messières. The organization is now looking for a planning grant of roughly $60,000 to $80,000 get the service off the ground.

The big challenge for any initiative that relies on user-generated content, of course, is to build a real community. But there seems to be a lot of interest in the idea of a corporate social responsibility ratings site, at least judging from the backing that the Citizens Market already has received. The organization has recruited a board of advisers including several successful entrepreneurs and persons with ties to prestigious institutions like Oxfam America and Harvard’s Kennedy School of Government and Berkman Center for Internet and Society.

The interest was also strong when Citizens Market put out an ad for volunteer web designers on Craigslist last November. One of those who responded to the ad was Vanessia Wu.

“There seems to be a large community around here of people with an interest in corporate social responsibility,” Wu tells Xconomy.”They are willing to work on this thing, because it can make a big difference.”

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