Charity Without The Checks

The worst mistake a nonprofit can make is to take all the money you're given and be beholden to doing things on someone else's terms." That's how Linda Rottenberg explains turning down an enviable $450,000 grant last March from the government of Chile to her nonprofit organization, Endeavor. Like most government gifts, it came packaged in red tape. At the time, Chilean President Ricardo Lagos--and no doubt many of Rottenberg's fellow nonprofiteers--had two printable words for her: "You're crazy."

Far from it. Rottenberg's principled stance has enabled Endeavor to excel in a new kind of charitable role, that of "venture catalyst." She and entrepreneur Peter Kellner co-founded Endeavor four years ago to nurture entrepreneurs in Latin America's emerging markets. That doesn't mean simply writing checks with lots of zeros. In fact, the organization gives no direct funding to the regional airline, the gourmet-cookie company and the 62 other firms it fosters in Brazil, Argentina, Chile and Uruguay. Rather, it provides M.B.A.s as consultants and organizes management workshops and research missions to places where the money is, like Silicon Valley.

Since Endeavor began helping out, those businesses have generated more than $390 million in revenue and created more than 5,700 new jobs. There's only one stipulation: Endeavor's companies must continue the virtuous circle, giving money back to the nonprofit organization and donating time to educate those who would follow in their footsteps.

Rottenberg's own journey began after Yale Law School when she took a job in Buenos Aires working for Ashoka, the nonprofit that pioneered venture philanthropy by giving small cash infusions to local groups across the globe. On a recruiting trip to Harvard Business School, Rottenberg met Kellner, who had co-founded a Western-managed independent oil company in Russia, and they scoured Chile and Argentina for people with outsize ideas. "We found a sheep farmer in Patagonia who was a real computer genius but just didn't have the right tools," says Rottenberg, 33. "We only needed to open the doors so he could fly."

Now the idea has taken flight among established Latin American firms. Philanthropy in the region has historically been limited to the Catholic Church and strings-attached government handouts. But since Rottenberg's much publicized rejection of the Chilean-government donation, the private sector is clamoring to offer support. Since Sept. 11, while the group's U.S. donations have ebbed, Latin American corporate leaders have kicked in $3 million. Nothing crazy about that.