In 1985, fresh from Harvard Business School, Laura Scher was hired by Peter Barnes of the socially responsible Working Assets Money Market Fund (which is no longer traded) to develop a company called Working Assets Funding Service. The idea was to give people a way to spend in a socially responsible fashion. Since then, Working Assets has rolled out a credit card, the long-distance telephone service that propelled it onto the Inc. 500 starting in 1993, and now wireless phone service. Each time one of Working Assets' 450,000 customers uses one of the services, the company donates a portion of the revenue to a collection of 50 nonprofit groups. Working Assets has raised $40 million for progressive causes.

I'm from the idealistic 1970s generation. I grew up in a family that was very involved politically and environmentally. We worked on presidential campaigns. We carried our recycling around in the trunk of our car before there was curbside pickup in our neighborhood. My father, a chemist, formulated chemicals that had the same properties as those made with oil, but they were water-based. My mother was an economics professor at a local college and president of the League of Women Voters. All of this shaped my interest in global issues, philanthropy, and the power of business to affect social change.

At first, I was the only full-time employee. I had to do everything from answering the phones to bookkeeping to negotiating with banks. Some of it was CEO stuff, some was just stuff that had to get done. At the same time, I had to develop a business plan. The big question was, could you use consumerism to help improve the world and affect social change?

The credit card was our first product, and we wanted it to be a win-win situation for everyone involved. The banks would win because they were getting customers. The nonprofits would win because they were getting donations. The customers would win because they were getting a product that would help raise money for good causes, but one that also had a low interest rate. This was before affinity cards, like airline miles cards or nonprofit credit cards.

We had all the classic start-up challenges. The bank we started with in 1985 decided in 1986 that it no longer wanted us to market credit cards. They thought we were going to sign up 10,000 people during the three years of our contract. We signed up 10,000 in eight months. They told us they couldn't put more cards on their books.

We stopped marketing credit cards from July 1986 to March 1987, which was when many affinity cards came into existence. In other words, we were out of the market at a time when our response rates were twice what they would be eight months later. That was quite frustrating. Soon we found two banks. Lesson learned: Try not to be dependent on one supplier.

We launched the phone service in 1988, but we didn't do the billing and customer service; at that point we just marketed other companies' service. We got paid a very small amount and we donated 1% of the phone bill.

We actually became a phone company, an authorized reseller, in 1991. It was a very different telecom world when we started. You had to convince customers to switch from AT&T. People were very skeptical of us because they didn't think we would offer quality phone service. The whole issue back then was quality. And without the name of an existing carrier behind us, people were convinced we wouldn't sign up customers.

But by May 1992, we signed our 50,000th customer. Our attrition and bad debt rates were lower than the industry average, while our average monthly phone bill was higher. By the summer of 1992, we had gotten out all the bugs from the billing system. We had customer service. People never lost phone service. Billing operated smoothly. And the marketing had become successful. People were very interested in signing up.

We recognized that a phone bill was really a wasted opportunity. When you get a phone bill in the mail, you have to open it, you have to get out your checkbook and your pen, and you have to send it back. We thought, what if you could do other things as well? We wanted to turn the phone bill into an activism letter. We knew that the phone bill was a powerful tool for social change.

"In a regulated industry, you live and die by the whims and politics of those overseeing it."

I've learned the importance of having several products and the downside of being dependent on one industry. Revenue has not been growing as quickly over the past few years as it has in the past, even though our customer base has been growing. That's because the average phone bill is decreasing. We now offer wireless services, but we don't have enough customers yet to offset the decrease in people's phone bills. That's just made us much more aggressive with our wireless product.

If you're an entrepreneur in a regulated industry, you live and die by the whims and politics of those overseeing it. Until recently, we offered local phone service as well as long distance in certain markets. But the FCC has done a serious disservice to consumers through a decision effectively eliminating our ability to engage in local phone service. We can't compete with local phone companies that barrage consumers with television commercials and letters offering combined local and long-distance service. We don't have a level playing field anymore. As a result, the consumer loses.

Companies are much more socially responsible today than when we started in 1985. Entrepreneurs and small businesses are much more likely to set aside a percentage of the public stock offering or to require volunteer hours or to adopt a school. We donate a percentage of revenue, but even donating a percentage of profit is still a fabulous way of doing something. i