For Working Assets, the challenge was finding a bank to issue a socially responsible credit card.

If it's true that behind every entrepreneurial success there lies one brilliant, innovative insight, then it may also be true that behind that insight is an absolutely obvious fact of life. Take the notion that led to the founding of San Francisco-based Working Assets Funding Service (#493), a $104-million company that has managed to combine 12 years of hypergrowth with a socially responsible business mission.

The brainstorm that struck CEO Laura Scher and two friends, Michael Kieschnick and Peter Barnes, who shared her social and political priorities, was that consumers would buy into a company that allowed them to shop with a conscience. "It was a challenge for us to find a bank that wanted to work with us to develop a socially responsible credit card," says Scher. These days, the credit-card market is virtually saturated with affinity cards. But back then, "people weren't used to the idea of credit cards doing more than one thing," she says.

Within the financial community, there was only one model the trio could point to: a summer-long program American Express had recently conducted, whereby pennies from AmEx charges were donated to help pay for renovating the Statue of Liberty. The more people charged, the more money got donated...and the more American Express would make.

"The difference was that we wanted to raise more than a penny a customer, we wanted to last longer than a summer, and we wanted to accomplish more than just repairing the statue," Scher notes. Complicating matters further was the fact that the founders were socially conscious when it came to customers' pocketbooks as well, which meant finding a bank whose card would charge interest far below the then-typical annual rates of at least 20%.

Finally, a Massachusetts-based bank signed on to launch a credit card tied to a 17.5% interest rate. Working Assets would donate a nickel of each customer's monthly charges to 16 nonprofit organizations.

If banks had been skeptical of the original product design, customers weren't. An initial direct mailing boasted a 7% return, and other marketing efforts succeeded as well. "By the end of our first summer, we'd signed up 10,000 customers," says Scher, with a laugh. She wasn't really laughing back then, when the bank told the company to stop signing up new customers, since the lenders had projected only 10,000 cardholders by the end of the third year. That sent the trio scurrying around to find other receptive bankers, a task that proved somewhat easier now that they had a proven market. That first year they brought in $32,000 in donations. By the fall of 1986, the CEO recalls, "we were already starting to think about our next product."

Today Working Assets, which is appearing for the fifth time on the Inc. 500, offers a range of long-distance telephone-service plans in addition to its credit card. Last year's donations of $2.5 million went to 36 different organizations, including Amnesty International and the Center to Prevent Handgun Violence.

Published on: Oct 15, 1997