Gifford Pinchot says business schools have fostered an obsession with maximizing shareholder value at the expense of employees, community, and the planet. That's why he started the Bainbridge Island Graduate Institute (BGI) near Seattle, where students will study environmental sustainability and social responsibility in the context of entrepreneurship and innovation. Best known as the author of the classic 1985 book on intrapreneuring, Pinchot is a consultant, successful software entrepreneur, and even a scion of a noted conservationist: His grandfather founded the forest service in 1905.

In many ways, BGI has the feel of a classically bootstrapped business. While it took a school in San Francisco three years to start a similar program, BGI's launch took just six months. Pinchot and his wife, Elizabeth, both 60, put up $120,000 for seed money. Working with president Sherman Severin, 54, they won state authorization to deliver an M.B.A., and recruited cutting-edge faculty like alternative-energy expert Amory Lovins. BGI's first cohort of 18 full-time students enrolled last fall.

The school has since raised another $300,000 from benefactors like Ben and Jerry's co-founder Ben Cohen and Wayne Silby, founder of the Calvert Fund. Challenges remain. Few textbooks exist for BGI's innovative curriculum, itself still changing. But Pinchot says he relishes that BGI is "a free experiment, where we begin with a clean slate." Perhaps that's just what American business needs.