socially marketing

The idea of applying market savvy to the social sector is still a pretty young one, but is growing up fast. We can now see social entrepreneurship, one of the more enduring labels attached to this idea, becoming institutionalized - for example, in our institutions of higher learning.

The Catherine B. Reynolds Foundation is sponsoring a Program in Social Entrepreneurship, which they define (rather nicely I think) as

“a form of public leadership that maximizes the social return on public service efforts while fundamentally and permanently changing the way problems are addressed on a global scale.”

Reynolds offers full scholarship and other support to the most promising future social entrepreneurs it can find at the two universities it endows: The Kennedy School at Harvard University, and The Wagner School of Public Service at NYU.

I know a good deal about this program, since I am a proud and active alum of Wagner myself, and was pleased to serve as a judge for selecting the 2008 Reynolds fellows earlier this month.

This was a tough gig - largely because by the time we judges came along, the huge number of applicants was whittled down to the most promising four score or so. Such pre-screening guaranteed that pretty much all the candidates we saw demonstrated a clear vision of their future as social entrepreneurs, on top of a history demonstrating their clear ability to walk their talk.

I see a trend, and I like it. In just a few short years, social entrepreneurship has migrated from the fringes of social science to its very core. As a result, some of our most promising young minds are incorporating its ideals into their own plans for their place in the world - and from what I’ve seen of those minds, the world will be the better for it.

Back to the harsh reality of limited resources, only a few of the candidates I saw made the final cut to become Reynolds Fellows. This is of course sad, but there is this consolation: who better than these budding social entrepreneurs to tackle this classic problem of too many worthy social causes and not enough money to support them?

Sometimes we get so caught up in sweating the details of bringing socialmarkets to life, we forget about the bigger picture. We know our work is an important step towards advancing the social capital model, but once in a while it’s encouraging to see that socialmarkets is just one piece of the puzzle, and that we are by no means alone in this effort. Last week we had the opportunity to get a glimpse of that bigger picture, and we liked what we saw.

Allan and I were invited to a discussion group on The Social Capital Marketplace (SCM) here in NYC. It was a small gathering - just a dozen or so people hosted by GivingNet, powerful proponents of SCM (as well as our fiscal sponsors.) While the group was small, it included a good cross-section of the market, from the supply side (e.g. donor advisors) to the demand side (e.g. nonprofit advocates) and the spaces between them (e.g. socialmarkets.) Everyone brought something special to the table, and the discussions which took place around it were animated, unscripted and best of all, highly educational. I may go into details in a later post, but for now I’ll focus on just one general idea: how social capital markets are gearing up for growth right now.

There are more wealthy people than ever pouring more money than ever into the nonprofit sector. This statistic is a mixed bag, since this new wealth is hardly democratic. As the rich are getting richer, the wealth divide is getting larger. However, as the invisible hand of the capital market moves us further into economic inequality, the social capital market offers a counter-balance. The inclination of the wealthy to “give back”, and in particular the “giving while living” trend offers new inputs to SCM. Gates and Buffett are setting good examples, but they’re really just the tip of the iceberg. Also, it’s not just the quantity of new philanthropists, it’s the quality: many if not most of them come from the quant-based worlds of finance and technology, so are receptive to the market approach of SCM. Here are a few of the creative ways that receptivity is being exercised:

• Knowledge is power

Several efforts (including ours) attempt to bring transparency and accountability to the market by doing more due diligence on nonprofits. There is very little information available for most nonprofits beyond IRS Form 990, which offers no insight on function and impact. Ultimately these efforts can produce complete ratings and analysis functions, offering potential social capital investors the chance to make more informed decisions. The functionality is like Moody’s, but the Web 2.0 model makes it more like a cross between Kiva and TripAdvisor.

• Behind the buzzwords

Terms like Social Entrepreneurship and Venture Philanthropy are so over-used that we forget the powerful ideas behind them. There are many current projects which recognize that social vs. economic capital is not a black and white issue. Inside the gray area between, there is plenty of room for deriving economic profits from social services. A little flexibility on the size and time frames for those profits can go a long way towards directing real money into social markets.

• Bottomless bottom lines

Once you broaden your definition of ‘profit’ to include non-economic criteria, the sky’s the limit. Double bottom line accounting, which adds social returns into the equation, allows for a more complete picture of what defines a successful business. This is where other often abused buzzwords like Socially Responsible Investing and Corporate Social Responsibility show their true power. When your only bottom line is economic, you’re shut out of several alternative (and arguably larger) economies, including the human, social, environmental and spiritual. At some point we should probably stop counting (triple and quadruple bottom lines are common, and I even found a quintuplet here) but the bottom line is that there is more than just one bottom line.

This is just a taste of what is happening in the SCM space, and it was all the more tasty because we got to meet the people behind the projects. We try to keep up with the literature, but you can get so much more out of face-to-face interactions with the people who share your goals- especially if those people are smart, committed and open to sharing. I think we all left that conference room a little wiser, and a little more energized. Socialmarkets is a web-based operation, so we spend a lot of our time in virtual spaces. Once in a while it’s awfully nice to check in with the real world.

Before this blog post really starts, I just wanted to thank the Cyber-Yenta, Deborah Elizabeth Finn, for her fantastic work in finding and opening doors for us in the nonprofit technology world. She’s been giving us incredible introductions to lots of great people in the sector.

After we got back from Boston, Deborah came to New York and thus started another flurry of meetings. We met with Resource Generation, Modest Needs and the Rockefeller Foundation.

Here are some pics!

That’s me with Deborah Elizabeth Finn and Dr. Keith Taylor from Modest Needs.