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:
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.
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.
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.
