socially marketing

At long last we are releasing socialmarkets into the wild!

This is a beta release, covering much but not nearly all the functionality we want to build into the site.

As always, our focus is on SROI (Social Return on Investment) but in this release, we are particularly focused on how crowdsourcing figures in to the calculation of SROI.

We are capturing our user’s opinions on which social projects deliver the greatest social returns.  The more user input we get, the better our result will be - so please visit us and add yours!

Here are the highlights of what you can do on the beta site:

• Find links to some basic research on SROI
• Find out about some nonprofits, including the outcomes used to measure their success
• Use our Rate-O-Matic to rate how valuable you think nonprofit outcomes are
• See how other users have rated nonprofit outcomes
• Vote up or down the SROI of individual nonprofits
• Donate to nonprofit projects you want to support
• See how your nonprofit “investment portfolio” compares to those on our Leaderboard

We are allowing access to the site in stages.  Anyone can tour the site, but an invite code is required for full access.  Here on the blog we are announcing the first public invite code: BLOG.

Please visit us at http://beta.socialmarkets.org and use the code BLOG to register.

We would be grateful for any input you have, from your opinion on social outcomes, to the value of our approach and its execution on the site.

There is a short survey at http://bit.ly/7wvBE, and you can always send us a note at info@socialmarkets.org.

We hope to hear from you!

Using impact metrics to understand the social sector can take many forms, as seen in these current efforts:

performance measurement: evaluating non-profit effectiveness by measuring their outcomes.

outcomes taxonomy: creating a master list of non-profit outcomes to be used as a sector-wide standard for comparison.

social capital: broadening the definition of capital to capture environmental and other social values.

socialmarkets depends on all these trends, and also pushes them a little further into unknown territory.  This is especially true for the social capital model, like when we mix up ‘regular’ dollars (e.g. a donation to a charity) and social dollars (e.g. the SROI a donation produces).

The name socialmarkets itself goes a long way towards explaining what we do: applying the market model to the social sector.  We believe there are potential benefits to applying economic market principles to the non-profit sector, which is after all, itself an economy.

We do not believe that markets and non-profits are a match made in heaven, and our goal is not to force one onto the other.  Rather, our goal is to explore the boundaries of where the market and social sectors can come together constructively, and where they can’t.

This exploration includes stretching some of the classical market vocabulary.  Take ‘currency‘, for example.  Currency is the very foundation of modern economies, offering a neat method of assigning value to things, and of facilitating their exchange.  Dollars, euros, rubles and the like comprise the hard currencies that make traditional economies go around.

socialmarkets suggests an economy based on the soft currency of SROI (Social Return on Investment.)  Social currency is no good for shopping at the mall, but is excellent for capturing and communicating the social value of non-profit work.

Currency actually flows quite naturally in socialmarkets, but price does not - even though the two terms seem closely related.  We capture the value that non-profits add to society, in the form of social currency - which is not quite the same as coming up with a price.  This distinction illustrates how social markets don’t always mesh neatly with traditional ones.

Traditional economic markets depend on a neat line between profit-maximizing producers and penny-pinching consumers, to guide the market’s invisible hand towards a compromise called ‘price’.

Social markets are more complicated.  The line between the producers and consumers of social capital are fuzzy, and the currency that flows between them is more nuanced than plain dollars.

We are so used to traditional ‘prices’ that we forget how fickle they actually are.  From real estate on a global scale, to a cup of coffee on our own corner, prices often move along surprising trajectories.  There is an entire field of economics devoted to studying (and ironically, rationalizing) the irrational behaviour of prices.

This helps remind us that the price of any thing is just a snapshot of how people value that thing… which suggests a useful definition for social return of any given outcome: a snapshot of how valuable people believe the outcome to be.

When we have more experience with social markets we should be able to make better sense of how price - and other economic jargon - translates into the social economy.  For starters, we can recognize that the boundaries between social and economic currency aren’t all that well-defined in the first place.

The basis of socialmarkets’ brand of social capital is the metrics we employ to approximate social value.  For starters, we try to keep up with the social science on non-profit outcomes and their social value (see our research section here.)

The database of such values is large and growing, and we are grateful for it.  Every study that contributes data on the social return of a meal served to the hungry, on medical treatment to the uninsured, etc. helps us more accurately produce SROIs to associate with the related project listings on our site.

But the database of outcomes and their social values is not nearly comprehensive.  This would prevent us from compiling SROIs for many non-profits, if we didn’t have the help of our crowdsourcing mechanism.

One of the most important functions of socialmarkets is capturing our users’ opinions on which outcomes they value most.  For better or worse, opinions are never in short supply, so our own database of user input can cover the entire non-profit space.

Ideally we would have both subjective and objective data available for the SROI calculation of a given project, but we know this won’t always be the case.  In any case, the amount of available data is significant.  Like in any market, size matters in socialmarkets.  The more players in the market, the more likely we can mitigate gaming, bias and other distortions that prey upon markets with few participants.

The wisdom of crowds presents another argument for more crowdsourcing data. Consider a classic guessing game, like when a random crowd is asked to guess the number of jelly beans in a jar, or the weight of a prize bull.  It turns out that while the average guess is off by a wide margin, the average of all guesses becomes more accurate as the number of guesses grows.  The bigger the crowd, the wiser they seem to be.   This is a fascinating emergent property of society, and it certainly applies to socialmarkets - at least to the extent we can reconcile votes on social priorities with guesses at bean counts.

The bottom line is that socialmarkets runs on social metrics, and is both producer and consumer of the data it needs.  Using the data generated by our own users, and by others doing related social science, we are piecing together a truer picture of the costs and benefits of social projects.  Ultimately, this will enable us to see how our social investments can generate the greatest social returns.

It’s a fair question: why bother with socialmarkets when you can donate directly to the non-profits you like?

We can think of lots of reasons (of course!) but have narrowed the field down to this top 5 - hopefully one or more of them speaks to you:

1.  Because socialmarkets is a better way to give… and receive.
One of the foundations of socialmarkets is the belief that more informed investors make better investment decisions.   When it comes to donations, socialmarkets offers information about your options that you will not find anywhere else.  Our input on where you can get the most “bang for your buck” can help you realize the greatest possible social impact.

socialmarkets works on the other side of the donation transaction too: at non-profits.  For starters, our social returns (SROIs) and user inputs offer potentially useful insights to non-profit managers too.  In addition, we help level the playing field, because visibility on our site is the reward for good social returns - irrespective of an organization’s size or marketing budget.

2.  Because socialmarkets is an interesting experiment.
socialmarkets is venturing into new territory in the field of charitable giving.  We are bringing social capital, outcomes measurement and crowd-sourcing together on the virtually limitless scale of the internet.  We believe the results will be exciting.

Our users are an integral part of the experiment.  Aside from being a source of donation dollars, our users are a critical source of data in the valuation of our project listings.  User input on the outcomes they feel are most important directly affects our SROIs.  The more user input we have, the more credible our SROIs become, as a reflection of the true social value of non-profit work.

3. Because socialmarkets is a critical piece of the social capital  model.

Social capital is not just different than ‘regular’ (financial) capital - it’s better.  It includes finance, but also the other dimensions of life that have value.  Good health, clean air, personal happiness… there is a long list of things in our lives that bring us more wealth than any bank balance can.

socialmarkets is a critical piece of this model.  By focusing on the value of non-profit work, socialmarkets promotes the social sector, and raises the visibility of the formerly fuzzy social capital it creates.  Ultimately, we can help bridge the gap between rich and poor, by any metric of wealth.

4.   Because socialmarkets is fun.
Social investment is serious business, but that doesn’t mean it can’t also be fun.  Our rate-o-matic was designed to be an instructive and entertaining way to gather your input on social values.  We encourage our users to engage with us and each other, on socialmarkets and on social networks like Facebook.

We also encourage our users to track their own portfolios of social returns (SROIs), and to get into the spirit of competition that lands the top social investors on our leaderboard.

5.  Because socialmarkets doesn’t cost you anything.
Finally, you can enjoy all these benefits without cost.  We don’t charge donors or non-profits to participate on our site.  We certainly welcome your financial support, either by funding our own socialmarkets listing, or by an optional commission when you fund others.  However, socialmarkets’ funding model is built on the honor system.  We are counting on enough users seeing enough value in what we do, to offer enough voluntary support to keep us going.  In this way, we are being the trust and transparency we want to see.

There are lots of folks who aren’t excited about social capital in general, but even within the socap community, social currency can be a hard sell.  I think some of this resistance would go away with a better understanding what “currency” is.

In its most basic form, currency is simply a mechanism for capturing value.  So in theory, if you accept that the social sector creates value, it’s not a far stretch to accept a currency that captures it.

Currency is tightly associated with money, because that is the implementation we are most familiar with.  However, the SROI socialmarkets promotes is only one of many variations on the currency theme.

The city of Ithaca, New York (my home as an undergrad) has been using their own currency for years now.  That currency is denominated in HOURS, based on the value of one hour of work, and used to supplement or even replace dollars by hundreds of local businesses and thousands of local residents.  HOURS is that community’s own creation, and they are rightfully proud of it.

Like any currency that is not directly backed by a “hard” commodity such as gold (including, since 1971, the U.S. dollar) HOURS and SROI are really just collective acts of faith.  There is nothing tangible behind these currencies or the economies they empower, which helps explain why dollar bills are inscribed with “In God We Trust” and HOURS bills with “In Ithaca We Trust”.  SROI bills don’t exist (yet), but the inscription I would recommend for them is “In Us We Trust”.

SROI is as real as we want to make it.  We may never be able to accurately capture the social benefit of reducing greenhouse gases, immunizing children or feeding the hungry… but carbon credits, health care savings and calorie counts are valid and accessible pieces of their respective puzzles.

Happily, SROI is more nuanced than the relatively small set of credible outcomes data currently available.  If value is ultimately what we collectively think it is, then capturing our collective thoughts is the ultimate path to SROI.  The most significant outcome of the socialmarkets experiment would be to make that happen - to provide a platform from which our collective wisdom can define social currency.

Our initial denomination of SROI is dollars, but this is mostly a matter of convenience.  Money is a great simplifier.  It helps make SROI more comprehensible even while it vastly underestimates its complexity.  We will iteratively incorporate more and more of that complexity, and even if we can’t always be correct, we can be consistent.

There is currency in social capital, and working as a community, we can make it flow.