socially marketing

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 social capital driving socialmarkets and similar agencies is only as real as you make it. It is not hard to sell the idea of value in educating our youth, housing our homeless or cleaning up our environment, but it is not easy to translate that value into concrete terms.

The concepts and even the vocabulary we use to describe social capital is largely borrowed from “real” capital markets, which makes the translation easier. This suggests an accounting system that mirrors, but is separate from the ledgers that define the bottom line at all but the most avant-garde organizations.

I don’t know if we will ever see (or even need to see) this separation disappear entirely, but I do know that less of it is more better - and that the winds of change are blowing in that direction. Carla Dearing (disclosure note: she is CEO of our fiscal sponsor GivingNet) talks about this on PhilanthroMedia.org, which in turn references this recent Fortune article on how the carbon trading market is helping farmers literally turn manure into money.

Carbon trading is perhaps my favourite example of the ‘new accounting’, where the scope of the bottom line is growing. Not long ago it would have been downright silly to include greenhouse gas emissions in your business plan, let alone on your balance sheet. Now, an increasingly viable carbon trading market has turned silly into savvy, and is drawing in participants from the public, private and nonprofit sectors.

This leap from social to “real” capital is just the tip of the iceberg, and arguably an arbitrary tip at that. Increasing alarm about global warming combined with an increasingly desperate search for new energy sources and myriad other factors to make carbon trading a reality.

But every social ill and issue has its own unique DNA, and is potentially just waiting for the perfect storm of political, social and economic trends to take them off the back burner. I can’t wait to see what market response is induced from a perceived crisis of illiteracy, homelessness or similarly sticky social problem.