Wednesday, September 8, 2010

5 Ideas for Philanthropy to help Unlock the $120 Billion Social Capital Market

The philanthropic sector is fully realizing the bitter truth that money alone cannot solve our most challenging problems. Many of our ideas around philanthropy need to evolve to truly achieve the impact we seek with our dollars.
Here are five ideas that can help advance our sector and bring our unique value to the bigger Social Capital Marketplace.

Embrace alternative financial instruments and ideas - Often times investors and philanthropists are the same people with different expectations. "Two-Pocket Investor" refers to someone who thinks differently of their philanthropic investments vs. their financial investments. Philanthropic institutions sometimes deem social enterprises as too risky and yet preferred to give a grant. One solution is a "stacked investment" which is a blend of financial investments and grants to help distribute the risk. These kinds of ideas need to be explored in entrepreneurial ways and given more consideration by traditional funding institutions.

Co-Investing- The days of one funder giving to one organization to solve a social or community problem are limited. Collaborative funding models are spreading. Most have centered around funders making grants in a certain issue area or cause. By co-investing, we are able to share valuable knowledge/information and leverage resources to come closer to systemic change. Soon we will see more diversified capital projects that bring together resources from impact investors across sectors who are able to play at various points within the financing. This will helps spread risk and strengthen stakeholder engagement throughout the social enterprise.

Measuring beyond the numbers - Evaluation is king in the world of social impact. You can't get what you don't measure, right? And yet a lot of energy, resources and time can go into visioning the outcomes you want to achieve and tracking progress (and proof) along the way. As we develop those strategies, it is important to embrace the qualitative along with the quantitative. When thinking about scale and reach, sometimes resources are better spent capturing the story of the impact and potential impact and ensuring those stories reach a broard audience. Think of the power of Kiva.org, where would that organization be if not for the brief story and picture provided with each investment opportunity. Besides, when you can't prove poverty alleviation in a quarterly report, a good and authentic story can make all the difference.

Cross-pollinating and sector blending -For far too long, missions and social impact have been relegated to the world of non-profits. Impact is executed by a charitable organization and funding comes from the foundations and donors. It has been an insular world with strange cultural customs and tribal language. Today with graduating MBA students interested in using their careers to create and work for triple-bottom-line business, this demand is expanding the universe of opportunities to make the world a better place. Impact can and will happen beyond mission-based work. Those philanthropic institutions that start playing across the sectors (public and private) will prove more successful in accomplishing the outcomes they seek.

Stimulating Informal Networks - Perhaps we do need another institution to carry our ideas to the next level, or do we? Have you ever heard the term "died by committee"? Think of all the intellectual, political and social capital that that gets tied up every time we create a new organization with by-laws, a board, etc. Plus, more importantly, it is almost making a pact with the membership that they will only seek connections from within. Perhaps instead of a new membership based organization, we need to create spontaneous and informal networks to bring existing networks together. Spark Club in North Texas has been just that. The organizers (myself included) like to bring together the "suits" and the "jeans" and pull from existing networks in hopes to put together an unlikely union, partnership, conversation, etc. No membership rules, no organizational infrastructure or hierarchy, and the only sponsors allowed are for technology...alcohol. In networking this way helps nurture fertile soil for the seeds of social entrepreneurship and enterprises.

Written for the #SOCAP10 Impact Challenge
by Stacy Caldwell
@Scaldwell

Help me compete for a free ticket to SOCAP -Social Capital Markets Conference in San Francisco this October. Please vote for me if you are inclined!

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