This coming Wed, Sept 12th, I will be part of this panel discussion on Social Capital Markets. I am... a bit nervous. It is a very impressive group. In case I get tongue tied and speak gibberish, here is what I hope to have said.
1) The Double Bottom Line is False
Social enterprises are social maximizers, not profit maximizers. There can only be one bottom line. If “social” means anything then social enterprises must have “social” as their bottom line. Otherwise, they lose the right to the modifier and financial profit is their bottom line. Every business must prioritize and something must be most important. This does not mean that financial profit is not important. It does mean it is not the most important.
2) An Impact Investor is Not a Financial Investor
The impact part is not just a filter on financial investments like real estate investor. An impact investor hijacks the investment discipline to fund social enterprises who create positive social impact. That’s what the impact part means - positive social impact. A financial investor places money in companies that she believes will create the greatest possible financial return back to her. An impact investor places money in companies that she believes will create the greatest possible positive social impact. This is not a return back to the investor. It is not a return at all. Positive social impact is realized by the commons. This does not mean there is no financial return for an impact investor. Money costs money. There is a financial return back to an impact investor.
3) Ecosystems: It’s the Network not the Node
We need impact investment and social enterprise because profit-fist enterprise and financial investment are incentivized to ignore any cost (or benefit) that is realized by the commons. We need a vibrant and resilient economy that balances all aspects of cost and benefit. The next step for social enterprise and impact investing is to add a cooperative layer on top of the competitive one that explicitly recognizes a community of actors that comprise an ecosystem. Then we can understand the health of that ecosystem and we can understand the value of any one actor based on their contribution to the whole. This is why what we are doing is a disruptive innovation.
Paula Goldman, Director, Omidyar Network Kevin Jones, Founder, Good Capital; Convener, SOCAP Greg Ulrich, Director, Advisory Services, Hope Consulting Steve Wright, Vice President, Poverty Insights, Grameen Foundation Kevin O’Malley, President, TechTalk / Studio – Moderator
SOCAP12 will gather global innovators – investors, foundations, institutions and social entrepreneurs – to celebrate directing the power and efficiency of the capital market toward social impact; the things that make a better world. This preview program will feature an engaging dialogue and debate from leaders in the field on how you keep the focus on making a difference, and not let traditional approaches to investing dominate.