When I first entered the Social Capital Market nine years ago, I found myself suddenly on the board of the Social Enterprise Alliance, the association of non profits working on building businesses and services to create earned income to support their mission. The organization had recently been decimated by a bloody fight between the founders over the definition of social enterprise. Billy Shore of Shared Interest, the godfather of cause marketing had not agreed with where the group had drawn the line, and Charles King of Housing Works had been left to pick up the pieces and lead the group forward.

Definitions divide, and at that early stage in this market, it seemed to me that getting over strongly held theories of change to make common cause would have been more productive. SOCAP was formed with that in mind; that you build markets by including people who see things in different ways, who come from different realms, but who have enough in common to get something important done together. SOCAP in its essence is all about setting up structured surprises where you have chance encounters with the person next to you who is likely to be someone you would not have met at your normal industry gatherings, but who might be your next best partner to help you do what you want to do. It’s about making connections with new people and new ideas. Learning and talking and then doing things doing together.

Despite the default to inclusion that’s in our DNA, as we head toward Amsterdam and the place where they created the first stock market, people told me we needed some clear definitions. We want to invite Europeans into a dialogue about what the market at the intersection of money and meaning is all about, at least offer some foundational thinking from our perspective. There were more than 100 Europeans at Socap10, more than 30 from the UK, 18 from Switzerland, nearly a dozen from Sweden, etc. But as we enter the European market with our Dutch partners, Frank Van Beuningen and Margaret McGovern of PYMWYMIC, we hear a demand for people to be able to understand and easily explain to their friends what all the buzz is about, what’s behind the energy and enthusiasm of these people who are gathering to use investment capital to do what the world needs now.

With new money in the room, new investors and wealth managers, on a new continent, it’s time to establish a little clarity at the bazaar. We’ve convened the people; more than 1,400 people from 40 countries came to SOCAP10, up from 600 just two years before. Now this movement and investing discipline that became catalyzed beside the San Francisco Bay is now going back to where sophisticated capital markets were born 400 years ago. With the journey to the origin as the theme, we need to explain and even define what we see as the phenomenon that’s emerged.

Toward that end, It’s time to pay attention to the intermediaries, the ones creating the rating agencies and metrics, the new marketplaces, the sense makers. Amy Benziger, Socap’s co producer of content and I been talking to those intermediaries a lot, I looked at a lot of definitions, including one used by the Social Enterprise Alliance, and while I found them useful, they did not accurately define the boundaries of the movement and investment discipline that I see coming together to form the Social Capital Market.

So I wrote my own. I’m not suggesting these are the final definitions of Impact Investing or Social Enterprise, but they are the ones I am using today. If you have better ones, refinements, or suggestions of what I have missed, that’s great. Let me know. In putting events and communities together our methodology has always been not to pretend we are the smartest people at the table; we are just the best at putting together the smartest table. If someone comes up with a better definition I will be glad to use it. Markets evolve in conversation.

Definitions: (note, the graphic is a reminder that definitions in the market at the intersection of money and meaning are in three dimensions; risk, return and impact).

What is a Social Enterprise?

It’s a mission focused for profit or non profit started with the goal of solving a social problem (illiteracy, malaria, water, etc). A business that gives away or subsidizes a social mission, but where the mission is fine, but it’s not where my focus is. The question of what is and is not a social enterprise is what they are trying to build. Is the mission a positive externality, (giving a portion of profits or percentage of sales away when they are able to, for example? ) Or is it at core to the operation and nearly impossible to rip out and keep the enterprise alive? Nothing wrong with the latter, but the Social Capital Market is focused on the former; where making a big difference in the world is the engine that drives the organization.

What is Impact investing?

Impact investing is investing for more than financial return; positive social or environmental impact is part of what the investor’s wants as a measurable return. An impact investor is not satisfied if they only make a financial return on their money allocated. Impact investing can stretch from investments without any financial return, (grants and donations) to pre-market subsidies of a business that will eventually either make a financial return or even become a part of a service delivered by the state, depending on the context and venture philanthropy which expects a financial return back to the philanthropic investor which uses the money to fuel further mission focused investments but does not include a return to individual investors.

Impact Investment also includes non-profit and other concessionary lenders, as well as venture like equity investment funds, from seed stage to expansion stage, as well as angel networks, on up to funds that try to for high impact and high financial return. This is return first portion of impact investing. Funds at this end of the spectrum do not invest in companies whose cost of doing good compromises their potential for financial return.

In short, the most inclusive definition of impact investing, the one that conforms to how I am seeing the market evolve and the one most likely to help expand the market within proper constraints, runs the spectrum from crowd sourced donations and foundation grants, to venture philanthropy, to for profit and non-profit funders along a spectrum of mission first impact investors to return first impact investors.

That’s kind of serious and wordy, but with new money in the room, this is our effort to apply some rigor to the definitions in order to make sense of the market for those just entering it and who want to understand what’s going on and put it context of their own investing, giving and individual investing for impact as the market moves into a new phase of self discovery as we head toward where it all began, Amsterdam in late May.