SRI - Socially Responsible Investing: A new paradigm?

A precise definition of Social Entrepreneurship continues to elude us as we go about our task of bringing our projects to life. We are moving on from the conceptual stage to that of a living organism, the pilot stage in which we will actually interact with the under-served people we intend to impact the most. Along the way we will face challenges in raising capital, remaining sustainable, managing growth, managing the different constituencies that make up the social enterprise, and yet managing to remain focused on the initial mission with which we intended to start out. But are we the only ones with problems? But another key constituent in the social eco-system, the social investor, has her own set of problems. Her big challenge is to choose from amongst a range of social initiatives and decide which one gives the biggest bang for the buck.

The Social Investment Forum (www.socialinvest.org) defines “Socially Responsible Investing (SRI)” as the integration of personal values and societal concerns with investment decisions, in the sense of considering the investor’s financial needs with the investment’s impact on society. So, what’s new here? Is this a new paradigm for age-old philanthropy? Is it new wine in an old bottle? Is there a problem of plenty here? Maybe, but maybe not.

To give credit where it is due, there is now a willingness on a certain part of the investment community to take a more holistic look at investment by considering the impact on society and the environment, in addition to a return on investment. So metrics such as social return on investment, social impact and social outcomes are just as important to the socially responsible investor as they are to the social entrepreneur.

There is hope yet, that the investment climate will become conducive to the needs of the social enterprise even though the process may be slow. We need an enabling ecosystem to survive. How do we save the world, if we don’t build sustainable social enterprises? So let us move forward and redefine the social ecosystem.

Shashank

An Innovative use of a Mobile Device

"Luring leopard with rooster and mobile"

This is the title of a news item in a newspaper published in India. Ken Banks of kiwanja.net could add this to his list of instances "where technology meets anthropology, conservation and development"
In this case the technology was in the form of a mobile phone with the ring tone of a rooster that was successful earlier to trap a leopard and then release it into a forest away from a village. The chicken kept in the cage to lure the leopard clammed up so the forest officials also put a mobile phone with a rooster ring tone in the cage and kept calling on it to provide the audio effect.

Social Sweat Equity: Monetisation of Social Capital

We have recently had a wonderful and lively discussion on the topic of social entrepreneurship. A lot has been said about building a sustainable organisation using the tools of business and I will focus this discussion on just this sustainability issue. However, it is not yet clear how one would build in sustainability without periodic infusion of capital. Is an NGO built on periodic grants a sustainable entity? Or, does sustainability imply a steady revenue stream which is higher than the expenditure of an organisation? Or, is there something else that provides sustainability?

This is especially hard for those organisations that do not fit into a classical mould of a business where the consumer or customer ma not be a paying customer. Capital infusion could be grant-based, or it could be through the venture capital route. While traditional philanthropies and foundations have often provided grants to NGOs or non-profits, the average VC does not understand social entrepreneurship. While the VC understands financial metrics that are easily measurable, an NGO cannot easily provide metrics for social impact.

So we need to find a new abstraction to help in the monetisation of social impact. We need a new ontology, a new vocabulary, that will convey the meaning of this abstraction in traditional economic terms. Hence we need an abstraction that will allow us to put an economic value on social impact. For the moment, let us call this abstraction "Social Capital" or "Social Sweat Equity". An analogy is in order here. The concept of "sweat equity" came up when VCs started funding entrepreneurs. This abstraction allowed the entrepreneur to put an economic value on his/her prior work in getting an idea off the ground and claim a significant share in a venture where cash infusion was provided by the VC. Wouldn't it be nice if we could use the abstraction of "Social Capital" or "Social Sweat Equity" to attract potential funders into investing into a social venture just as sweat equity is valued by a VC in a traditional venture?

We need to get some economic thinkers and financial gurus to think about this concept and provide a theoretical foundation which may
then benefit the field of social entrepreneurship in the long run. "Social Capital" or "Social Sweat Equity" could be defined in a way that would measure social impact which could be monetised.

Any ideas? SocialEquity.org ?

Shashank