10.27.07
Philanthropy Marketplaces: Similar Questions & Challenges
I came across an interesting dialogue posted in onPhilanthropy discussing a recent roundtable discussion among 40 technologists, entrepreneurs, philanthropists and analysts at a private conference in New York called “Hacking Philanthropy” (read the excerpt here). Emerging markets as an organizing principle was one of their strong themes, and while the dialogue was focused on the growing philanthropy ‘marketplaces’ - such as Kiva and Donorschoose - some of the intriguing questions this group were wrestling with are quite applicable for social enterprise ‘marketplaces’ - or exchanges -that are hoping to develop. Specifically:
Reasonable balances between supply and demand: Some of the emerging exchanges are investigating these topics right now: are there enough ‘investment-ready’ social enterprises? Is there enough interested capital from the donor/investor side to match the number of enterprises? Will this capital invest using an exchange? What can be done to keep the balances in supply and demand? Validating legitimacy: While the philanthropy roundtable focused on how best to confirm the veracity of the nonprofits or enterprises requesting loans or donations - for exchanges the issues center on the “legitimacy” of social enterprises listing. There are several aspects of the legitimacy challenge to think through in setting up an exchange - and ideas developing around solutions. For example, listing requirements may have potential solutions that mirror those in the traditional capital markets (such as listing authorities and NOMADS). Rating agencies that have potential to provide or enhance the information for exchanges may develop through some of the new efforts/groups who are incorporating environmental/social/governance (ESG) metrics to their systems - ranging from traditional investment firm to new companies - such as B CORP - that provide ‘certification of enterprise that enhance or create social and environmental value as a “B corporation”.
Additional questions after legitimacy of those listing on an exchange center on their social impact and social value creation. How will an ‘exchange’ verify the social value of those listing? What will these measures include? How can - or will - these measures be comparable at aggregate levels? And is that necessary? Related to this topic of comparability - the onPhilanthropy author argues that in financial markets, transactions can tied to a currency and thus compared within it its own markets and across markets - but in philanthropy “there is no currency” - which I found an interesting take on how to think about comparisons. Is there a way to create a currency for social value? A ‘meta’ level above individual achievements of social impact, whereby social value can be linked to some ‘currency’ measures (to be defined) - and these can then start to be compared. NOT all the social value created could be linked, given the huge diversity of social needs being addressed and the variety of interventions undertaken by a social enterprise (in scale and in point of entry). But perhaps common measures can be captured - and some created - which will allow comparability?
Questions, questions - not yet the solutions, but I read this posting with great interest on the content and the brain-power gathered at this session and thought without a doubt these solutions will be addressed through collective problem solving - experimentation - and to all of us being open to failing a few times as we start to get it right…
