11.24.07

Secondary benefits of markets

Posted in exchanges, transparency at 9:57 pm by Lucy Bernholz

The development of social stock exchanges is important for several reasons - only one of which has to do with buying and selling equity in social benefit enterprises. Here are a few others worth considering:

• Exchanges require transparency - buyers, sellers and analysts need access to consistent, comparable data. The quest for increased transparency will be helped by the creation of exchanges;
• Revenue streams would become more visible and clear - right now there are multiple “counts” of in-kind donations and embedded giving. Exchanges might not eliminate these multiples, but they’d probably assist in raising their profiles, helping stimulate more public and complete methodologies, and eventually producing some standards;
• There would be competition for industry indices - and thus incentives for them to improve. Think about the Dow Jones Index or the Russell 2000 - sometimes it seems these indices were handed down from above and have ever been with us. Of course, that’s not the case - they were designed, marketed, and published - and have been tweaked, revamped and new ones created over time. Perhaps we’ll get a Blueprint Index of Embedded Giving (the BIeG?), the NFG online giving index, or trend projections about giving that draw from market leaders in gift management platforms.

Social Stock Exchanges might not be the only way to develop these kinds of indices, but they would be an efficient way. These indices would help improve philanthropy in many ways. After all, philanthropy is many things - an act of love, a basic part of human behavior, and a cultural standard, AND almost all of its forms include a transactional component. We should demand, expect, and create the clearest, most visible, and most accurate public counts of these transactions - to grow the practice, protect it, defy fraud, and consider it in context of public and private sector changes.

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11.20.07

Rethinking the definition of ‘businesses’: Mohammed Yunus calls for Social Stock Exchange

Posted in exchanges at 2:08 pm by Andrea McGrath

At a recent event in Mumbai, Mohammed Yunus - Nobel Peace Prize winner and founder of Bangaldesh’s Grameen Bank - called for establishing a social stock market that would list companies who are ‘doing well and doing good’. Mohammed emphasized that economists have been limited in their previous definitions of “businesses” as soley creating wealth, and that businesses can also “do good for society on a no-profit, no loss basis”. A social stock exchange would allow investors who are interested in these “return of capital” opportunties to find enterprises whose focus is on doing good.

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11.16.07

One Word: Don’t Think. Just Write.

Posted in Story Index, information hubs at 12:18 pm by Samantha Beinhacker

One Word. Don’t Think. Just Write.

The philanthropic landscape is littered with remnants of failed attempts to quantify the impact of nonprofits’ activities. High-impact models, quantitative measures, improved business management– these are just some of the tools bandied about. Much has been written about the failure of these systems to adequately capture and track the cumulative value of resources for good; and worse, the harm they can wreak on social change efforts.

How about envisioning a new way of doing this: using words rather than numerics to understand core competencies and stakeholders’ perspectives about value and impact?

If you could express in one word the impact of your most treasured nonprofit or mission-based social enterprise, what would that one word be? Write that one word down in the comments section below. And then start composing your impressions of that word– the meanings it connotes for you. You have sixty seconds to write about it. Don’t think. Just write.

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11.15.07

New Social Enterprise Exchange in India

Posted in exchanges, India at 4:19 pm by kevindjones

India Development Gateway was founded by an Ashoka fellow who now runs a microfinance strategy and research group called Intellecap in Mumbai and Hyderabad, it’s a new investor-matching platform that plans *not* to make the same mistakes as the orignal SeaChange.org. The new site is scheduled to relaunch tomorow, Friday, November 16th.

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11.12.07

An Idea whose time has come…

Posted in exchanges, Order at 12:04 pm by Andrea McGrath

I just returned from a two week trip, and per usual I stacked my bag with all the reading that continues to pile up at my desk. One report I brought along to actually re-read is titled “Creating an Ethical Stock Exchange” by Jamie Hartzell. It provides a thoughtful analysis of how an exchange might work, details of how it could work (functions, ownership, listing requirements) and how to think through market listing criteria and the pricing of stocks and bond - and a honest conclusion of some of the main barriers to developing an exchange. This is a good - and quick (27 pages) - analysis I would recommend which you can download from the Skoll Centre for Social Entrepreneurship at the Said Business School at Oxford (home to the Skoll World Forum 2008). This report is actually one of a few quite interesting working papers from the Skoll Centre - others listed are on social innovation, two on venture philanthropy and a new(er) one that I am just reading now on critical concepts and writings on social capital markets- titled “From Fragmentation to Function“ from Jed Emerson and Joshua Spitzer. Read on - and discuss! 

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11.05.07

Ethical enterprises…. Ethical investors

Posted in exchanges, product at 6:09 pm by Andrea McGrath

One of the goals of a social stock exchange would be to facilitate capital flow to a wider number and variety of social enterprises - including those that are too small for regulated exchanges, those who may not yet be on the “radar screen” of circles of social investors (angels, those advising philanthropic portfolios, etc, etc..), and those who are ready to move beyond their initial angel financing and really start to grow!   

However, I read an interesting quote that reminded me of another key value - outside of increased access to capital - that a social stock exchange would/could provide to social enterprises. And that is access to “principled” investors. This is not at all to say those of us investing in traditional stocks are unprincipled - but rather than the development of a social stock exchange - if handled properly - could actually help attract investors who would support the ethical and/or mission minded operating principles and practices of social enterprises, rather than try to modify them to - say - increase short term returns…. 

The quote is from Mark Constantine - the founder and owner of Lush - a beauty products company that does not test on animals, uses minimal packaging, etc.. among other ethical business practices. He recently spoke with the Financial Times about the life and passions of Anita Roddick - founder and owner of the Body Shop who recently passed away. Lush has 500 stores currently (luckily one in my neighborhood in Boston) and he would like to open another 500. While he works on business challenges - he is frustrated with the capital challenges. He would like to broaden the ownership of Lush shares, but - as he tells the FT - “he is extremely nervous of the stock market, which he believes can force ethical businesses to abandon or water down their principles…. “Maybe what we need is another kind of stock market where [ethical] companies can trade and it’s understood they will abide by certain [rules] above others.”  Agreed!  I’d recommend reading the entire article (here) - including Mark’s advice for aspiring ethical entrepreneurs. His last point is that “conventional wisdom is often wrong!” These ideas around social stock exchanges - and developments within the “social capital markets” writ large - are both challenging conventional wisdom around ‘investing and philanthropy” - and incorporating some of their best attributes! Join the conversation.   

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11.04.07

There’s Nothing Philanthropic about a Social Stock Exchange

Posted in exchanges, economics at 11:36 am by Samantha Beinhacker

I have been musing about what “philanthropy” means– partly triggered by a piece Lucy Bernholz has written, and in a recent conversation, she thoughtfully suggested that we need to alter the understanding of what philanthropy, traditionally, means, and to consider all the engines that fuel the giving practice.

People need to stop equating “giving” with “social good.” In fact, philanthropy is just a piece of the larger pie of many aspects of social good and the exchange of capital.

The goal of the Social Stock Exchanges that we’re blogging about (and there are other types out there!) is quite clear: this is not a ‘philanthropy’ free cash model. The “social” is in the social-value created by social entrepreneurs and businesses, not in getting free money from the public.

This may be controversial– or maybe not. I’d like to hear your views.

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