11.04.07
There’s Nothing Philanthropic about a Social Stock Exchange
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.
Lucy Bernholz said,
November 5, 2007 at 11:01 pm
Some of the other sources of capital for social good include community development loan funds, social venture capital, social private equity, fair trade investments, co-op structures, community venture capital…The trick is to first identify the sources, find values for each source, then add. Philanthropy - grant dollars - would be in the mix. Some of the invested corpus might also, to the degree it is invested with mission-related ROI goals. Here’s the kicker - most of philanthropy - 95% or more of the $600 billion in endowed assets (US only) would not be included, at least not as it is used in its present form.
Sean Stannard-Stockton said,
November 6, 2007 at 12:40 am
My take is that relating “giving” to “social good” confuses inputs with outputs. There are only two relevant outputs, social value and financial value (or “personal value”). The input to get those are time, money and intellectual capital.
Giving a “donation” to a politician might be done to create social value or to create personal value. Investing dollars into a for-profit startup might be done to create social value or personal value. Both inputs are likely to create a combination of personal and social value outputs.
Most people think that investment-like inputs must only create personal value and that philanthropy-like inputs must only create social value. I think the key framing issue to the developing social capital markets is understanding that the full range of input-types can be used in the quest to create social value.