10.21.07
Posted in Story Index, exchanges, information hubs, rating agencies at 3:17 pm by Samantha Beinhacker
The William and Flora Hewlett Foundation
is engaged in a fact-finding investigation to assess the most effective tools and models to assist decision-making in philanthropic investment. Calling it a “social marketplace” of information for the philanthropic community, the tool (or tools) would probably be some kind of technology-based application, according to Susan Bell, director of Hewlett’s philanthropy program. You can read the full interview here.
I suggest there is an important role these emergent social stock exchanges can play in the development of this information tool. Perhaps the Story Index might help? We’ve defined the Story Index as an attempt to create a Rosetta Stone between all the nascent exchanges, rating agencies and analyst groups that are arising, trying to determine common denominators of the value of “businesses doing good” that are best encapsulated in narratives.
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10.20.07
Posted in Story Index, exchanges, funds at 1:57 pm by Samantha Beinhacker
It’s now twenty years since the fateful day known as “Black Monday” when the Dow Jones Industrial Average dropped by 508 points, or 23%, making it the single worst day in the history of the American stock market, and therewith, a similar pattern of enormous drops occurred all across the world.
So, it seems appropriate, on this 20th anniversary, to reflect on that event and think about its implications, especially as we’re observing so many fledgling stock exchanges emerging globally.
I’ve been reading a bit by a fellow named Jason Zweig, a journalist for Money magazine. His new book, Your Money and Your Brain, is a fascinating examination of what goes on in our brains when we make decisions about money. The implications of his hypothesis are quite helpful in thinking through how and why we need to think about investing in a totally different way in 2007 (and beyond).
His argument, based on neuroeconomics, is that human beings are simply not hard-wired to be good investors. We think with our heart and we are not always (perhaps never) rational. He writes: “The brain is not an optimal tool for making financial decisions. The part of our brain that tells us to act like rational investors tends to be completely overtaken by much more powerful emotional impulses—impulses that make us human.”
So, what are the implications for these emergent Social Stock Exchanges? Perhaps what many of us have been calling “putting the heart into the financial” is what we’re after. Forget the attempt to overlay sophisticated technical analysis onto the work of social purpose businesses; forget the need to identify the patterns that will yield the highest margin of return. Instead: let’s turn to the irrational—the messiness of the stories that one tells about the efforts and work—and try to make some sense out of that.
As my friend Kevin Jones has said a thousand times: “Trying to compress our value into spreadsheet thinking is reducing their inherent value. We are learning to tell a story that uses spreadsheet thinking, that is clearheaded as investing, while being as warmhearted as giving.”
The twenty-year anniversary of “Black Monday” just reminded me to stop thinking “rationally” and start feeling “irrationally.”
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10.17.07
Posted in exchanges, prediction markets at 3:17 pm by kevindjones
Prediction markets bring together buyers and sellers around a collaborative project that creates the highest level of forecasting. And they don’t need regulatory approval. If the exchange conversation grows, or that in the overall social capital market space grows, it could be a great design tool for how to design the market; asking the crowd but not being hobbled by traditional consensus thinking. Suroweicki’s book Wisdom of Crowds outlines some relatively simple conditions for how to make them work. I’m also on a prediction markets listserve and learn a lot there. He wrote here about it in Forbes.
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10.15.07
Posted in Story Index, exchanges, producers, product at 2:08 pm by Andrea McGrath
There are so many exciting developments in ‘social capital markets’ – and many thoughtful groups gathering formally and informally to figure out how to develop and implement innovations as they emerge. We here at the xchangexchange aim to track these developments and find out what we can about these emerging networks and activities to help connect the dots in a truly emerging landscape…Here’s just a few of the efforts we’re learning about:
Exchanges
§ For-Profit/Blended: Social Stock Exchange (SSE) in UK, BLAB in the USA, a Kenya Social Investment Stock Exchange in Kenya, and a donor advised fund/exchange at Calvert Philanthropic Assets in the USA.
§ Nonprofits: existing exchanges such as BOVESPA in Brazil and SASIX in South Africa, as well as some in development such as Altruistiq in USA and some effort towards developing Local Exchanges
Landscape Mapping:
§ On the capital side, we see some developing efforts, such as a team from Collective Intelligence and Good Capital on sources of capital, funds and syndicates and a team at Rockefeller taking a sector dive into sustainable agriculture -among others
§ More generally, there are others drafting interesting ‘maps’ of the various capital sources, risks/returns, the players and intermediaries, etc… as part of existing organizational efforts and/or as part of reports on developments in the sector
Indices/Measures
Social impact and social value are in some ways considered an implicit element in this emerging market – both in the investments and in the expectations of investors and donors. As new efforts around exchanges are rapidly developing, the questions around how best to demonstrate social “return” (quantitatively and qualitatively) are emerging as well. Social value is often measured or demonstrated best through the use of narratives – either exclusively or in combination with numeric or financial measures. Jed Emerson is currently working on an effort investigating whether we can expand our set of indices to include the quantitative value of qualitative factors. The Story Index Project is a new effort investigating how we might compare narrative social value across organizations: are there common descriptors or language? Can these be aggregated? Can we create an Index of these similar to those in the more traditional markets?
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10.14.07
Posted in exchanges at 11:43 pm by kevindjones
In what way does or doesn’t the innovation exchange fit into our look at exchanges? “Do you want to invest in fledgling social innovations that could achieve large-scale change? We are looking for people who want to invest in innovations from the third sector that could tackle social problems on a large scale. You might be from the public sector, a trust, a foundation or any other type of private investor.”
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10.13.07
Posted in exchanges at 3:49 pm by kevindjones
Egypt plans to launch the Middle Easts first bourse for small and medium-sized companies, a senior government official has said.
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10.08.07
Posted in exchanges at 6:42 pm by Andrea McGrath
There are lots of exciting developments globally within the larger umbrella called “social capital” including increased efforts focused on raising growth and equity-like capital for social enterprises and the development of new legal and regulatory structures easing the tensions between existing not-for-profit and for-profit classifications – just to name a FEW efforts. In the mix of these developments is increasing interest around the potential of social or ethical stock exchanges. Early efforts – such as BOVESPA in Brazil and SASIX in South Africa are currently focused on nonprofit enterprise – however we are seeing some early efforts now focused on developing exchanges focused on social purpose businesses and social enterprises which would be much like those in the existing capital markets. In many ways, an exchange represents a way to encapsulate many of the other developments happening in social capital’… That said – there are several challenges which need to be resolved…
As the introduction of the xchangexchange states - there are some solutions for which ‘we don’t have a bloody clue’… but we also believe that there are models, experiments, maps and solutions being discussed globally which need to be brought forward…. And we believe that dialogue among thoughtful people who are – and have been – immersing themselves in these challenges will help develop and move forward solutions.. We hope this blog and site will help generate these discussions and brainstorming and we welcome you to participate.
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10.07.07
Posted in Story Index, exchanges at 8:40 am by Samantha Beinhacker
The Story Index is a journey to understand the emerging pieces of the social financial infrastructure. We believe that real ‘profits’ come from creating financial and social value. The Story Index Project hopes to act as a Rosetta Stone between all the nascent exchanges, rating agencies, and analyst groups that are arising– capturing and comparing the measures of social value– and creating an index or common language on social value measures– which are often encapsulated in narratives– so that investors can more clearly see how their investments are “doing well” AND “doing good.”
Well, you might ask: how can “narrative be turned into an index?” We have no bloody clue. 
So, we’re doing as all good explorers on the truth-seeking journey do… we’re going to start writing and asking questions, and hopefully get input along the way.
Welcome to our new blog… where we hope to explore the exploding world of the social capital market, write about the questions we’re struggling to understand, and dialogue with fellow travelers along the journey. And hopefully, out of all that, will emerge that fruit– that perfect peach– of an answer…. a direction–perhaps even the apple that Newton discovered!
We welcome you along the way… please join!
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10.06.07
Posted in exchanges at 9:15 pm by kevindjones
Interesting new exchange platform. The smartest people get to direct donations. “bet2give is a thrilling real-money prediction market where you grow your account with investments in smart predictions about the future, and give your winnings away to non-profit organizations of your choice.
Since you’re betting directly against other people, you are effectively competing to divert their funds to your favorite causes — and they’re trying, of course, to do the same thing unto you.
On bet2give, those who are best at predicting the future also get to decide how to improve the future, one donation at a time. Which causes will you champion?”
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09.29.07
Posted in exchanges at 8:27 pm by kevindjones
Samantha Beinhacker, Andrea McGrath and Kevin Jones plan to use this blog as the central point for tracking the growth and development of the new exchanges that are arising in the social capital market, including the London-based Social Stock Exchange and other efforts that might include GEXSI and others. It will be a progressive revealing of our daily ignorance, our questions and our tentative conclusions, the connections we are finding, the progressive pattern of sense making in a new and complicated area that will also tie in to and refer to other mapping efforts in this space that finally, at long last, seems to be emerging with new money in the room and people who are in the next concentric circle out from the initial true believers. That’s the time that emerging markets really have to start making sense and explaining things in new ways. A great time to be doing what we’re doing, I think.
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