01.17.08
Posted in exchanges at 4:21 pm by Andrea McGrath
This year we hope to post conversations with the teams behind some of the developing social stock exchanges - both those who are ‘listing’ nonprofits or social enterprises.
Before the holidays I had the opportunity to speak with Neil Abraham, who is one of the cofounders of Altruistiq (or ALEX). The team at ALEX has been operating since June 2007, and they are actively collaborating with thought partners and potential funders in thinking through some of the questions around and challenges in developing a nonprofit exchange. Among the many topics we discussed was how they can establish ‘shares’ in nonprofits that inherently possess value: Why would someone purchase a ‘share’ in a nonprofit (as opposed to simply making a donation) and How could investors in these nonprofit shares get a “return”? Three possibilities for adding value to nonprofit ’stocks’ that they are exploring include: (1) Voting rights: Possibly offering a lower class of voting rights, such as rights in community or local affiliates; (2) Non-cash dividends: such as gift certificates from the nonprofit or some sort of non-cash value from a nonprofit donor or partner organization; and (3) Real cash dividends: Since nonprofits can’t pay out dividends, what if there was an intermediary who could pay dividends on behalf of the nonprofit? What if a market maker or big corporation could “sponsor” the dividends of these shares - and perhaps even tie the dividends to performance? Thus dividends could be paid when an organization hits specific metrics or quarterly targets (this last idea touches on two areas of interest: value of the stock in the form or cash dividend and tying dividend payments to performance measures) Each of these three possibilities could - to a varying degree (as yet untested)- define or create the ‘added value’ of owing a nonprofit stock (as opposed to making a traditional donation). They might also encourage trading of these shares, as ‘new’ donors look to buy these shares (rather than simply donate).. Great questions to explore… If you are interested in connecting with the team - please do email them at: info@altruistiq.com
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12.29.07
Posted in exchanges, commonstradingfloor at 6:16 am by kevindjones
“It is risky to use concepts like commons and non-commodified relations to describe a superior
form of economic organization for early-21st century America. It runs into the teeth of the dominant
analytic paradigm, which relies on neoclassical economics to press for the strengthening and extension
of exclusive property rights–the antithesis of a commons—in all aspects of economic life. Yet, the
interest in these phenomena is driven by empirical facts that are impossible to disregard, and risky in
their own right to ignore.” from a Stanford Cyberlaw research report on collaborative economics by Mark Cooper (to get the report you have to scroll down through his blog)
Soft things like the increasing value of collaboration are getting easier to measure because of fundamental principles by which digital information now has to be shared and processed. The technological aspect of the new social value creation is a key element, and will guide the design and prospects for success of any social stock exchange that arises. Cooperation is now a new means of production; there is a lot of interesting thinking going on about how the new medium changes the way we work and makes sharing fundamentally more valuable because digital goods are not scarce and actually increase in value as they are shared.
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12.16.07
Posted in exchanges, resilience_economics, risk, model error at 5:32 pm by kevindjones
People working on biocomplexity and resillience science are factoring in a method for including unlikely but extreme events (fat tails) in cost-benefit analyses, such as the uncertainty surrounding climate sensitivity. They are approaching it from a hard science perspective, and are getting it right, imho. By contrast, conventional financial risk models are under attack from a variety of sources, from Teleb’s Black Swan theory which began as more anecdotal than mathematical to the neglected but increasingly relevant idea by Benoit Mandelbrot that our fundamental risk model, using the bell curve, should be reconfigured as a power law, the kind of network pattern we see in everything from epidemic outbreaks to the growth of dominant sites on the internet. It’s good to see that Teleb and Mandelbrot are writing together. Social stock exchanges will need a new model of risk, since there are new, social values on the balance sheet for these companies.
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12.15.07
Posted in exchanges, producers, transparency, usergeneratedcurrency, attentioneconomy at 12:20 am by kevindjones
The power equations will be rewritten in the new version of social stock exchanges. It’s a merger of social value in a medium where the individual has asserted a new level of power. the intermediary’s role in an online exchange that treats people and the planet as of some intrinsic value will be different. Technology itself is one reason that new power dynamic will accompany transactions across these exchanges. User generated content becomes user generated value. This is an exchange that will attract a lot of liquidity from those most familiar with the web, and who want to play in this inherently liberating medium (TCP/IP matters; it sends power to the edge of the network).
Technology’s impact on this comes from the fact that the modern computer is an interactive device. The speed of communication inbound determines the pace of your response, if you are paying the attention (attention in kind and attention in quantity) that full productive use of the device demands. The tool demands, it doesn’t just give; the tool makes the user an extension of the tool, rather than a tool being an extension of our will or force, as previous, non interactive tools were.
The tool demands a certain kind of attention. You don’t give it attention. It snares you subtly into loops of attention, communication and response, like a tar baby who can dance.
I wonder if you can measure the level of attention demand a particular media has? It’s AIK and its AIQ. Of course there are probably consumption metrics to map against the attention matrix; dollar spend, against time, against durable vs. electronic vs. other goods, etc. how do you spend your depending on the kind of attention you pay when connected to an interactive device? Why would you want to give that information to any old vendor, though. Isn’t there a higher value you could place on it if you computed your attention index? Would that be the coin that would cause John Hegel’s original attention economy to trickle into being?
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12.06.07
Posted in exchanges at 11:29 am by Andrea McGrath
The team behind the Social Stock Exchange Ltd in London is continuing its development efforts, and this week it was reported that they would begin a study - endorsed by the Office of the Third Sector (UK) - to gauge the interest of 300 UK social enterprises in joining a potential social stock exchange. Pradeep Jethi, Chief Executive, and Mark Campanale are focused on creating a market which would include enterprises with annual turnovers of more than £500,000 (approx $1 million USD) that have been trading for three years or longer. There is growing interest and conversation on the idea of a social stock exchange in the UK across the sectors, and increasing interest from government officials - including the Cabinet Minister Phil Hope - who called for investigating a social stock exchange for social enterprises this October “as a means beyond bank borrowing or early stage investment to raise capital by issuing shares.”
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12.05.07
Posted in exchanges, rating agencies, transparency at 12:54 am by Andrea McGrath
Fast Company magazine has just announced this year’s winners (45) of its annual FAST COMPANY/Monitor Group Social Capitalist Awards. OF NOTE this year is the inclusion of 10 for-profit social capitalists, and the introductory article presents a good opening/overview of the thoughts behind the addition of the for-profit category and emerging developments in this ‘social capital markets’ (recommend a quick read-through all the articles in this edition)
There’s much to discuss from the articles in this edition, but one comment that caught my eye was a quick quote from Andrew Kassoy from B Lab, who notes that “Traditional capital markets have a massive amount of infrastructure built up over the years. Capital, laws, tax codes, research, ratings. This sector needs that sort of infrastructure.”
To that end, the B Lab team has been actively working on developing that infrastructure through its innovative efforts in developing the survey, methodology and tools to identify “B corporations” - companies who demonstrate transparent, comprehensive reporting on social and environmental performance and also restate their articles of incorporation to reflect nonfinancial stakeholders’ interests. The co-founders - Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy - and some partners are now thinking through how to possibly create a dedicated stock exchange for B companies and lobbying for changes in state laws that would make it easier for hybrid for-profits to incorporate. (if you haven’t yet - check out www.bcorporation.net)
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11.24.07
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
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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11.15.07
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
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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