Earlier this month, entrepreneurs, nonprofits, investors, and foundations convened at the Social Capital Markets conference (#SOCAP12) to discuss how to direct more capital towards social change. What emerged from the conversation were new ways to think about, fund, and inform social change so that organizations can increase their impact. Christine Egger attended the conference and shares the lessons she learned below.

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posted by Christine Egger

The Social Capital Markets conference brings together entrepreneurs, nonprofits, investors, and foundations to explore “the intersection of money and meaning.” Photo by @tipitai via SocialFinance.ca Storify

Until recently, the SOCAP conversation has focused almost exclusively on the kinds of capital that offer a return on investment: how do we bring market-based solutions to the task of addressing the problems of poverty? of environmental stewardship? of civic engagement? What do those success stories look like, and how do we replicate them or take them to scale?

This year, though, the discussion broadened in ways that fully engaged with the philanthropic sector — not just as a resource to turn to when markets fail (or are nonexistent), or as a community of practice that could learn a few things about how to measure social impact, but as a valued partner in seeding and strengthening a social market that has yet to realize its full potential.

Working across sectors

The most common visual used to help attendees think about the full range of philanthropic and non-philanthropic resources come together was a single line – a single spectrum with grants and donations (what I’ve come to think of as “no boomerang attached to those dollars”) at one end, risk-adjusted rates of return (think venture capital and traditional business loans) at the other, and zero-interest investments (like Kiva-type loans) in between. That single line served as a baseline for thinking more creatively about how to design and fund non- and for-profit businesses in new ways.

Graphic by the Omidyar Network

New ways to think about the entire social change market: The Omidyar Network presented three subsets of a “social good delivery” market, two of which include nonprofit activity: those building market infrastructure, aka new ways to combine social and financial returns; those creating market innovations, aka new enterprises based on those combinations; and those scaling the market, aka bringing proven enterprise combinations to new or expanded customer bases. They’ve outlined this in more detail in a recent Stanford Social Innovation Review blog series, calling specifically on the philanthropic sector to fund the market’s infrastructure builders and innovators.

I had a chance to attend a session that highlighted an example of a foundation and its grantees “playing” with these categories in new ways. The Knight Foundation’s John Bracken explained how they’re shifting their practices from a “funding only” paradigm to “financing, facilitating, and futurizing.” Two of their grantees, Zeega and Public Media X, talked about how that broader paradigm opened up a much broader range of business model options they could use to fulfill their mission. For example Zeega (an online platform for new forms of interactive storytelling) began as a 501c3 supported by grants and the founding team’s consulting services. With Knight’s support, they’ve transitioned to a C corporation supported by private investors (and, over time, revenue from subscription services). The 501c3 continues, having received preferred stock in exchange for the intellectual property it transferred to the C corp.

New roles for funding: The Monitor Institute spoke to the need for enterprise philanthropy, funding the impact investing infrastructure as well as early, high-risk enterprises that are innovating new ways to deliver market-based solutions. Impact investing, Katherine Fulton argued, simply cannot realize its potential – cannot address the world’s social needs at scale – without philanthropic capital. The Monitor Institute’s recent report, “From Blueprint to Scale: The Case for Philanthropy in Impact Investing,” goes into more detail on what foundations and donors can do, and on early enterprise philanthropists have learned so far.

New attention to information sharing: The Bill and Melinda Gates Foundation, the William and Flora Hewlett Foundation, and the financial firm LiquidNet announced a new campaign to improve the information infrastructure across the entire spectrum. Markets for Good aims to catalyze those improvements so that everyone – beneficiaries, service organizations, donors and investors, and entrepreneurs – are equally contributing to and benefiting from a virtuous cycle of information that improves services, meets needs, and informs smarter funding. The campaign will continue for at least a year or two, capturing and sharing ideas about what that a robust information infrastructure looks like. I’ll have a chance to share more about Markets for Good in a second post here.

At heart

It’s important to note that equal measures of optimism and humility infused these and the other discussions that made up this year’s conference. There were constant reminders of how hard this work is, and of how important it is to hold at its heart – whether we come to it first from a non- or for-profit direction – the desire to better care for and about each other and the world we live in.

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More SOCAP video highlights:

• Paul Polak on creating markets to ethically serve 2.6 billion people living on less than $2/day
• Joy Anderson on changing the rules of the economic game
• Jackie VanderBrug on the value of bringing a gender lens social change
• Sylvia Earle on the protecting and learning from the world’s Blue Economy

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Christine Egger works at the intersection of mission-method alignment, enterprise design, open data, empathy, and learning (about what might be real, what might be known, and what might be done). She can be found online at cdegger.com and @cdegger.