Deep Throat was right


(image: stockexpert.com)

I'm trying to figure out the cumulative value of investable resources available through social venture capital/private equity firms, socially responsible mutual funds, CSR initiatives, mission related investments, program related investments, Community Development Venture Funds, double bottom line investors, and clean tech investment funds.

One way of thinking about my question is "What was the dollar value of the Blended Value Map when it was first created (2003), what is it today, why is it changing, and in what sectors are the changes most pronounced?" Another twist is to ask, "New maps, such as those at xigi are being developed, but what is the value of that marketplace and others like it?"

Why? Because - as any American who was older than four or five in 1972 well knows - the key to understanding something is to "follow the money."

What am I trying to understand? I'm trying to understand what are the real sources of funds for public benefit and social good.

We tend to think that philanthropy funds public benefit action (even though we know that the greatest source of revenue for many nonprofits are government contracts). As the types of organizations that contribute to the public good expand beyond "pure form nonprofits," the markets they access, the capital they use, the numbers of people they employ, and their contribution to GDP are also expanding. We count foundation gifts, corporate contributions, individual giving, and bequests as philanthropy - and the numbers get a lot of coverage every year. But what if these aren't the real sources of revenue anymore?

Compare the $295 billion in overall giving in the US in 2006 (Giving USA) to the $2.29 trillion held in accounts managed in accordance with socially responsible practices. Hmm. Suddenly the first number doesn't seem so big anymore.

And the $2.29 trillion is only part of the story. And the value of fair trade. There is $180 million managed by community development venture funds. And $2 billion in foundation mission-related investments (which will grow to $12 billion, if the Meyer, Heron, and Casey Foundations are successful in their recent challenge). And carbon markets. And microfinance investments....

Another way to put the numbers in perspective is to imagine that 40 foundations made a half billion dollars worth of grants to the environment one year. That would be big news. Well, according to VentureOne/PWCMoneyTree, the total value of venture capital deals in Clean Tech (alternative energy, pollution and recycling, power supplies and conservation) was $451 million in Q2 2007. Nearly half a billion dollars in one quarter.

I could go on and on. I know that others are working to define the sectors (again, see the Blended Value work), ascertain their value, identify new players and sources, and plot the trends. I want to point out how badly we need such an index - it is absolutely key that we all be able to follow the money. It may not be all we need, but without it we can not know if sectors are really blurring, the sources of change are truly changing, if our regulations are really regulating, if our investments are really returning anything, or, quite simply, who is doing what.

We're heading into "Giving" season, otherwise known as the last months of the tax year. All kinds of stories will be aired and printed, numbers quoted, and products/services offered to help the charitably inclined. This is all good. But it may no longer be the real story of where good comes from, and who is paying for it.

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By the way, I put the cumulative value question out to my linkedin network, sent out a few additional emails, and spoke with a few very knowledgeable folks about this - thanks to all who replied. If you have thoughts on how to track the cumulative value of resources for good, what should/should not be indexed, who might have more information, or what the baseline value of the blended value map was in 2003, please comment below or email me.


1 comment:

Anonymous said...

I think your number on the capital under management at CDVC funds is quite low. CDVCA, the trade association of such funds, quotes a much higher number of over $900 million by 2005. Hope that helps.