Friday, October 12, 2007

More on the blur - or follow the money part II

I'm at the Social Venture Network conference in San Diego. So far, fabulous. The creativity and energy of the individuals creating sustainable change is really interesting. Just this morning, I have spoken with bankers creating new bank structures, Native Americans creating and selling natural and native sourced energy bars that feed some of the income back to the community and some back to the native vendors in the supply chain, eco-affordable housing builders from Australia, and several locally and sustainably sourced manufacturers of clothing, cleaners, and community jobs.

All the more reason to understand that the capital markets for social good are not primarily philanthropic. Fixed income securities focused on clean water for inner cities, bonds for affordable housing, revenue from sales of energy bars and knit hats, fair trade revenue, screened mutual fund investments in solar energy and organic farming, and nonprofit investments in medical research - these are the revenue sources for change. We really must start to think about the spectrum of revenue sources on the same spectrum we consider investment options - instead of low risk/low return to high risk/high return the meaningful spectrum might be high social/low financial to low social/high financial returns. And then we plot all the different kinds of resources along the spectrum - from pure charitable giving to purely return-based investing.

Where the resources sit on such a spectrum may actually be more interesting/useful than the source behind them. As I've said for years about small unstaffed foundations - they are not really much different from the individual or family's direct giving. Same here - as individuals continue to expand the number of charitable vehicles they use for their giving (private foundations, donor advised funds, giving circles, volunteer time), and their investing (socially screened mutual funds, direct capital investments, loans) and their political contributions - we need ways for those people to see their whole financial commitment - mapped against their values and goals - in one place.

First a charitable giving portfolio. Then an investing portfolio. Then a political portfolio - and then the complete picture. At that time, the structures for managing the resources can be looked at -as they should be- as strategic means to an end. How am I advancing my environmental or social justice goals with my financial resources - charitable, invested, and political? That is the key question for savvy donors, as the realms of the possible continue to blur as do the expectations individuals have for their wealth.

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