Friday, October 26, 2007

Moving the conversation to xchangexchange

The Green Skeptic responded to my post about environmental blogs and the need for cross-sectoral solutions with this post. Here's the basic gist of the discussion:

My claim:
"...we can only solve social challenges through the combined contributions and creativity of all sectors. There is no reason we should expect any single sector to ever solve our social/environmental problems - simply because these problems are a result of the dynamic failures of all of the sectors. In other words, business, government and independent action created our social ills, they will all have a role to play in solving them."

The Green Skeptic offered up these thoughts, with some quotes from Susan Raymond:

"[Raymond] rightly points out that the biggest advantage of philanthropic capital is its "ability to take significant risk, to seed a promising idea and recognize that all promising ideas can be failures."

So risk tolerance or tolerance for failure, playing on the field of ideas and at at the edge of problems "where the probabilities of success are unknown, is the key playing field for philanthropy."

For many ideas, perhaps chief among them those addressing environmental issues, it may be time for other types of capital to be brought to bear. I'm particularly interested in what Raymond describes as "a multiplicity of approaches to organizational finance in the nonprofit sector...for self-reliance, sustainability, and (yes) profit" to come to the stage."
So here now, is my next question.

How do the above thoughts on the role of philanthropic capital fit with the reality?

Recent research on philanthropy and poverty have focused on the amount of giving which actually tracks to major mainstream cultural institutions and alma maters. There have been serious discussions about proposals to change the tax code to favor giving for poverty-related efforts and away from well-endowed organizations.

We also have to factor in the rising role that commercial capital is playing on some, previously philanthropic, issues - e.g. cleantech and microfinance. Is this the capital we are referring to in calls for "social capital markets to take over?" Let us not forget that these are socially-oriented, bottom-line driven, commercial ROI-based capital sources.

So, if we're really asking questions about the role of philanthropic funds within a social capital stream, we had best at least start with a sense of what dollars go where, what dollars come from where, and how we value, access, count, and use these dollars. In other words, we're back to my previous question about what mix of revenue (philanthropic, social investment, commercial investment, fair trade, social venture funds, etc) is actually funding public goods/services.

This is, I believe, still the key question, and one which is being taken up by some very thoughtful folks running the xchangexchange - which has the intellectual horsepower to become a hub of thinking about the changing capital markets. I'm going to move my conversation, questions, and the insights I received about the value of various elements of the blended value map over to the xchangexchange conversation - join me over there.

1 comment:

The Green Skeptic said...

Excellent thoughts, Lucy, as usual. And I appreciate your continuing this important dialogue.

The idea of philanthropic capital being risk tolerant struck a chord this week out at UC Irvine, where I was speaking with a variety of folks -- from the Center for Unconventional Security Affairs, IISD, a former USAID conflict resolution specialist, and some stellar grad students and post-docs -- about the possible applications of microfinance and social entrepreneurism in helping the poorest of the poor adapt to and even mitigate the imapcts of climate change (my initial thoughts are on my blog).

What concerns many people familiar with what's happening in microfinance these days seems to be that the philanthropic motivation behind microfinance seems to be moving away, especially as the commercial interests see this space as a potential profit center. (There are other dangers associated with that, as we've seen recently in Mexico.)

One question that we kept coming back to is should donor dollars, if indeed they are better sutied to risky endeavors, now be directed to the "real bottom" of the pyramid, the folks who are not near the first wrung on the ladder of poverty alleviation?

I'm eager to join you over on xchangexchange and keep this dialogue going...see you there.