Thursday, March 03, 2011

The meaning of social capital

In 2004 I published Creating Philanthropic Capital Markets: The Deliberate Evolution. The book offers ideas on ways to rationalize funding streams for social good. I chose to use the term "philanthropic capital" to describe the capital markets for social good. I picked it instead of "social capital" because the term "social capital" was already understood to mean "connections between people and networks." This is what social capital means in sociology, in best sellers like Robert Putnam's "Bowling Alone," and in the academic world.

Then along came the social finance, social capital, impact investing movements. The Social Capital Markets conference, which launched in 2008, made me realize I'd made a mistake. The term, social capital, was being used to describe the revenue sources for social good. It's become a term of art for these revenue sources.

Then a funny thing happened. Social networks took off. Since 2008 the term social capital has taken on yet another meaning - closer to the original one - that refers to people's reputational capital online. How much "social capital" you have refers (again) to the value, size, and heft of your relationships. There are businesses out there that will help you track, grow, and manage this capital. As the "sharing economy" continues to grow, this kind of capital is increasingly important.

Just to confuse the matter, I've seen the term used to mean "online currency used in social networks" - such as Facebook credits. I thought of these when I saw a tweet from the recent "Future of Money" Conference predicting Facebook's rise as one the world's largest banks.

No, this post is not my attempt to revitalize the recently retired "On Language" column from The New York Times Magazine. It's to note these multiple, somewhat overlapping and somewhat exclusive uses of the term and to wonder what the rapidity of these definitional changes mean about technology, finance, and social good.


Event360 said...

There certainly are companies out there that aim to help nonprofits take advantage of social capital. But if you do enough research, you can take charge of your own social capital and put it to work for you. Of course, specialized help is something you should also invest in, but that should come along once you have learned and implemented as much as you can. Readers can check out our blog for more information on mobilizing social capital.

kevin jones said...

when gary bolles first thought up the name social capital markets i did not get it.but it was a fecund unholy mashup, a biome that place where the most life giving biodiversity abounds, the creative place at the intersection ofmoney and meaning.

David Crowley said...

Yes, the term social capital has now circled around back closer to its original meaning. The way it is used in the context of online social networks parallels how the concept works in offline relationships. I find people's familiarity with social network sites helps them better understand things like reciprocity, building trust, etc.

Emily Rushing said...

Social capital seems to be related to the open-source way of generating ideas, with a large & perhaps geographically separated group is providing ideas and input because of their social media relationships. You may not be my neighbor on the next block or even across town, but because we share a concern for a particular issue, we have a relationship and can build on that using our shared talents. Our Prize2theFuture contest is benefitting from more than 1,000 ideas generated by people whose commonality is a concern for creating something great in Birmingham, Alabama. Yes, they may want to win a prize, but that's not the only reason.