Would anyone invest in social enterprises nowadays? Well yes, actually. The crisis has demonstrated that the “profits at all costs” economic model is probably finished. Social businesses and enterprises address this directly, offering a balance between financial reward and societal benefit.
It is still capitalism, as the market and investment models still apply, but a bit less “raw in tooth and claw”. For example, we have just secured funding for our new social business, socialinvestments.com, and other early stage businesses I know have also. Socially Responsible Investment funds are holding up relatively well.
Secondly, the credit crunch has thoroughly debunked the notion of a “guaranteed financial return”. We have learned there is no such thing. Even bank and governmental guarantees are only as good as the entities behind them–and these now seem somewhat less secure. Moreover, the failures of some guarantees were outside the control of the guarantor. I think the “social returns” social enterprises and ethical fund managers aim to achieve can be more reliably delivered–and their ability to guarantee them is more within their sphere of control.
So with all that, why would anyone ever invest in anything but social businesses and enterprises, especially in the current environment? You get some financial return, a guaranteed social return and who knows–entry into heaven?”
First published in The Guardian in February 2009.