Social businesses are well suited to the online environment

Our recent posts have been of a political nature and I am beginning to get really bored – you too? Let’s shift to those of social businesses that have made excellent use of the internet, for which social businesses are especially well suited. In the interest of transparency, I should confess to being privileged enough to have some involvement with each of these firms through Catalyst Strategy Advisors .

About a year ago I wrote in Alliance Magazine about one of my favourite social companies,, and how it had exploited its online expertise to gain a commanding presence in the online charitable giving sector. Its remarkable success has enabled it to generate funds for charities and be a financially successful company.

PointOV Limited is an intriguing Newcastle-based company. They are soon to have four different faces, but they are basically a set of online offerings focused on ethical consumer products and related social action. What particularly appeals to me about this company and justgiving is how from the earliest days they have managed themselves professionally as “for-profit” social businesses. Their share registers reflect this and consist of institutional and private venture capital funders. (UKV) is another brilliant social firm, which has positioned itself as a sort of “Myspace” for middle-aged (plus) people throughout England. Launched in April 2000 it provides information about events, history and people in nearly 32,000 villages across the UK. “Villages” include everything from an isolated rural village in Northumberland to an urban village like Islington in London. It’s hard to think of anything more “”social”” than this clever attempt to assist people in reinvigorating village life.

With a large list of corporate and public sector clients, UKV has been able to generate revenues nearly from its inception. I believe it (and the other two above) offers exceptional value for money in comparison with state-funded “e-schemes” in which millions of pounds are wasted annually. In the process, UKV has generated an enormous amount of web traffic. Its site says it is currently registering 35 million hits each month!

Thus far, UKV’s funding has been less institutional than the others mentioned above. The business has been funded by the usual assortment of “friends and family”. I have no doubt that with the proper resources its platform can also be leveraged into one of the more successful and valuable social business brands in the United Kingdom.

I could go on and on but I hope my point is clear. The unique characteristics of social business are extraordinarily well suited to the internet and its power in enabling communication across like-minded individuals with strong social values. This list will grow and grow.

High Net Worth investors are the key

Over the past few weeks we have written why we feel a social stock exchange (SSE) is a bad idea. We have received much abuse for this (we must be on the right track!) but felt a partial departure would help break the monotony!

Earlier this month, I had occasion to participate in a key industry discussion hosted by the New Economics Foundation (NEF) on a related subject (I do not want to give too much away and steal their thunder!). NEF, in my judgement, do some excellent work and the team involved in this study, organised by Jessica Brown, continue to blaze exciting trails in social and ethical investing. At one point in the debate I did have to pinch myself. The third or fourth person had said something about what some class of investors or institutions “should” do. That bloody word “should”, I thought – who are we to say what people should do, as if they were obliged to do something. Charities, pension funds, foundations, governments – all of them were expected to do this, that or the other. These expectations are a bad idea. First, I do not feel we have the right to expect anything. Second, if we expect economic agents to do what we feel they ought to, we will be waiting a VERY long time. These agents are like us-?they do what they want to do. We need to focus on those who want to do something and then give/sell it to them.

And here is where High Net Worth (HNW) investors come in. They are absolutely gagging for access to sound social investments and effective charitable giving. Instead of complaining about the “stubborn donkey”, practitioners should (oops, me too – that word again!) provide products to this incredibly keen “racehorse”, who is “chomping at the bit”. They are rich, focussed, action-oriented, although they can be somewhat demanding. Most importantly, they need not answer to voters or stodgy trustees!

At least two groups are doing this. Philanthropy Capital helps donors make their giving effective by writing in-depth and high-quality research. Less well-known, but at least equally ambitious in scope is Investing for Good. This tiny but increasingly well-respected (no, I do not own equity – in fact, they are a community interest company and I am NOT on their payroll!) firm provides online services to professional advisers who, in turn, assist their clients (largely HNWs) in undertaking social investments and more intelligent charitable activity. As these two companies progress, the flood gates will open. The challenge is that there is still an insufficient flow of sensible projects and businesses for them to fund (let’s leave this for another blog).

In fact, one could say this is part of the answer to the question of how to get capital to flow to social businesses (a pre-occupation of ours at Catalyst. If an SSE is not the answer, perhaps companies like Investing for Good are? Elsewhere we have also proposed an adjustment to fiscal policies but let’s also leave this discussion of our “full-cost/benefit taxation” proposal for a later post.