Is a Social Economy Possible?

If you look to the left (I mean that literally—to the left hand column of the Social Edge homepage) you will see a rather silly photograph of me and the words “A Clearly Social Economy”.  This is meant as a clever play on the name of our business (ClearlySo) and the social economy we all wish to help bring about.  But just because we want desperately for something to happen does not mean it will, and I have a profound weakness for hopeless causes.  My football team (soccer, to you Yanks) has little chance of surviving in the top division and my political party seems to be a perennial third place finisher in a two-horse race.  Is a truly social economy just a pipe dream?

On the investment side, despite all the talk, the flow of funds is just a trickle.  Foundations, with few exceptions, keep talking about social investment but doing little—here the USA is uniquely advantaged because of the requirement to spend at least 5% of fund assets each year (a requirement absent in most other countries), against which “Mission Related Investment” counts.  So that is relatively good, but where else would we applaud entities who dedicate 5% of their assets to their core activity as a success but in social/impact investment?  What about the other 95%!!

SRI funds, although they are growing at a clip, make investments in the same large listed companies as mainstream investors—no hope there, right?

We speak often of the massive tidal wave of wealth that could come from the HNWIs, but the private bankers which guard those assets are conservative to say the least.  Less well-off retail investors, even those inclined to make social investments, are blocked from doing so by securities regulations.

And what of the social entrepreneurs?  Despite all the hype and charisma, where are the big success stories—the social sector equivalents of Google or Facebook?  We cannot blame it on time, as these two businesses are recent hits.  Those which make a big difference and become household names (The Body Shop, Ben & Jerry’s and others in the UK whose names will not be widely recognised) cash in their chips as soon as they achieve scale.  Will there ever be a big social enterprise (apart from Mondragon of Spain, the exception that proves the rule)?

Absent financial success, do we really imagine the funding will continue to flow to unsustainable (though eminently worthy) social enterprises in a fiscally constrained world?

And earlier today, at the Said Business School at Oxford, where I spoke at the Skoll Emerge Conference to high-powered students looking for guidance, a young woman asked me if she should not “clear her debts” and work for an investment bank.  It was not just the money, but she valued the competitive, highly-charged atmosphere.  Could I really pretend that this was available in abundance at firms in the social finance field?  To whom do I owe my loyalty?  To the keen MBA?  To the sector?  To “Truth”?

First published in The Social Edge in November 2009.