Indigenous farming techniques sold as information products to carbon buyers

March 29, 2011 at 1:08 pm (Uncategorized) (, , , , , )

That’s a rough idea I have. here is an email thread about it.

 

working with several of the scientists individually already to tell their stories and start mapping the overlaps of the spaces already charted by some of the best practitioners. linking and abstracting what is working in one place and comparing it to what is working in another place  will be really important as we systematize all this so that investors will be able to assess their risk as they look at this area. when can the people be relied on to manage what resource, based on what history is the first part of the due diligence that needs to be systematized. getting investors to trust indigenous and local people will require some historical precedent of collaborative and functional community success in managing resources collectively over time and being willing to document it, down to the smallest landholder, every year, and whenever the reporting is needed in the midst of a hectic and busy life of a poor family.

the collective productive reliable agency of the poor on their own and the planets behalf is what would cause investors to put their risk capital into the hands of the poor. this project is one place that could happen more quickly and easily; it doesn’t require new resources, just new and effective social collaboration around information gathering and dissemination and analysis. this is an information business the poor could run for themselves. that’s what i hope we are building. an information business that values things like indigenous farming knowledge, in context, as more valuable than industrial farming, and which counts all the externalities of both systems, over an extended period of time, so you get a picture of the true cost, not just the cost to the people who count value by compound interest in the financial markets. an information business owned by each poor community, biosphere reserve that wants to be part of it. a cooperative in function, maybe run by a local cooperative in partnership with the biosphere trust member.
it could be that the international biosphere trust, a non profit, could offer those services back to the people in each biosphere reserve, as a service to help them bring in more resources by better keeping up with how they are managing their resources. the information about ecosystem services management, biodiverse agriculture etc. is a technology that could be sold. Sierra Gorda is meeting next week with the sophisticated investors in New York to go over how the big shots are selling their carbon and to whom.
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Sergio’s report.

March 29, 2011 at 8:30 am (Uncategorized)

Here is a great report on indigenous farming practices and science in Mexico that reclaimed landscapes. Arico_IAASTD

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Biodiverse farming systems & food security, Paris, UNESCO

March 29, 2011 at 8:20 am (food systems) (, , , )

Biosphere Trust, Biodiversity workshop, Paris, Unesco

Farming Systems and Food Security

UNESCO Biosphere Reserves as Learning Sites

An Expert Planning Workshop

UNESCO Fontenoy, Room III, Paris

24-25 March 2011

24 March 2011

1000 – 1100

1.   Opening remarks

Natarajan Ishwaran, MAB Secretary, UNESCO Division of Ecological and Earth Sciences

2.   Background and scope of the workshop

Tom Gilbert, International Biosphere Trust

  1. Introduction of workshop participants
  2. Questions, clarifications on background and scope of the workshop

 

1100 – 1130    Coffee/tea

 

1130 – 1300

1.               Farming and food systems: the case of fisheries in Lake Vänern BR, Sweden                                                         Johanna MacTaggart, Swedish National MAB coordinator

2.    Multifunctionality in Agriculture: results of the IAASTD

Salvatore Arico, UNESCO

3.    Bio-Cultural Mosaic Landscapes: Centres of Crop Domestication and Eco-Agricultural                          Adaptation and Innovation in the MAB Global Network

Pablo Eyzaguirre, Bioversity International

4.    Sustainable use of agricultural biodiversity in biosphere reserves: Bioversity-UNESCO-                       UNEP/GEF Pilot project in Cuba

Guillén Calvo, UNESCO consultant

5.    Discussion

 

1300 – 1430    Lunch

 

1430 – 1600

1.    Biocultural approach to access genetic resources and benefit sharing in BRs                          Ana Persic, UNESCO

2.    Bonds That Last: Integrating conservation, sustainable development and innovative research            in the management of coffee forests, Ethiopia

Bettina Hedden-Dunkhorst, German Federal Agency for Nature Conservation

3.    Farming Systems and Food Security: BRs as learning sites

Sergio Antonio Guevara Sada, President IberoMAB

4.    In-situ and ex-situ conservation of crop genetic resources

Tom Gilbert, International Biosphere Trust on behalf of Mark Dafforn, ‘Lost Crops of Africa’

4.    Food mapping and food security – what opportunities in biosphere reserves?

5.    Discussion

 

1600 – 1630    Coffee/tea

 

1630 – 1800

1.  Social Capital Networks – Kevin Jones, Social Capital Markets (SOCAP)

2.  Discussion on Day’s presentations

 

25 March 2011

Discussion on the pilot project:

  • Objectives
  • Actions and activities
  • Outputs, results and impact
  • Partners, working modalities and funding options
  • Number of Biosphere Reserves for the pilot phase and candidate sites
  • Duration of pilot project
  • Vision beyond pilot project

Background and Scope

In late 2010, Ms. Johanna MacTaggart, Coordinator of Swedish Biosphere Reserves and the forthcoming EuroMAB Meeting in July 2011 in Lake Vänern Biosphere Reserve, Sweden, discussed opportunities for using biosphere reserves as learning platforms and places for sustainable development at a meeting with Mr. Tom Gilbert, Founder and President of the US Biosphere Reserves Association (renamed in March 2011 as the International Biosphere Trust) and Mr. Kevin Jones, Leader of the Good Capital Team of the SOCAP (Social Capital) Network. Their discussion was in line with the UNESCO General Conference decision 35C/31 that encourages Member States to fully use the potential of MAB and WNBR as learning platforms for sustainable development.

 

The ensuing discussions between these experts and the MAB Secretariat have indicated interest and readiness to develop a pilot project focusing on farming and food production systems in biosphere reserves with a view to enhancing food security of resident communities. The role of biosphere reserves as experimental areas for testing investment approaches for food security may address: (i) improving food production and farming systems in order to ensure greater equity in the distribution of food and access to knowledge, technology and capital needed for improvements; (ii) diversifying the dependency on food crops so as to prevent the eruption of crises linked to the failure of a single crop either due to man-made or natural causes; and (c) deepening and broadening the knowledge base on wild relatives of actual and potential crops with a view to improving the diversity of crop-dependencies and as a consequence, food security.

 

The workshop convened a small number of biosphere reserve coordinators, scientists, social entrepreneurs, Member State representatives and MAB Secretariat staff to discuss key elements, means of implementation, expected outputs and a time-table for the implementation of the pilot project. Investor networks such as the SOCAP were invited to share their views and thoughts on the development of the pilot project. Biosphere reserves that could be part of the pilot project were identified and a process for soliciting their participation                                                      described.

Potential partner biosphere reserves

  1. Sierra Gorda BR and World Heritage Site, Mexico
  2. Lake Vänern BR, Sweden (Fisheries)
  3. Kafa and Yayu BRs, Ethiopia (traditional coffee landscapes)
  4. Clayoquot Sound BR, Canada (Food Action Planning Project)
  5. Southern Appalachian BR, USA
  6. Frontenac Arch BR, Canada (Local Flavors Project)
  7. River landscape Elbe BR, Germany (landscape restoration using traditional grassland use)
  8. Rhone BR, Germany
  9. Intercontinental BR of the Mediterranean, Morocco/Spain (BR aids agro-diversity)
  10. Southern Moroccan Oasis BR, Morocco (date palm)
  11. Boloma Bijagos BR, Guinea Bissau (origin of mangrove rice and oil palm)
  12. Luki BR, DRC (WWF project on sustainable agriculture and food safety)
  13. Cuchillas del Toa and Sierra del Rosario BRs, Cuba (Bioversity International/MAB)
  14. Maya BR, Guatemala (agricultural intensification and conservation in buffer zone)
  15. Beni and Pilon Lajas BRs, Bolivia (origin of peanut)
  16. Seaflower BR, Colombia (traditional agricultural methods)
  17. Sary-Chelek BR, Kyrgyzstan (nuts and apples)
  18. Tonle Sap BR, Cambodia (sustainable fisheries and rice farming)
  19. Nokrek BR, India (citrus)
  20. Chebaling BR, China (indigenous populations and agricultural techniques)
  21. Bogeda BR, China (black tea)

 

Farming Systems and Food Security

UNESCO Biosphere Reserves as Learning Sites

An Expert Planning Workshop

Room III, UNESCO HQ, Paris

24-25 March 2011

Workshop participants:

  1. Tom Gilbert, International Biosphere Trust (vernongilbert@comcast.net)

 

  1. Kevin Jones, SOCAP (jones@goodcap.net)

 

  1. Johanna MacTaggart, Swedish National Biosphere Reserve Coordinator (johanna.mac-taggart@mariestad.se)

 

  1. Tom Hatley, International Biosphere Trust (tomhatley@gmail.com)

 

  1. Pablo Eyzaguirre, Bioversity International (p.eyzaguirre@cgiar.org)

 

  1. Bettina Hedden-Dunkhorst, German Federal Agency for Nature Conservation, Representative of Kaffa and Yayu BRs, Ethiopia (Bettina.Hedden-Dunkhorst@BfN.de)

 

  1. Sergio Antonio Guevara Sada, President IberoMAB, Chair Mexico MAB National Committee  (sergio.guevara@inecol.edu.mx)

 

  1. Peter Debrine, UNESCO World Heritage Center and UN Foundation (p.debrine@unesco.org)

 

  1. Natarajan Ishwaran, MAB Secretary, Director of UNESCO Division of Ecological and Earth Sciences (n.ishwaran@unesco.org)

 

  1. Salvatore Arico, UNESCO EES (s.arico@unesco.org)

 

  1. Guillén Calvo, UNESCO SC/EES consultant (gicv.pro@gmail.com)

 

  1. Ana Persic, UNESCO EES (a.persic@unesco.org)

 

  1. Sarah Gaines, UNESCO EES (s.gaines@unesco.org)

 

  1. Malcolm Hadley, UNESCO MAB emeritus (hadley.malcolm@gmail.com)

 

 

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Cherokee digital

February 27, 2011 at 9:33 pm (Uncategorized)

starting to work w cherokee here near asheville to set up publishing
system for their immersion language preservation, cultural
preservation schools. books first.  but online learning w be a part as
it progresses. lots of other places here want cherokee language
culture curriculum, there is none produced by them. telling their
story to keep their tribe alive. other tribes would want it too; there
is nothing for tribal generated education, other digital information
products. huge passion, casino money looking to do good, no one
filling the market need.

 

what digital resources are there? this is one partner we know and like along with UNESCO; linguistic and biodiversity linked

 

 

the cherokees themselves post things on a private but searchable listserv that is on tribal stuff; the literacy work has no website, but could use one, at least as brochureware to tell the story of what they are doing

but the answer to what else is there is more culturally and geographically answered. the innovators are the traditionals; the thing to revive that can save their people from extinction is their old food, crafts and their old language, the things that make them who they are. on vancouver island we are connected with our  mapping project with a first nations group that has done amazing things with gardens involving young people that also included learning the old foods, the old ways to catch fish, etc. as well as stories, language. the result has been a locally significant decline in the problems killing indians; obesity, diabetes and depression (and linked alcoholism, drug use, etc.) so revitalizing a way of life and making it work today is what the whole thing is about.

but the guy i know working on immersion language for eastern cherokees (school three years old, first grade next year) does not like email much and you need to call him or a friend to get him to check it. but he’s brilliant, a phd, teaches at western carolina univ. talks about the geographically localized deep grammar in the cherokee language; how the mountains shaped the words, the birds (this area is the most biodiverse on the continent; hundreds of local fish when, say in alabama or georgia there are nine of a certain kind) reasons:  it was never flooded by an inland sea, it never had glaciers. it was too hilly to develop, etc. so it’s a uniquely valuable place as climate changes and bringing in wild relatives of domesticated plants becomes more important. eg. they have a new green this year in the experimental green house and seed bed. has been harvested and “cultivated” meaning seeds or shoots were put in convenient places along paths, but never domesticated. there is a product rollout system three years old from this  really amazing entrepreneurial startup, that goes to enrolled cherokee for free and then some of them sell them on ebay as cherokee foods, and some other places.

but value added crops with a brand are compromised in their economic extent by the fact that cherokee do not get why they would sell food. they give food. but they need to sell them to keep the engine running that is better food, cultural revitalization, higher incomes, reclaimed land, etc. but working with native folks you run into these sorts of walls around doing things what we would call efficient. they are not eager to adopt many of our processes; our ways killed them. they lost their land twice, because of american law. they were able to argue in court (their cherokee law books are amazing, their ability to drive treaties unique) that their land was taken illegally. so they were given it. but then lost it quickly for back taxes that had not been paid since it was taken away. they bought the hill land back but the whites had settled into the best bottom land by then.

we are also working with them to emulate what @sierragorda in central mexico has done in selling their  ecosystem services and carbon for top dollar because local and indigenous people are doing it as part of cleaning their own land, but in sierra gorda’s case, they are led by a visionary old woman and her younger college educated partner who have banded 35,000 people, some who own 1/3 of a hectare, into selling their carbon rights together and demonstrating they can manage on the scale of 30 year projects with a 20 year track record. rain forest alliance is about to certify their carbon at $20 a ton; up at the level of ecosystem services at a german alps ski resort because they can tell a blended value story in the voluntary carbon market such that big companies like a spanish rental car company buy it because the story is better.

other groups (pur projet, france) we are working with are changing the supply chain of companies like carre four in france (sp whatever) to source ethically from these people and their lands, not just offset bad things. but those are the cutting edge innovations and they are not evenly distributed to quote gibson, and the cherokee are 10 hours from the nearest extant tribe (isolation is what save them at all, the ones who did not go to oklahoma on the trail of tears). they are interested more, it seems in the high potential of selling what they are already doing (ecosystem services/carbon) than changing to become more easily a part of a commercial culture around value added crops.

the language part is just easy for me because it’s setting up a publishing system to make things easier for the old people to get their stories captured, into audio and books to teach the kids.

but nothing in the native american culture is disconnected, especially for the change making entrepreneurs who are trying to figure out how to live in this economy while being who they are. so it’s language, food, land, but with other value taken out of it, or extracted by information proxy that does not disturb the land, like ecosystem services. or bringing in jobs around publishing that lead to  greater understanding of linked complex issues around economic and cultural sustainability.

figuring out what part of that process is and should be digital and for which tribe where (the creek, over in georgia, would be easier to work with, people say, but that’s not where i am. the choctaw in mississippi are amazingly entrepreneurial but ruled as a kind of tribal dictatorship that does not include many voices but provides for the people well.) so i am at the front end of figuring out how to work with a particular group of cherokee on a particular project, but then it occurred to me, the assets would be digital. and beyond the immediate utility of helping optimize a currently painful process and expand its production capabilities, there might be more that could be done. and, thought i, it’s digital. retreaters are deep into digital. so i wonder what could happen if people thought about that before coming here to the retreat june 17 th around in Asheville.

my friend tom hatley raised the money for the literacy project and for the related crafts marketplace and training facility. their double weave river cane baskets can hold water and sell for $500 and up. that craft was down to eight people and now has close to 250 trained in the last few years. language is kind of where that was five or eight years ago. it’s culturally ok to sell baskets and crafts, unlike food. so that lags even as it moves forward.
anyway that’s probably more than anybody wanted to know about this. tom and Tom Belt, the cherokee linguistic anthropologist (one way to describe him)  would love to talk to retreaters.

one thing i find exceptional is that the more than i focus on indigenous capital, the deeper and more interesting the linkages become; it’s deeper than fair trade; fair trade is the tip of the export crop arm, which is linked to the climate change, forced migration as land becomes harder to farm, trees are gone, water dried up, extractive industries with power move the people off the land, and then you look at who is really affected and to what extent we are complicit in this by our participation in our place in the economic system and then to what we can do to build a world where our grandchildren can live in safety and relative abundance. that means looking at our collective, west and south, etc. use of resources, as they change, oil based travel gets harder, reuse and sharing become more acceptable (collaborative commerce) and valuable, businesses based on sharing make more money because of reduced costs with cooperation as a means of production, etc. and then you have to see resources both locally, by watershed and globally, so what wild plant cousins do they have in other biosphere regions we might be able to adopt and use here, and then you need people to do it and that means diy farmers going local along with the people who have been here for thousands of years, whose indigenous science around sustainable land use is suddenly more valuable.

and people will want to be linked to it more, learn from it and be part of it,as we have to be closer to our own food and product production, so a valuable global information network producitizing the parts of indigenous culture we all need to help save our asses as climate changes is an interesting way to look at the potential future of this.

so i am going to help them publish stuff they know to tell their kids. and then work on gathering more stuff to publish, and distribute. and then other tribes will probably want the engine we might, in the best case, be able to build that would create jobs with a low footprint by high impact.

but the digital assets and what could be done with them, from all of this, is not something i have time to think about now as i go further in my research.

 

 

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Yet more definitions

December 2, 2010 at 7:06 pm (Definitions, Impact Investing)

Impact Investing is investing for a mix of financial return and positive social and environmental impact. It is the next phase after traditional investing and traditional philanthropy, which invested purely for financial return and then the investor set aside a portion of that return to do good or “give back.”

Impact Investing asserts that there is a middle space between giving and investing that partakes of the best of both. It can be useful to define it is an asset class in order to explain the Impact Investing approach to traditional investors and money managers. At the heart of the Social Capital Market, however we see Impact Investing as both an asset class and a movement, the child of money and of meaning.

JP Morgan, Rockefeller on why Impact Investing IS an asset class. I agree that there needs to a coherent methodology of to allow investors to research comparable investments, and clear reporting of impact for each enterprise. At this point, the impact is mostly singular, detailed and complex for each enterprise; standardization of impact reporting is still a goal that the market will attain when it reaches the requisite level of growth and history to allow for broader definitions.

Having more than one bottom line makes the issue of measuring impact more complicated than just counting the internal rate of return of a traditional, purely return focused investment. Because of its multidimensional nature, immersed in the complex systems of injustice, culture and systemic disfunction that keep poverty entrenched, and the early stage of even the best and most inherently scalable social enterprises, creating real impact and quantifying it is more art than true, replicable, standardized science.

I agree with Rockefeller and JP Morgan that organizing the research and analysis of Impact Investing using those inherently multidimensional lenses is the way to make the field scale quickly. I also hold out the premise that the movement aspects of the Social Capital Market are important, and non quantifiable. I hang out the my shingle at the market at the intersection of money and meaning; it’s the child of both and at home in that space in the middle. It’s a hybrid, not capable of being fully encapsulated in the older language of either parent.

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Definitions from Bugg Levine, JP Morgan

November 30, 2010 at 7:10 pm (Definitions, Impact Investing)

This summary below was pulled from the pdf of the JP Morgan, Rockefeller collaborative research piece on impact investing. I had not read this when I made my own definitions. Their rationale for why Impact Investing meets the test of being an asset class is a strong one. For my part, I don’t want Impact Investing to be totally defined within a market context. That caveat aside, I  think their work is a real contribution, the kind of research this new and emerging market needs to approach clarity.

My caveat comes from a belief in the reality of the market in the middle. Impact Investing is a creature of two worlds; it’s home is at the intersection of money and meaning; it is not just the child of the market. That’s a philosophic distinction, which does nothing to detract from the ways in which Impact Investing behaves like a child of the market; the ways in which it conforms to accepted definitions of what constitutes an asset class. But Impact Investing is also a child of meaning; of using the market to make a difference, not just to use the poor to create yet another extension or differentiated niche of the market economy that just focuses on return, sometimes, as Jonathan Lewis says happens with microfinance, even coming close to exploiting them.”Is social entrepreneurship about creating a viable asset class to make money while doing good or about building a social movement for economic justice? Are we advocates for the poor or advisers to the well-off?”Lewis asks. in his recent Huffpo piece.

Here is Rockefeller, JP Morgan introduction to their research :

Impact investments: An emerging asset class

In a world where government resources and charitable donations are insufficient to address the world’s social problems, impact investing offers a new alternative for

channeling large-scale private capital for social benefit. With increasing numbers of investors rejecting the notion that they face a binary choice between investing for maximum risk-adjusted returns or donating for social purpose, the impact investment market is now at a significant turning point as it enters the mainstream. In this work, we argue that impact investments are emerging as an alternative asset class. As such, we analyze the questions one would ask when adding impact investments to an investment portfolio. Specifically, we consider the following:

What defines and differentiates impact investments?

Impact investments are investments intended to create positive impact beyond financial return. As such, they require the management of social and environmental performance (for which early industry standards are gaining traction among pioneering impact investors) in addition to financial risk and

return. We distinguish impact investments from the more mature field of socially responsible investments (“SRI”), which generally seek to minimize negative impact rather than proactively create positive social or environmental benefit.

Who is involved in the market and how do they allocate capital?

Charting the landscape of the impact investment market, investors range from philanthropic foundations to commercial financial institutions to high net worth individuals, investing across the capital structure, across regions and business sectors, and with a range of impact objectives.

What makes impact investments an emerging asset class?

While certain types of impact investments can be categorized within traditional investment classes (such as debt, equity, venture capital), some features dramatically differentiate impact investments. We argue that an asset class is no longer defined simply by the nature of its underlying assets, but rather by how investment institutions organize themselves around it. Specifically we propose that an emerging asset class has the following characteristics:

• Requires a unique set of investment/risk management skills

• Demands organizational structures to accommodate this skillset

• Serviced by industry organizations, associations and education

• Encourages the development and adoption of standardized metrics, benchmarks, and/or ratings

These characteristics are present for such asset classes as hedge funds or emerging markets, which channel significant capital flows as a result. With each of these indicators having materialized, we argue that impact investments should be defined as a separate asset class.

Link to Pdf of the entire report.

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Bugg Levine, JP Morgan, on why they think Impact Investing is an asset class

November 30, 2010 at 6:37 pm (Definitions, Impact Investing)

Excerpt from the Q & A with Rockefeller’s Antony Bugg Levine and Nick O’Donohoe, J.P. Morgan:

GIIN: What are the most significant findings of this report?

NOD: There are three key conclusions. First, impact investing is emerging as a separate asset class. Second, the potential for invested capital in this market is huge. Although we don’t seek to measure every possible impact investing opportunity, those areas we did choose to look at – affordable urban housing, microfinance, maternal health, primary education, and rural access to water – could represent invested capital approaching a trillion dollars, and that is just part of the investing potential. Third, this report includes the first substantive survey of impact investors’ projected financial returns. In most cases it’s too early to have realized returns, and the range of projected returns is quite wide. But our survey results show evidence that many investors project commercial or close to commercial returns.

ABL: The report also includes important refinement in the definition of what constitutes an impact investment. We assert more clearly than ever before that the intention to create social and environmental good is core to the definition of impact investing. The report also clarifies the two primary ways that impact investment can create social good alongside financial returns: first, through the production of products that benefit poor people or the environment; and second, through business processes that further social justice and economic development goals, such as hiring low-skilled workers.

More: http://www.thegiin.org/cgi-bin/iowa/investing/spotlight/155.html

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Idea for Socap11, SF Oct 15 2011

November 30, 2010 at 6:05 pm (conference ideas)

 

Goal: bring the arts to the market. like ecosystem services, art is valuable. it matters. the value is real, but,  like ecosystem services and biodiversity, the value of art is hard to price. If you don’t price it, and explain that price to the market, then people who can only count when they add up value can not include it in their calculations. so it is among the first things to get cut, the last to get funded, etc. Maybe we can help fix that together. or change the dialogue, in our neighborhood and as a model that could be replicated, bringing in other people who are working on it. the market, without including social and environmental externalities, is intrinsically rapacious. but it’s just a tool. we built. we can rebuild it so it works to create more of the things we value.

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Unshackled investors

November 30, 2010 at 5:35 am (Socapeurope)

In the market at the intersection of money and meaning, SocapEurope asks a simple question as it convenes the leading social enterprise practitioners, investors, donors, entrepreneurs, academics and thought leaders. What kind of capital market would be create if we could do it over, knowing what we know today? We’re going back to where the market was born, the Beurs van Berlage in Amsterdam to make things happen and ask some deep questions at the same time.

A movement and investing discipline that catalyzed beside the San Francisco Bay is now going back to markets were born. All we ask is a do-over.

For example, could we do things like incorporate the social cost to indigenous people of extractive industries on the balance sheet, instead of externalizing them to be taken care of by government, citizen volunteers and the non profit sector? Could we vWhat do we value and what will we do and what will it take to see our values put into action, through all the resources at our disposal, including the capital market? Those are just some of the questions that will be addressed when SocapEurope comes back to the place where the stock market was created. What myths, what unquestioned assumptions, need to be questioned and changed in order to get done what the world needs to get done?

We’ve been out talking to a lot of the new intermediaries who are trying to help us all make sense of the new market. The rating agencies, metrics makers, marketplaces,  researchers, and think tanks at the intersection of a new economy and policy, and even alternative currencies and crowdsourced investment pools have all become suddenly more significant.

The intermediaries have new significance because new money is in the room; there is a flurry of interest from family offices and wealth managers in the social capital market. Some is led by the client, in response to a moral hunger, some is led by the intermediary who believes that a mix of positive impact and investment thinking is where the market and the world ought to go. With this new flux is coming a willingness to question the existing rules of investment and change them, including changing the power relationship between capital and the entrepreneurs.

The social enterprises that are becoming the most attractive to investors who free themselves from the shackles of traditional, pure return focused investment thinking and are able to truly value impact often work across multiple dimensions.

The best social enterprises I am seeing are good, growing businesses that understand planetary limits & the value of reuse, sharing and biodiversity creation and that use giving as an input (people and organizations give them stuff, time and money). Oddly enough, social enterprises that are able to work in this sustainably abundant niche, they are finding lower operating costs and higher margins, so purely return focused investors are finding it interesting.

Markets form in the same pattern no matter whether they take impact into account as well as risk and return. When new money is in the room and senses an opportunity, it looks for services that can help it get smart fast. Here, actually, I have encountered a significant market gap. While Hope Consulting has done groundbreaking research, there is no independent analyst firm that can explain and interpret and compare the value of the flood of new intermediaries. In the technology industry, analyst groups like Gartner place new emerging categories and markets into context, as trusted, third party guides. They don’t build the new applications that customers buy; they explain the value of what’s going on and place it in context.

I am working on  taxonomy of the “sense makers,” the think tanks, consultancies and metrics folks, but have not found the organization that is playing that role that independent third party analyst and guide to the Social Capital Market; it seems a real market gap that should be filled. We are interested in playing some part of that role, or partnering with people to create it.

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Broken markets, mending creation myths

November 29, 2010 at 7:36 pm (New myth)


An important step in bridging the gap between the philanthropic capital market and the social capital market took place at the recent SoCap10 conference. Both sides met, as if they were trade delegations from a foreign land, entering the market at the intersection of money and meaning and each pitching its tent, like a market on the Black Sea at the end of the silk road.

 

It was a practical necessity, not an abstract exercise in multiculturalism. We impact investors find ourselves investing in non-profit social enterprises, or in deals where non-profit and even some public sector dollars are at the table, in various forms. But we don’t speak the same language.

 

Both sides are finding a need to dislodge themselves from outmoded and often unexamined cultural myths in order to learn to work seriously together. As Sean Stannard Stockton, who led the Tactical Philanthropy track at Socap10, said: ‘There is a big segment of philanthropy that believes it has to correct for the problems of the market economy, that the market economy is fundamentally flawed and philanthropy fills in those gaps. If you believe that, then you hate mission being linked with a market solution. You represent the forces of justice fighting the market.’

 

The process-centric nature of foundations and the non-profits they fund is also problematic for people coming from a market perspective. It is a disconnect that is deeper than style.

 

I believe that both the capital market and the philanthropic market in the US are broken in different ways that can be traced to the goals of their creators, robber barons like Andrew Carnegie and John D Rockefeller. The first pillar was enshrining the capital market as a force of nature, not amenable to reformers’ efforts.

 

This foundational flaw at the heart of the capital market allowed business and markets to focus purely on financial return and to externalize both environmental and social costs to the state and to philanthropy. It also made markets more subject to bubbles and busts than they would have been if all the costs of their impact had been included on the balance sheets of for-profit businesses.

 

Those raising impact investment funds need to find investors who are not blinded by traditional investing’s deep, often unexamined cultural shiboleths. Investors have been taught to divorce financial return from social and environmental impact. Often called ‘two-pocket thinking’, this traditional investor mindset sees it as heretical to compromise financial return for social impact. You invest for financial gain, put that money in one pocket, and give out of another pocket, one set aside to ‘give back’ what traditional business and markets have extracted from the world. Extractive industry thinking, reflective of its social Darwinist roots, is at the heart of the capital market.

 

The shackles created to limit the disruptive impact on the purely financial return focused capital markets of people demanding positive social and environmental change began by creating foundations with continuity as a goal. That meant growing the foundation’s corpus was job one, which made foundations fundamentally an asset management vehicle with a small charitable arm. The result is that bad foundations don’t blow up; there are no foundation Enrons because they risk so little of their resources to accomplish their goals.

 

This handicapping of foundations and thus non-profits, coupled with a capital market where environmental and social cost is externalized, were the paired design goals of the robber barons who set up the legal structures and culture in which both exist.

 

Thankfully, there are signs of change in the philanthropic capital market, such as growth in programme- related investments by groups like Omidyar Network and the Gates Foundation, and some leading foundations spending down their assets to have a bigger impact sooner. Similarly, markets and for-profit businesses are being reclaimed from the captivity created by their creation myths by the people creating social enterprises and the social capital market that fuels them.

 

The heretical position that there is a middle space between giving and investing that partakes of the heartfelt focus of the first with the rigour of the other has been the premise behind the SoCap conferences. When investors mix impact with return, they find themselves partnering with non-profits and foundations in new ways, sometimes working in the same place on the same problem.

 

This new space between giving and investing acknowledges that all capital produces a blend of social and financial returns. To get both sides requires a new set of lenses. Looking at those lenses is at the heart of what we are doing with SocapEurope.

 

 

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