|
Home
: News and Events : Market and Hybrid Approaches to Social Change
Market and Hybrid Approaches to Social Change
Initiatives Online
An Electronic Newsletter from TPI
May 2008
Dear Friends and Colleagues,
We are pleased to focus this e-newsletter on the emerging topic of using business principles, models and capital to make sustainable, scalable social change. TPI has always advocated an investment approach to philanthropy but today we are delighted to be introducing our clients and colleagues to a new breed of organization and approaches that take the investment mentality to a whole new level. First there were program related investments. Then we had venture philanthropy, social finance, micro-enterprise portfolios, social enterprise and mission-related investing. Now we have a dizzying alphabet soup of hybrids like B Corporations (that's "benefit") and L3C Companies (that's "low-profit, limited liability") that up-end what some believe is an artificial tax distinction between doing well and doing good. All of these are designed to bring more capital into the social sector and make the business of "doing good" more sustainable, scalable and widespread.
Read more from TPI President and CEO Ellen Remmer...
Market and Hybrid Approaches: A TPI Breakfast Discussion
On April 15th leaders from the business and philanthropic communities gathered at TPI for a conversation on how philanthropy and the market economy can intersect to create social change. The event, part of the continued discussions surrounding Peter Karoff's book, The World We Want: New Dimensions in Philanthropy and Social Change, included a panel discussion moderated by Peter, and featured Ben Binswanger, COO of the Case Foundation, and Elyse Cherry, CEO of Boston Community Capital. The conversation that followed raised a variety of provocative ideas and questions for all of us who are serious about making change. We highlight some of the questions and comments here. (Quotations come directly from audience comments.)
Mapping the Field
Below is a framework for thinking about the emerging Social Capital Market Landscape:
Thoughts on the Subject
Read what philanthropic thought leaders John Abele, founder of Boston Scientific and the Argosy Foundation, Pierre Omidyar, founder of eBay and Steve Case, Co-founder of AOL have to say about using the market economy for good.
A Few Innovative Examples
Today, we are seeing an exciting wave of innovative market approaches to achieving social change. Here are a few examples of what TPI clients and others are doing (Note: these are not intended as recommendations, but to demonstrate a range of possibilities).
Promoting Causes Via Social Networking
The Case Foundation and Facebook Causes - Side by side for-profit and philanthropic investments
 Causes is a new business that creates civic engagement applications for the social networking platforms Facebook and MySpace. These applications allow people to connect around social issues they believe in and charitable organizations they want to support. The Case Foundation sponsored a matching funds program on Causes, rewarding the causes that solicited the greatest number of online donors. Case Foundation Ventures, a for-profit entity that dedicates its returns to the Case Foundation, also made a for-profit investment in Causes.  The goal is to create financial as well as social return on investment by connecting more people to raise greater funds for the causes they care about.
Mission-Related Community Investing
The Melville Charitable Trust - Mission-Related Investments
 The Melville Charitable Trust views its philanthropy as social venture capital and subjects its funding to the same rigorous analysis that would be applied to any serious investment decision. Over the past four years the Trust has funded several Mission Related Investments (MRIs) in Frog Hollow, a Hartford neighborhood that has suffered from poverty, lack of opportunity and disinvestment. The Trust's mission-related investments include a seasonal weekly farmer's market, Firebox, a 125 seat, fully licensed for-profit restaurant, a community center and an affordable housing complex - all part of an effort to revitalize this neighborhood.
Growing Small Businesses in Jamaica Through Microfinance
Micro Credit Limited - A Pooled Loan Fund
 Micro Credited Limited (MCL), created in part by a Minneapolis-based family foundation and TPI client, provides microloans and business development services to self-employed, low-income Jamaicans who lack collateral and cannot get bank loans. In addition to giving small $100 - 250 loans, MCL helps these Jamaicans organize "solidarity groups," grow small businesses and save for their families. Launched in 2003, MCL has more than 700 clients and a repayment rate of over 98 percent.
Financing Education with "Human Capital"
Lumni Inc. - Equity in Individuals
Lumni Finance is making higher education more accessible for low-income families by marketing and managing Human Capital Finance Funds for students. Rather than paying an interest rate on their loans, students commit to paying a fixed percentage of their income for a pre-determined period of time. This approach makes it safer and easier for young people to invest in their own education by ensuring they never find themselves overwhelmed with debt. Lumni focuses on long-term sustainability for the funds it manages, partnering with individual and social investors in an effort to make higher education available to all of the world's young people. Currently operating in Chile and Colombia, Lumni plans to expand to the U.S. in the near future. For more information, visit www.lumninet.com.
Venture Capital Social Investing in Vermont
The Kelsey Trust's Investment in Fresh Tracks Capital - Venture Capital MRI
 For 20 years the Kelsey Trust, a small family foundation, has sought to support the people and the environment of the Champlain Basin in northwestern Vermont and northeastern New York. For most of its life, the trust has put its investment capital in conventional investments - domestic and international equity and bonds, seeking only a fair return on the investment dollar. In the last year, however, the trustees decided to seek a "double return" on its investments. It became a limited partner in Fresh Tracks Capital, an early-stage venture capital fund, investing in socially responsible start-up business in Vermont. The trust's aim: to obtain a fair economic return, while at the same time investing in new jobs and new businesses in the trust's geographical focus area.
Unlocking Sales Potential for Arts and Crafts Businesses in South Africa
The Pick 'n Pay Foundation - Investing in Self-Reliant Entrepreneurism
 In 1997, Raymond and Wendy Ackerman, owners of the South African food retailer Pick 'n Pay, founded the Pick 'n Pay Foundation, whose mission is to make a measurable contribution to sustainable development skills by supporting projects that encourage entrepreneurship and self reliance and provide employment opportunities for South Africans. The foundation supports indigenous arts and crafts businesses that have the sales potential to enable communities to become self-sustaining. Funded projects include an organization run by quadriplegics to develop wheelchairs that work on rough, rural terrains, a Peninsula School Feeding Association organic community garden project and the Men at the Side of the Road Project, an initiative that connects employers with South Africa's unemployed workers and provides job training.
|