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Social Capital Markets: What Are the Most Important Signs of Progress? What are the most important signs of progress in social capital markets in the last 10 years?

Burgess COMMENTARY

Peter Burgess

Philanthropy Social Capital Markets: What Are the Most Important Signs of Progress? What are the most important signs of progress in social capital markets in the last 10 years?

I probably first heard the term “social capital market” about 10 years ago. As with all commonly adopted jargon, though, it’s hard to remember where I first came across the term. I’ve been thinking about it a lot lately as I’m preparing for this years Social Capital Markets conference in San Francisco next month. I’ll be appearing on a panel in the Tactical Philanthropy track representing GiveWell, where I serve on the board. Alongside representatives from Charity Navigator and Root Cause, we’ll be walking through approaches to evaluating an organization; in this case the DC Central Kitchen.

The intent of the conference, now in its third year, is to help build social capital markets. This year in particular the theme is “what’s next?” But I’ve been thinking mostly about what’s happened so far. It’s difficult to really think about the future without having a solid grasp on the past.

Now I’m far from deeply enmeshed in the social capital markets movement, but thinking back on the last few years, I’m wondering about what progress has been made. There’s no question that awareness of the idea of social capital markets has increased. But while awareness is important, it’s only progress insofar as it leads to tangible action and change. So I don’t consider an increase in awareness as progress in its own right.

So I’m wondering what you think has changed and what progress has been made in the social capital markets movement over the last five years. Is there materially more money moving through social capital markets, such as they are? Is the flow of money more efficient? Is it easier to raise funds? Is there more standardization in the approach that leads to time and money savings for entrepreneurs raising capital? Have significant regulatory hurdles started to fall? Have important legal precedents been established?

I’m mostly interested in evidence of change and progress that is distinctly about social capital markets, not just new approaches to philanthropy. I’m also interested in social capital markets globally, not just in the US.

So, help me, and ideally other attendees at SoCap ’10 out: what are the most important signs of progress in social capital markets in the last 10 years? Feel free to respond directly in the comments or to write on your own blog and provide us with a link.
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Tim Ogden is Executive Partner at Sona Partners, a thought leadership communications firm. He has edited 4 books on the intersection of business strategy and technology published by Harvard Business School Press and co-authored or ghostwritten several articles for Harvard Business Review. He is frequently quoted in the Wall Street Journal, New York Times, and Financial Times. You can follow him on Twitter: @philaction or @timothyogden.
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BY Michelle

ON September 15, 2010 12:30 PM

Hello Tim!

Thank you for writing a thoughtful post and it’s great to see the success of a fellow Davidson grad.

My nascent understanding of social capital markets only enables me to point in the direction of recent resources I have come across, as well as opposing viewpoints regarding the effectiveness of social capital markets.

One such resource is patient capital, which the Acumen Fund defines as:

• * Long time horizons for the investment
• * Risk-tolerance
• * A goal of maximizing social, rather than financial, returns
• * Providing management support to help new business models thrive
• * The flexibility to seek partnerships with governments and corporations through subsidy and co-investment when doing so may be beneficial to low-income customers.