Calculated Risk?
Posted: 02 November 2010, in Blog
The need for money in all its guises to grow social enterprises into sustainable organisations can represent a normative dilemma for the sector. Typically, many social entrepreneurs are left of centre in their world view and some can be cautious or even hostile to engagement with the world of commercial profit driven investors.
This presents a problem if you believe that access to capital markets is one possible option for those social enterprises that want to scale up. Scaling up through equity investment may not be appropriate for all social enterprises but it is surely an aspiration for some. Ignoring politics for a second, the nub of the issue is that the alignment of investor and social entrepreneur interests is not guaranteed, consistent, (ethical?) or predictable – and when the going gets tough……… A good image is the pushmi-pullyu of Dr Doolittle fame with no sense of joint purpose, shared direction or shared risk and reward being evident. There is also the problem of aligning executive/staff interests with the social mission of the enterprise – have a look at the history of mutuals.
The introduction of the Social Impact Bond pilot in England has generated huge interest and attention but their are other ways to raise capital. For example, I am amazed that The Ethical Property Company model is not being replicated across the land. Trading in Ethical Property shares is done through a matched bargain market (via a broker) not through an exchange. See:
http://www.ethicalproperty.co.uk/site/en/_How_To_Invest.php
This seems to get over the (to some) unacceptable and scary feature of IPOs and the lack of control in trades in equity (and ownership and control) that exchanges generate – that is a feature of markets and that worries some social entrepreneurs!
Next time you and your board are worrying about funding (God I hate that word), considering a loan or praying for a miracle, get inventive and have a look at The Ethical Property Company model. Just because politicians are trying to control the agenda for the development of our society does not mean we have to lie down and let them. After all, social entrepreneurs are investors not speculators, the change makers, the innovators, the mavericks etc – or is that an illusion and the truth is that most social entrepreneurs shy away from the pros and cons of personal financial risk, reward, investment and profit.