Convergence in three sectors

In the wake of the Social Capital Conference held earlier this month in California (SOCAP09) there is a renewed vigor in the discussions about effective financial investments (rather than donations) to solve social problems.

Perhaps the comments of Nell Edgington summarize best the value of this new movement towards a convergence of commercial ideas with the age-old agents of change in western society: the non-profit organizations.

Sadly, in the world of social investments, charities are often seen as the “cousins” working tirelessly, yet fruitlessly, on changing the fabric of our society. It is not that they are completely ineffective, it is that they are not “transformational” in the way social entrepreneurship is expected to be in the coming decades.

Nonetheless, if the experience and knowledge of venture capital markets can be married successfully with the understanding of the needs that is resident with charities, then we may indeed see significant movement forward on human rights, basic needs, global justice, and alleviation of poverty and suffering.

One organization that is leading the charge in Canada is CanadaGives.org. The head of this organization is Denise Castonguay, with whom I recently shared a lengthy discussion on this issue, is a product of the financial world, and her business savvy is evident. She, like many others who have been successful in managing money, wants to put her skills to use to support charitable endeavors. In her own words, her leadership in Canadagives.org provides her with “the lifetime satisfaction of combining industry skills with personal values.”

Canada is still a neophyte player in the world of social capital investing. That being said, Denise Castonguay is one of a small, important cast of like minded social entrepreneurs and organizations: Jeff Skoll (himself a Canadian, although his foundation is US-based) to Social Capital Partners and Social Venture Partners, to the Tides Foundation and the Canadian Ashoka office, with their many Fellows across the world, to name a few.

Canada has a long history of charitable activity. With a registered charity for every 400 citizens, and host of other non-profit entities (companies, regional and local governments, religious organizations, service clubs, UN organizations, and others) active in social issues, the expertise in defining and tackling social problems is not lacking.

However, the ability to design effective interventions on a significant scale remain hamstrung by limited funds, charitable traditions, competition between charities, charity legislation, and a diversion of the majority of investment capital into the for-profit world of stocks, bonds, real-estate and businesses.

I agree with Nell Edgington when she states, “Let’s take a bigger picture view of the essence of what we are attempting to do. And that is to completely reconfigure, and create a productive convergence among, the three sectors (public, private, non-profit). Now that would be innovative.”

Indeed.