A Clearly Social Economy

I attended an intimate dinner last week, hosted by a bank (I will not name them, but I invite them to name themselves if they so desire), and the guests, aside from staff at the bank, were commentators from the social business enterprise and investment movement. The subject, as it inevitably does, came to politics. A debate ensued regarding whether or not social enterprise would be an electoral issue next year (a UK general election will be held in 2010) and what the policies of the two major political parties would be. Some argued that we were going to see a major change, others thought there was little difference in the likely platforms of the two major parties. I suddenly felt myself feeling a sense of despair. Here we were, as ever, looking to government to see what it would do in order to solve social problems or accelerate the growth of our sector.

In many ways this seems normal. Our leaders are responsible for us, in the same way that parents have a moral duty to look after our interests, so looking to our chosen leaders is as predictable, in a time of crisis, as looking to our parents. Yet I believe it to be very unlikely that our political leaders will lead us out of this crisis; which they contributed heavily to causing. I see them rather as the bad parents in a seriously dysfunctional family. The textbooks say they should love us unreservedly and look after our interests (parents, anyway) but many children are unfortunate enough to be born to couples who are incapable of acting responsibly. They may be self-absorbed to the point of neglect, or in extreme cases abusive, but absolutely cannot be relied upon to make things OK for us. To me this feels an apt description of our political leadership.

On their watch the world is overheating and the financial system has collapsed and yet they seem not only unable to act, but profoundly disinterested. In many ways this is unsurprising. They are entrusted to serve but seem to focus primarily on getting re-elected; and they use our own cash to do so–absolutely outrageous, but a situation we have come largely to accept as “the norm”.

Children of dysfunctional families have the odds stacked against them, but those that do emerge from a bleak and painful childhood, do so by learning how to cope on their own, without a nurturing supportive parent to assist them. This path to self-reliance is not easy, and academic studies regularly reveal the advantages for those children with attentive, nurturing parents. Nevertheless, at some age these children, if they are to succeed, understand that they need to find the strength within themselves; there is no caretaker on whom they can rely.

Our social enterprise sector needs to learn such self-reliance. This is partly because even the “good parents” will find they are less able to help. Mother Hubbard found her “cupboard was bare” and as a result, she could not “get her poor doggie a bone”. Despite her good intentions, that hound would starve unless it fended for itself–hopefully it did so. Not all our leaders share Mother Hubbard’s benevolence, and in such circumstances, self-reliance is essential, despite even the most bountifully supplied cupboard.

Our sector has become heavily reliant on Government, in terms of grants, contracts and general support. This strikes me as dangerous and ill-judged, given both the trends in state finances and my own ideas regarding the nobility of our leaders’ interests and orientations. The sector may be “flavour of the month” nowadays but a shift in a Minister’s mood and we will be headed for rapid decline. Much of the good work will evaporate faster than bank capital over the past 24 months.

We need to diversify revenue streams, broaden our access to different forms of and sources of capital, and generally strengthen ourselves from top to bottom. It may be that I am exaggerating the dysfunctional nature of our leaders, but there is no downside to the courses of action I suggest. Self-reliant children are in no way unable to maintain excellent relationships with supportive parents, but children who find themselves with bad parents will suffer greatly unless they strengthen themselves from within. It is time for our own sector to achieve a greater degree of self-reliance.

What do you think?

Rodney Schwartz

Now ClearlySo is truly the “first global marketplace for social business & enterprise, commerce and investment”, with a non-UK local presence.

Since launching ClearlySo in March, we have received numerous enquiries from parties all over the world expressing interest in working together. These have come to fruition this week, as Julie McDowell, CEO of ClearlySo Canada, will be making the formal announcement at the Third Canadian Conference on Social Enterprise sponsored by the Social Enterprise Council of Canada.

Two questions readers could ask. First, why go global–is the UK not a big enough challenge? Second, why Canada?

Is the UK not big enough?

ClearlySo decided to expand internationally for several reasons. First, one of our objectives is to help social businesses & enterprises (SBEs) to succeed. We make no national distinction, thus it seemed logical to extend our coverage outside the UK and help SBEs elsewhere. SBEs stand a better chance of learning when you increase the breadth and diversity of examples and models they have to learn from and emulate–an international presence broadens the range. We have argued on Social Edge that the Social Enterprise world seems too Anglo-Saxon. While Canada is a first step, and hardly addresses this issue directly, future expansion plans will do so. Thirdly, we grant member SBEs access to capital from investors. Increasing our geographical coverage will mean they will have access to investors from different markets, where regulation allows. Finally, we seek to spread our investment in technology and product and service development over a larger base. This is ultimately in the interest of all stakeholders.

Why Canada?

Canada is a country I have been fascinated with and enjoyed since I was a university student in Rochester, New York, when I visited regularly. The people are just really terrific and that has always made visiting a very pleasant experience. More recently (December 2007) I had the privilege of being a speaker at the first Conference on Social Enterprise and my own warm feelings for the country were rekindled. I have been back several times since and as a result of one of those visits, developed a professional relationship with Julie McDowell, an exceptional business person. the rest, as they say, is history. She approached us just after we launched ClearlySo and was impressed–the discussions advanced to the point we are at today. I expect Julie to play a large role in ClearlySo’s success going forward. One could develop other rationale for why you choose one location over another–but a partner you can work with has got to be number one on the list.

Canada is also more of a leader in this field than they realise. Vancity, based in Vancouver, BC, is a large factor in the field and has been making social loans and investments since 1946, when they ended the year with assets of $2,966 and enjoyed profits of $0.83! They have hundreds of bankers now engaged in social finance and their CEO, Tamara Vrooman was judged to be one of the 100 most powerful women in Canada. Renewal Partners, also based in Vancouver, has been investing in social businesses since the early 1990s and has just closed its first fund, Renewal2, at $18 million with 37 investors. Investeco is another Toronto-based institution with a solid track record investing in cleantech, while the Centre for Social Innovation incubates social enterprises. MaRS and its affiliate SIG(Social Innovation Generation)@MaRS, are a hub of innovation in this area. In Quebec there has been considerable activity in this sector (perhaps larger than anywhere else in the country) for many years, although it operates in a somewhat different way than in Anglophone Canada. I could go on, but I think you get the picture. This is a place where a “global marketplace for social business & enterprise, commerce and investment” needs to be. Watch this space!

And of course, if you have any ideas, please get in touch.

Rodney Schwartz

Last week we held our Fourth Annual Social Business Conference at Mary Ward House in London. Attendance was 30% up on last year and more than three times the size of our first conference in 2006. More important than the numbers attending, however, was the growing realisation, on the part of all of us, of how diverse the sector was becoming. Some observers seem uncomfortable with this diversity and urge the disparate sector to “get its act together”, by which they seem normally to mean that the sector should get aligned around one view on what social enterprise/business is, and to push that view. Such commentators seems uneasy by the mix of agendas, structures, objectives and orientations of the variety of social entrepreneurs. At Clearlyso, by contrast, we celebrate such diversity and believe it is one of the hidden, yet vital, strengths of the sector.

Not only is the sector becoming more diverse, but it is also increasingly strong, with a growing number of role models of high calibre. This was abundantly apparent throughout the conference where the quality of the panels was matched throughout by the quality of the audience. Nearly anyone in the room could have played nearly any role and done it well. When footbal teams have such strength and depth, they win championships–this augurs well for our sector at this time–especially as other models of economic organisation falter.

No panel evidenced this better than the second panel which focused on the variety of organisational forms available to UK social businesses. CICs, Coops, IPSs, Limited Companies and employee-owned businesses all were argued for in turn and each seemed to have some intriguing benefits and attributes. Caroline Mason, Vivian Woodell, Malcolm Lynch, Andrew Tanswell and David Erdal each argued in turn in a session excellently chaired by Stephen Lloyd. One might have such such material fundamentally dry but the speakers brought the subject to life. One could observe strength and breadth again, both in the quality of speakers and in the vast array of legal and organisational forms available to social businesses and enterprises. Challenges from the audience were of an equally high calibre.

We feel very an extraordinary amount of pressure to continue to deliver useful content to social entrepreneurs in a way which leverages what has gone before, but takes it a bit further. This year we experimented with “social surgeries”, where three businesses which pitched during the day were analysed in detail by a panel of experts. Next year we aim to innovate again and do so on a European basis, partnering with Good Deals in doing so.

We would be ever so grateful for your feedback in helping ensure another successul event in November 2010, probably on the 9th and 10th. Many of you who have attended have given us detailed feedback which, again, we will incorporate into our thinking for next year. We welcome views from anyone with an interest–even if you have not attended.

As ever, the more the merrier.

Rodney Schwartz

Last week I had lunch with a friend who told me, essentially, that “no man lives by pontification alone”. Rather, according to him, the tangible things we were doing at ClearlySo would reinforce the issues-oriented posts commonly published in this blog. In this spirit, I would like to tell you about four important milestones we have surpassed; in web traffic, in social businesses & enterprises (SBEs) on the site, at our upcoming conference and by virtue of our upcoming announcement to expand ClearlySo into North America. For those of you not familiar with ClearlySo, it is the first marketplace for social business & enterprise, commerce and investment. ClearlySo seeks to help social entrepreneurs succeed by giving them publicity, access to capital, information, advice and access to discounted products and services.

Traffic on the site has surged, enabling us to become the leading website in the UK focused on social business and investment. Officially the number of social businesses and enterprises on the site surpassed 500 last week (over 10% from outside the UK). All of this after just seven and a half months of operation. The SBEs on our site tend to be the larger and more successful ones, who are able to make better use of the services ClearlySo offers and generate substantial social impact. On the other hand, ClearlySo is also very keen on the smallest and newest social enterprises, with big ambitions and, as of yet, more limited resources.

Our 4th annual Social Business Conference will be held on Thursday of this week. The attendance will be at record levels despite the economic downturn, and the array of topics and diversity of speakers promises an interesting and thought-provoking event. We have already announced our intention to run the conference jointly with Good Deals in 2010, and further “Europeanise” the event.

Finally, we will on the 18th of November, publicly announce our first non-UK market expansion into Canada. Driven by the experienced entrepreneur, Julie McDowell, this initiative will be a model for others we expect to announce in other markets in 2010. ClearlySo believes gaining international breadth is in the best interest of the SBEs and investors who use the site.

For those of you who prefer the issues-oriented pieces this blog is best known for, you can be assured that in subsequent posts we will return to historical practice. To the rest of our readers, we hope this better explains the fundamental work of ClearlySo, the site in which this blog is maintained.

Rodney Schwartz

Earlier tonight I attended the official reception at the House of Commons to celebrate National Ethical Investment Week (NEIW). Hosted by Hugh Bayley MP, organised by the UK Sustainable Investment and Finance Association (UKSIF) and sponsored by four financial institutions (Aviva, Coop, CCLA and Henderson), the evening called attention to this second, now annual, NEIW and the impact it has had begun to have on public consciousness. Listening to the speakers I began to consider how marvellously effective simple events such as these are–and how much better value-for-money they are compared with the other lavish Governmental programmes. But that is another story–for tonight I just wanted to applaud this creative initiative, dreamt up by UKSIF and, in particular, praise the Rt Hon Stephen Timms, currently Financial Secretary to the Treasury (explanation to follow).

NEIW in some sense is not anything really, its just a series of events hosted by many different players around this common theme of ethical investment. ClearlySo’s annual Social Business Conference is part of the week, as are many other events put on by a wide range of other organisations. Most of us paid nothing extra to be part of NEIW but, the collection of events galvanise interest in the social investment arena, in the broadest sense of the term, and this is hard for any of us to do on our own. By providing this focus journalists dedicate space at least once a year to an area they might otherwise ignore. Penny Shepherd, who runs UKSIF, had a piece published in the Times earlier this week. Perhaps less helpfully, but more amusingly, the Telegraph today wrote a piece entitled, “It’s Ethical Investment Week - Buy Tobacco, Guns and Oil“, but at least they have taken notice.

For a minimal sum of money the four sponsors and the entire industry have bought itself a great deal of attention and this will build over the years. I am a great fan of such incredibly cost-effective initiatives and commend all those involved. Such a refreshing departure from the more costly and grand but less effective gestures which are all too common.

A final cheer for Government doing something it can do best–what Americans call “jawboning”. This means, literally, exercising one’s jaw bone in “talking up” the sector. Politicians are well placed to convene and call attention to things and by virtue of their office, people come and listen. This is a great and astonishingly efficient way to effect change. It is made considerably easier by people like Stephen Tmms, who was the guest speaker tonight. I attend endless meetings where politicians drone on about something or other they might know very little about and have had hardly any role and (if they were honest) probably have little real interest in. What is so wonderful about Timms is that none of these things apply to him.

Timms has been a trieless campaigner for ethical investment for years–his role in the Social Investment Task Force and the key 2004 Pensions Act were cited this evening as vital contributions to the development of the sector. He speaks intelligently and is undoubtedly well informed about the sector, its needs and the key issues it faces. He is the sort of unsung hero, the likes of which we see far too little of in Parliament and in politics–someone who obviously cares a great deal about an issue and is willing to do the hard and unglamorous work necessary to make things happen. Other SIFs may follow UKSIF and have their own NEIWs (Timms announced that in Belgium they were planning something similar and hinted that others might follow) but without a Timms, their chances of success will be far more limited. A key Minister who becomes a true supporter is a vital commodity, and Timms has been a consistent supporter.

(Just for the record, I have never properly met Timms, have had no one-on-one meetings with him, have never asked him for money and have no plans to do so. He is also not an employer or prospective employer of any family member. Just wanted to make all that clear in case some of you with suspicious and mischievous minds were wondering!) 

Rodney Schwartz

Earlier this week it was announced that RBS and Lloyds were due to receive another £30+ billion in support from the UK Government. We have become so inured to such injections, that many commentators hailed this as a positive restructuring and applauded the fact that RBS and Lloyds were being dealt with severely; bonuses to be restricted or deferred and certain businesses to be sold. The unexpectedly harsh treatment from Brussels prompted RBS’s CEO Stephen Hester to say he felt “bruised”, regarding the measures imposed. I may be alone, but this saga and the muted reaction to it makes me boil with rage. Readers who want to hear a bit of this rant should click onto the recent Guardian Business Podcast. The news from the City of London makes an interesting contrast with that of the Utrechtseweg in Zeist, The Netherlands, where Triodos raised EU 102 million in funds from a combination of retail and institutional investors. In both cases, we are talking about a capital infusion into the banks. Only in the case of Triodos, the retail investment was voluntary–the taxpayers who funded Lloyds and RBS were not given the choice!

This is called the Social Business Blog so tempted though I am to dedicate an entire blog to a tirade against the injections into Lloyds and RBS (for much of my early career I was a bank analyst, to reveal my secret past!), I will restrain myself. Let me just make a few points. First, whereas the initial injections were meant to prevent contagion and collapse in the banking system, this is no longer true today. Second, there is no guarantee this will be the last state injection–we should keep our powder dry. If Lloyds could not do its rights issue without Government support, that is its problem, not ours. The deferral of executive director bonuses until 2012 and the one-year suspension of bonuses for those earning over £39,000 is a small gesture in the context of the support already made available to save these banks–talk to some of the now unemployed staff at companies which have had to declare bankruptcy if you think otherwise. That some assets have to be sold is trivial. Shareholders in these banks should consider themselves lucky indeed they have any value at all remaining. That Stephen Hester should feel bruised at RBS’s treatment, and be unwise enough to say just that, shows how the bankers badly judge the public’s mood. One day there could be a more serious reckoning.

Back in Zeist there was no drama. Triodos’ share capital issue, orginally targetted at EU 90 million, was over-subcribed, with 40% coming from institutional investors and 60% from the public. These investors like the Triodos “sustainable banking” model and are keen for it to expand its balance sheet. Triodos has 225,000 customers and talks about doubling its balance sheet, predominantly through its lending activities. Another contrast with some of the UK’s troubled banks where despite massive state infusions, balance sheets are still in decline and borrowers are being pushed “to the wall”, or forced into bankruptcy. Triodos will be providing more loans to its clients, many of them social businesses, supporting their growth.

There is something poetic and important to the fact that these two bits of news happened within two days of each other. In one case, taxpayer money is being used to paper over the recklessness of yesterday, in another case, investors are backing a long-term oriented and sustainable approach to banking. We must begin to draw some lessons from this serendipitous juxtaposition.

Rodney Schwartz

1. Acceptance of the fact that an SIWB is certain to be launched and enjoys the support of all major political parties—thus, even if my intention was to try to stop the SIWB from coming into existence (which it is not), such an effort would be futile.
2. A strong personal belief that any alternative uses of the funds which lie in dormant bank accounts would likely be far less constructively employed—call me a cynic, if you wish.
3. Recognition that the UK has played a leadership role in the development of the social investment sector globally and that this leadership is in my personal interest and that of ClearlySo and the country’s interest, which would be furthered by experimentation through an SIWB.
4. Belief that as a result of the current financial crisis from which we have only just emerged, the discrediting of financial institutions is widespread. Thus it is important to try to develop and shape a more positive financial institution.
5. The social business and enterprise sector and the third sector are ready for some of what an SIWB might be able to do. Thus, although I am certain mistakes will be made, my own analysis of the pluses and minuses suggests that it’s worth the effort to try.

I have also stated in a previous post that I do not understand the reason for the unclaimed assets to be used to support only one SIWB. I firmly believe that best interests of the sector and society will be served if Government “spread it around”. Even in this case, I think one institution should probably receive a large percentage, because I think there is a particular job that needs doing at the wholesale level.

So what should the SIWB do? The OTS posits five roles, of which we think two are highly appropriate. The most valuable role the SIWB could play is that of a market-maker. There is nobody performing that role and no candidates in the offing. It would require a great deal of capital; this would thus be an extremely useful facilitative role. Also vital would be the SIWB’s role as an investor. Their very large capital base would render them uniquely well-positioned to do this role and be quite innovative. Another role suggested is that of “sector champion”. That seems a bit ridiculous. Why should the public fund another champion when there are so many already? By virtue of its size the SIWB would have an extremely influential role. It is pointless to mandate it with such a responsibility. The fourth and fifth are fund-raising and advisory services. These would create substantial conflicts with the first two, which to me seem vital. Thus I would be inclined against giving the SIWB these responsibilities as well.

I do not know who all the bidders are but suspect, in the end, the largest funding will go to those with strong “connections”. A bit sad from a societal context but “twas ever thus”. I only hope that wherever the funding does go, especially if it goes to an institution with contacts in the right places, at least the people involved should be competent and well-constituted, rather than just well-connected. That would be so important for the sector’s long term sustainability and legitimacy. We live in hope.

Rodney Schwartz

The CRIE campaign is not solely directed towards the SRI industry. Investment organisations whose beneficiaries can be deemed likely to have strong ethical orientations, by virtue of their background, should also be included. For example, entities such as university endowments, religious organisations, pension funds and others such as charitable foundations, whose key stakeholders possess some sort of shared set of ethical beliefs, should also become part of this campaign. Up until this point the presumption in the investment industry is that financial return maximisation should be the main focus, with compensation structures designed accordingly. We have had some painful lessons recently concerning the impact of such an orientation in financial markets!

It would be unfair to blame this state of affairs solely on fund managers or Trustees. Guidance from regulators and case law motivate behaviour in this direction. It is definitely the safe thing to do–but is it the right thing to do? I understand the strong force of inertia, but should not ethical investors take the lead in challenging this return-maximisation approach? Perhaps this is something they already wish to do—and all that is required is some external impetus? Anyway, if not them, then who? If not now, then when? Managers of funds with an ethical bias have, I believe, a responsibility to lead the way in ensuring that extra-financial factors are incorporated. This principle underlies the very existence of many SRI investors. SRI practitioners have often been at the forefront in demanding that the companies in which they invest engage with their stakeholders and act accordingly–should they not lead with regard to their own stakeholders?

Most of the ethical fund managers I know are uniquely well-suited to undertake this role. On frequent occasions I have been told that this is what they seek to do. They tell me they did not come into the ethical investment world “to trade Vodafone shares”. Not that there is anything wrong with Vodafone, but this will hardly set responsible investor pulses racing. They should be funding the sorts of social businesses which have the potential to change the world—and I believe this is what some of their clients truly desire.

My suggestion that they consult with their investor clients may add costs—but this is not very different from the costs added to listed businesses compelled to pursue stakeholder engagement. We must agree these are both similarly worthwhile. Those investment organisations which do this (probe stakeholder views) well, and act accordingly, will win the favour of their socially-oriented investment clients and probably see their market share increase. Those who did this badly will perhaps suffer.

Thus far I have not suggested such engagement be obligatory–my views on this are not yet formed. I would, of course, prefer this were done voluntarily. However, there is some precedent for mandatory action in this regard. US brokerage firms are obliged to determine their client’s risk tolerances. Clients did not ask to be so surveyed, but the firms are required to do so and clients wishing to transact have no choice but to answer these questions. Does this not argue in favour of some assessment of investor’s ethical desires for those who have actually voluntarily chosen the ethical/responsible route? Should this not be part of the “know your customer” rules which operate in the industry?

I look forward to the debate later today. I also am keen to engage with the industry about how this can be best pursued. I do so not in order to compel them to invest in Catalyst Fund 1 (a fund which seeks high financial returns by investing only in social businesses), as some suggest (I am Founding Partner of Catalyst). To the extent I do have an ulterior motive, however, it stems from my involvement as CEO in ClearlySo. The 400+ companies on the site need capital and I think the socially-oriented investment community is exceptionally well-placed to provide it. For being assertive in advocating their interests I make no apologies.

To find out about this campaign and what you can do as part of it, please email me at rod@clearlyso.com

Rodney Schwartz

It has to do with the latest proposal of Social Finance, likely bidders to become the Government's appointed Social Investment Wholesale Bank, the Social Impact Bond (SIB).  The architect of the SIB is Toby Eccles and I have to say it seems a rather good idea to me.

The details are sketchy but it works something like this.  A bond is by investors (probably Charitable Foundations) with an interest in achieving positive social outcomes and the payment they receive will vary in accordance with the outcomes secured.  The funds will be given to "service providers" to "invest" in public services.  Their role will be to meet some target (such as reduced reoffending rates for short sentence offenders) in doing so.  If targets are achieved the Foundation will receive a portion of the Government's savings--paid by HM Treasury--if not, well it is money the Foundation would have spent anyway, to try to achieve it social objectives.

By zeroing in on actual Government savings the SIB addresses a key problem in state expenditure--investments which can have impact are rarely undertaken, because the benefit is spread across departments.  By working directly with the Treasury, Toby and his colleagues are onto a potential winner and deserve our praise (congratulations to be withheld until the first bond is launched and track records established).

One oddity however needs resolution.  The idea that Foundations benefit from the savings seem fine, but a bit strange.  The benefit should accrue to those with the greatest incentive to achieve it--the Government.  I believe these SIBs should be Government issued debt, on normal commercial terms, to traditional institutional investors.  If social targets are achieved then HM Treasury can pay something extra to investors which represents a portion of the savings (resulting anyway in lower Government funding costs).  Eventually, if the service providers are able to prove they save the Government cash, then the coupon on these instruments will also be issued at below market rates.  HM Treasury cannot lose, as it will only pay out extra a portion of real cash savings.  A win-win, which we clearly need more of in these fiscally constrained times!  If Foundations wish to use their monies to catalyse such activity in the sector they can make payments to investors conditional on results, cutting funding costs even farther and hopefully thereby increasing public sector investment.

I may have my sums wrong, but this feels potentially very interesting--with lots still to chew over.  Well done Toby and good luck!

Rodney Schwartz

Charles Mackay in Extraordinary Popular Delusions and the Madness of Crowds wrote in the nineteenth century of the irrationality of crowd mania. The Wisdom of Crowds, published this century by James Surowiecki, states that the collective intelligence of groups of people is greater than the individual. ‘Collective stupidity’, conversely, is the tendency for mass collaboration to dilute bright ideas to the lowest common denominator. Crowdfunding, whether it’s the latter or former or both, has the proven ability to capture the imagination and pockets of a disparate bunch of individuals worldwide.

My colleague at ClearlySo, Rod Schwartz touched on ‘crowd-based initiatives’ in his blog back in May. Expanding on this theme one comes across a spread of sites dedicated to the struggling entrepreneur. Kickstarter is ‘a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, explorers…’. ChipIn embeds a widget on your homepage or favourite websites to promote your cause and collect cash as widely as possible. With Sellaband you can help your favourite cash-strapped amateur musician record an album. I’m keen on BeerBankroll - a $50 buy-in means you will be ‘living the ultimate dream’ of helping establish a community managed brewery.

On a more intellectual tangent, Cquestrate is attempting to find an answer to the challenge of reducing carbon in the atmosphere through a simple and ingenious idea; they have made the project open source, which is smart and common sense. This system of connecting lots of clever brains on a single goal is the central theme of the book Wikinomics. It cites examples of large corporate's reaching out with a problem to the web and successfully recruiting the solution from a mass effort.

This ‘hive-mind’ approach to puzzles of enterprise and intellect has a promising track-record. It brings together collectives with a common passion from music, to charity, to film to science. Financially, the funders sink or swim with the failure or success of their investment and this shared purpose engenders a virtual camaraderie.

If you are a social entrepreneur, you should be excited because it provides a technological lifeline to the ideas which can’t access traditional funding. The power of social networking has enabled this financial democracy to flourish. The Age of Stupid for example has already raised £850k and maintained its independence on distribution rights.

If I were to take a punt over where this is headed I would say it’s certainly likely to become more popular and professional with the evolution of the web. It will also likely cover an ever wider range of sectors and interests. And, given the money being pumped by Western governments worldwide towards creating a Social Economy, social enterprise will surely benefit.

If you have a eureka moment but nae cash then why not try yoking your friends and colleagues together and making them stump up. At least this way you’ll avoid the bank.

Alex  Scott-Tonge

First, the "third sector" is really a miserable term; it conveys a sense of something that is not even second best, but THIRD.  Third is not a thing to be.  Few countries strives to get into the Third World (now so bad as to be politically incorrect), few football clubs seek to be in the Third Division and getting a "third" in a UK university is not considered a very good result.  I do not want to be in the Third Sector anymore.  I like his new term, the "Social Sector", which is what we are anyway.  (Apologies to Third Sector Magazine, for whom I sometimes write!)

What singles us out from other sectors of the economy is our focus on the social (or ethical or environmental) benefits we generate-so why not call us what we are.  The Government and the Corporate sectors can then revert to what they are, and nobody gets to be "first".

I especially like the fact that Maude suggested this change despite the fact that people are getting used to the term Third Sector.  We at ClearlySo believe that words have meaning and nuances which are important.  By promoting our sector to parity with the others Maude is making an important statement.  We recently posted about this semantic debate in A Social Business World Divided by a Common Language.  We argued for a marketplace of ifeas and the absence of an orthodoxy of terms.  When better ones come along, we should feel free to junk the old.  Well done Francis--a good start for the possible Government and our potential new minister.  This is no disrespect to Angela Smith who gave an impassioned, well-organised, thoughtful and action-packed presentation herself, as the current Minister for the Third Sector.

It is nice to have two competent Government officials fighting over us!  I do hope it lasts.

Rodney Schwartz

Since 2007 we have been organising trips to learn from and celebrate the best of social business and enterprise from around the world.  Beginnning with the Balkans, we moved to Thailand, Mozambique, Canada and Sri Lanka, among others, to learn from some of the world's great practitioners and shout about their successes.  ClearlySo hopes one day to have full operations in these and other countries but in the meantime our blog series will have to suffice.  It is by coincidence that as I sit here in Germany, attending the annual Global Economic Symposium in Ploen, that we have launched ClearlySo in Germany.  (YES IT IS A COINCIDENCE!)   Produced by one of our outstanding interns, Hans Schmucker, and co-authored by another, Julian Sartorius, it covers a few interesting stories, with more en route, and breaks new ground with video interviews (translated into English) of the CEOs.  I hope you enjoy the blog--having met some more interesting social entrepreneurs in Germany (betterplace.org and DESERTEC among them) I am sure more stories will follow.  It reinforces the notion as well that far more is happening on the Euopean continent than many realise.  I hope readers do enjoy this and the other "ClearlySo in..." blogs.  Please contact us with any suggestions for interviewees and themes!

 This is not a group I normally meet. Nevertheless, as a conference focused on practical solutions to global problems, it would be surprising if social entrepreneurs did not play a bigger and bigger role here in the agenda over time.  I cannot capture the many profound insights all in one post.  However, my colleagues and I agreed one of the stars of the show was Trevor Manuel.  Former Finance Minister of the South Afrcan Government (1996-2009) he was exceptionally profound--and uniquely (this is not a meeting where brevity prevails) brief--he offered seven gems which summarised our problems of today:

We have:
1) globalisation without governance
2) consumption without replacement
3) agreement without enforcement (a la Kyoto, fishing policies, etc)
4) accumulation without accountability
5) research without conscience (the drug companies)
6) decisions without content (witness most multilateral meetings)
7) knowledge without wisdom

Much to chew over.

Rodney Schwartz

It is a meeting held by the Kiel Institute for the World Economy, one of the five institutes which formally advise the German Chancellor, Angela Merkel, and the only one focused exclusively on global economic issues.  Its ambitious Director, Dennis Snower, has formed the GES as a more proactive meeting of global bigwigs from commerce, finance, academia, government and policy-making; its thrust is solutions.  This is in contrast with the more common fora whose output tends to be great quantities of hot air and western media-oriented photo shots.  Ten of us will be there to throw social entrepreneurship into the pot.  These include Sergio Arzeni from the OECD, Stephan Breidenbach from betterplace.org in Germany, Ray Fisman from Columbia University in New York, Nejira Nalic from Mi-BOSPO in Bosnia-Herzegovina, Samantha Morshed from Hathay Bunano in Bangladesh, Alex Nicholls from the Said Business School in Oxford, Max Schoen from DESERTEC in Germany, Bill Young from Social Capital Partners in Toronto and me.  What is significant is that social entrepreneurship was not on the agenda last year and now it is playing a prominent role.

What explains the change?  I have two candidates.  The first is that the practical orientation of the GES has forced its own hand.  What I mean is that they have established a reputation as being solution-oriented; a very brave claim indeed.  However, the solutions published following the last symposium were rather general.  Given the focus on practical solutions to global problems it was inevitable that the GES should find its way to the social enterprise and investment movement.  Where else to turn for solving social problems in the modern, fiscally-constrained world?

These fiscal constraints are my second candidate.  When the panellists for GES 2008 were being identified back in 2007 we were in that blissful era preceding the explosion of the financial crisis and its significant fiscal fallout.  Thus back then there might have been some expectation that government would be a substantial provider of funds to support solutions.  These days are gone.  Government still has many roles to play but, although as a funder it may have long arms,  it also has very short pockets.  Social business, enterprise and finance have the possibility to plug this gap.

Preparation for the GES has been interesting.  Normally one writes a speech or puts together a PowerPoint presentation—sometimes just a few days beforehand.  For this conference they expect panellists to upload supportive documents, state the challenge to be addressed, propose solutions and then debate them in a virtual forum, assembled by the GES.  The actual debate on the day is really a debate, not the more standard (and very dull) re-statement of existing positions—and the best solutions will be voted upon!  This is quite a bit to demand of speakers, yet the GES has succeeded in securing an extraordinary number of CEOs, Nobel Laureates, senior government officials and the like.  They have also put them all to work!  Some might find this all to be absurdly ambitious—but is the world not in a bad enough state to warrant such a format?  It is encouraging how many delegates are rising to the challenge.    

I hope the ten of us do not let down the sector in our introduction to the GES audience!  I also hope we are able to make our solutions as practical and “doable” as possible and that these might receive support from the GES community.  If not, I hope we are able to contribute usefully to the broader debate by being practical and positive as well as social and entrepreneurial.  Anyone wishing to know more about this strange but exciting new forum, please comment on this blog post or email me at rod@clearlyso.com.

Rodney Schwartz   

In a recent discussion posted on Social Edge I used the term "social business" to describe as part of my initial post.  This was challenged by one commentator who said our definition was "totally UK centric and, in many respects, unhelpful to others outside the UK".  When I pointed out that the terms social business or enterprise were no more or less parochial than the term "not-for-profit", which Americans use freely, and without regard to national sensitivities, this particularly gallant individual was extremely gracious in his reply.  The point here is not to brag about a small point won, rare though that may be, or to compliment a particularly noble commentator, but to directly address the vexing question of language and terminology.  No issue seems to occupy people in our sector more than language and the definition of terms.  I have always found these debates rather wasteful and a bit sad, but wanted to delve into this a bit deeper to see if something useful can be gleaned.  If you share my fascination or frustration with the time we spend on "terms" than join me and read on.

Firstly, it needs to be clear that a certain amount of defining is essential.  Whether we are speaking amongst ourselves or to outsiders it is incumbent upon us to say what we mean when we use terms that are not part of common language.  This clarifies our approach and our bias and is a matter of common courtesy and professional integrity.  At ClearlySo, right off the homepage, we have a button which links to our definitions called "What actually is a social business?"  We use this term (Social Business) instead of others because we generally accept others’ definitions when it comes to concepts like "philanthropy" or "social enterprise" but have worked hard to define a social business as we use it on the site and in our business.  This is explicitly NOT because we believe our definition to be "the final word" on the subject--far from it.  We simply think our readers deserve the courtesy of knowing where we stand and also that as a participant in the sector we should help to participate in moving things forward.  On the specific question of what is a social business we felt there was a great deal of ambiguity in the UK--we felt obliged to make a contribution.

We have been approached by folks associated with the Nobel prize-winner Mohammed Yunus, the founder of microfinance.  Our definition of social business disagreed with theirs and they were advocating their view.  The fault line had to do with profits and the very nature of the organisation.  In our definition, profits to investors are OK and the ultimate purpose of the business may be financial as well as social--in the world of Yunus this was not acceptable--the business needed to be predominantly about social impact.  We agreed to disagree.  Apparently those in the Yunus-phere are keen to convert others to their view.  Our approach is different, we feel compelled only to define what we mean, in a way which suits us and our purposes.  If others have definitions which work for them--great.  Frankly, if their terms suit our needs better than ours we would gladly replace our own.

I do wonder why people have so much invested in our definitions of terms.  Partly it may reflect our passion for the sector.  On some level, it may reflect business interests.  How things get defined may impact business and funding opportunities.  I think on some level it is evidence of a desire to control.  Having defined something and then working to that definition, I suspect many are enraged at the loss of control that comes from a redefinition.  We have called the investment in unlisted social businesses “social venture capital”.  Along comes the Rockefeller and the Monitor Group and they use the term “Impact Investment”—how enraging!  Once we calmed down though, we realised it was simply a superior term and adjusted accordingly.  Such progress is to the good of the sector.

One respected expert in the field said, according to another observer, that “"we don't need more terms, we need a common understand of the terms we have."  Apart from the appalling English such a statement reflects a common desire to have all things rest after one particular individual has arrived at his definitions.  I can imagine the guardians of Webster’s Dictionary were aghast at the conversion of “understand” from a verb into a noun.  There is an understandable desire to see these last for eternity, I imagine, but this is not in the broader interest of our sector.

Our difficulties exist despite the fact that many of us operate in English.  Even in the English language meanings can differ greatly when used in non-English speaking countries.  For example, the term “social economy” has a very different meaning in the UK than in Germany.  And the term “social business” has a very negative connotation in Serbia, where it has certain political undertones.

Despite all the above, I would not call for an attempt at harmony.  A free and open marketplace of ideas is the best way to move things forward—from a linguistic and a practical standpoint.

iRodney Schwartz   

Last week I met with a key professional from the Socially Responsible Investment (SRI) fund community.  His organisation is one of the leaders in the City, and my colleagues had approached his firm seeking investment for Catalyst Fund 1, the venture capital investment fund which strives for high investment returns as well as significant social impact from investments into private companies.  His answer, to paraphrase, was "we would love to try to help you but it is pretty much impossible for us to invest in such vehicles".  SRI funds, you see, are only able to invest in large, liquid exchange-traded shares. 

I had a sudden flashback- this was almost exactly what his predecessor said approximately seven years ago. 

Back then it sounded a credible problem which needed addressing, this time it sounded either like an excuse or a testament to the industry's laziness and inertia. It began to dawn on me that perhaps one of the core reasons for the lack of progress on impact investment are these institutions who manage SRI funds and refuse to back smaller, younger social enterprises and businesses. 

This behaviour has actually slowed (possibly severely) rather than accelerated the development of the social sector, as these funds have hoovered up the capital of socially minded investors and then backed traditional companies.  Thus, rather than lead, the SRI funds have been a hindrance.  This is an an appalling indictment for a sector which uses the term 'social' or 'responsible' in promoting itself.

First a few caveats.  I believe my views may be especially applicable in the UK marketand perhaps less valid elsewhere--I welcome comments which set me straight on this.  Also, I will not mention the name of the individual I referred to above; he is one of the "good guys" in the sector and is more likely to change this situation than let it persist.  I mention this particular anecdote only because it was the 'straw that broke the camel's back'.  Also, readers may decide that this blog is just a gripe from someone whose fund was turned down.  This is possible, but a bit harsh for a few reasons.  First, I suspect that in the end this investor will invest in the Fund--getting around internal restrictions in a clever way--they have done this sort of thing before.  Secondly, Catalyst Fund 1 is making good progress elsewhere.  The sad irony is that UK SRI funds have represented the most resistant audience.  Other mainstream investors, who do not describe themselves as "social" or "responsible" are far keener than the SRI funds because of the investment practices of the SRI community which, when it comes to "impact investing" are well behind most of the industry--this is very bizarre.  Lastly, I sat on the UKSIF Board for four years, from 2004 to 2008, and had little impact myself in changing this practice.  UKSIF is the trade body for the SRI industry--thus a fair criticism could be, "why haven't you changed this when you could have done so?".  We were not marketing a fund in those days, and the full picture has only become clear to me recently--but these are poor excuses, mea culpa, I should say.  Nevertheless, these caveats do not change the facts--the SRI industry in actually holding back high social impact investment in the UK.

This is despite the fact that SRI is booming.  A recent report by Booz Allen and Robeco noted that the "responsible investing" (RI) market would reach $26.5 trillion worldwide in 2015, or 15-20% of total global assets under management.  The RI market has been growing at 22% annually since 2003, more than double the 10% growth overall, acording to the Booz Allen/Robeco report.  Thus its failure to undertake high social impact investment is not due to its troubled past--in fact, my suspicion is that its success has led to a tragic conservatism, with the result that its portfolios continue to match the investment mainstream, whereas the investment mainstream is looking to become more social.  The lethargy of the SRI community in this regard is, in part, explained by its success.  Rather than upset things and go to the forefront of the space, the community has been satisfied to rest on its laurels, successes and profits and not do anything which may "upset the applecart".  As SRI funds are the vehicle of choice for socially minded investors, by sitting on their hands this way the SRI industry is actually blocking the development of the social business sector, thus making it more difficult for the sorts of businesses that, as they mature, would be exactly the kinds of companies we need to encourage, and they should be investing in.

Such a circumstance will not persist for long.  Eventually the extra fees SRI investors pay, especially on the retail side, will be challenged if SRI portfolios remain indistinct from those of the mainstream--and the rapid growth will be arrested.  It is outrageous that it has persisted for this long.  Thematic investment firms and products, such as those investing in cleantech, microfinance and other niches will pass the SRI movement by--and this will be a just punishment for its conservatism.

I feel particularly bad for the employees of the SRI units.  They are often terrific, sincere people who join the SRI community in order to make a difference.  They believe that by making investment more social they will be doing their part to change the world.  In reality, they are often making fine distinctions between one or another large cap stock which inevitably dominate their portfolios.  How deflating!

The SRI has its reasons to feel proud however.  It put social issues on the map and has helped make investors and governments more conscious of the importance of responsible investing.  Now it needs to show some leadership or fall into the category of those it often criticizes.

Rodney Schwartz

Hands up if you know what a CDFI is

I confess that I didn’t until recently. Community Development Finance Institutions may not have the snappiest name but they perform a very important function, providing responsible finance to people and businesses that banks and building societies won’t lend money to. What distinguishes CDFIs are a personal touch with customers, a robust attitude to risk, and a determination to make responsible loans available for all which make them a very ’social’ kind of business.

I caught up with Katy Ford who runs Foundation East, a CDFI which covers the East of England. She tells me why they have loan sharks in their sights, and dispenses some common-sense advice for bank managers.

Why are CDFIs so important?

Katy: They fill a gap between mainstream and non-mainstream financial services; the average person on the street can get a bank account and credit if they have a history that can be evaluated by the bank – but many have either no credit history or a poor one – like bad loans & credit card debt. These people are refused by the banks and often forced into the arms of unscrupulous lenders, mostly with disastrous consequences. Something has to be done to change that, otherwise the chasm between haves and have-nots simply widens. That’s why CDFIs are so important.

Foundation East is a local lender and a mutual society that lends to both people and businesses based on what they can realistically afford to pay back. That can sometimes involve not just a frank look at the business’s cashflow but also the personal cashflows and expenditures of the people who run it, recognizing that they also have to manage themselves financially.

Do you have high default rates on your loans?

Katy: We do, but that’s the risk you take. Foundation East’s portfolio at risk is in the region of 25% - versus 13% in a typical bank. As you can imagine, we’ve had lots of activity in the last eighteen months as ‘lenders of last resort’, which has meant that some 30% of our debt has had to be written off. We are at the risky end of the risk business; we manage that risk and we make provision for it. That means our costs are high and will be so in the future.

How do you know Foundation East is making a positive difference?

Katy: We’ve been lending since 2004, since when we’ve enabled 192 jobs to be created, 183 to be saved and 75 new businesses to be started up. Our core activity is business lending to people who have effectively been redlined by the banks. Not all those businesses are still around – some of them failed - but we did enable people to start a business who otherwise would never have had the opportunity, and that’s important. We generate opportunity and aspiration where none exists; money does sometimes get written off, but lives have been improved and self-esteem boosted. You can’t quantify that positive aspect, but it’s definitely there.

We also lent almost £71,000 in personal loans last year to people who might have otherwise have gone to a loan shark, so there’s another positive outcome.

What do you do differently to banks?

Katy: We offer an intensive support programme to our loan clients. Each region has Loans Officers who work really hard to build old-style bank manager relationships with clients: it’s all about open, honest and transparent communication. They are on first name terms, and they have a proper understanding of their clients’ circumstances - that approach allows for true flexibility when they’re repaying money. We will pursue individuals who decide not to pay, sometimes to the fullest extent provided by the law, but we are always prepared to listen and negotiate.

Do CDFIs get to influence mainstream bank policies?

Katy: We don’t actively influence them, but we do work closely with them – after all they provide us with many of our client leads. Some regional bank managers do try to embrace a more personal approach to banking and are more customer-focussed than others, possibly as a result of doing business with us. It’s important to remember that CDFIs like Foundation East are not competition to banks; we’re an ‘add-on’ not an ‘instead-of’. If banks refer their “can’t do’s” to a responsible person who can, like a CDFI, the loan sharks don’t get fed, and that’s a good thing.

What advice would you give to the banking sector?

Katy: Get to know your customers – and their businesses – better, and look hard to see the people and not just the numbers.

What could Foundation East be doing better as a company?

Katy: Talking more about what we do as a company and as a group (CDFIs); we don’t do this enough. CDFIs need to be more transparent about our operating practices - and acknowledge where they can go wrong - so we can improve them. We do have higher loan default rates than banks, but that’s for a good reason; we take a punt on people when the bank’s ‘computer says no’.

Many thanks to Katy for her time and views. Do you run a social business? Get in touch (tom at clearlyso dot com) if you’d like to be featured in our Social Business Spotlight.

Tom Mansel-Pleydell
 

Last night, several of us were invited to the launch of the UK Government’s Social Investment Wholesale Bank (SIWB)–quite a mouthful. Readers of this blog know that I am often critical of yet more cash coming into the sector. One feels there are other worthier causes and perhaps there is already too much cash chasing too few good deals. Yet that “train has already left the station”. There will be an SIWB of some form and Angela Smith, the new Minister for the Office of the Third Sector (OTS), argued persuasively that a bit of capital into this area would unlock much more–perhaps she has a point? Moreover, as an adopted Brit, I am rather proud the Government is taking the lead in such an important area. But the question remains, will the Government really be willing to listen to the sector and work with participants in order to ensure the capital is used in the most effective manner–or has the deal been done, the key players chosen and this exercise just part of a pretend process–hardly a rarity in politics?

The key question I have is whether it makes any sense at all for all of this cash (estimated to be at least £250 million) to be awarded to one player. Concentration in financial services has hardly been given a good name of late–why replicate this with a new monolith in social finance? What if “the chosen one” is not well run–will that not do irreparable harm to the sector? Also, if there is one winner, the losers and others will ask if the process was fair and open from the outset–and griping will be nearly certain, potentially undermining the effect OTS intends.

Most critically, it seems obvious to me that the Government would find the money far more effectively invested if it were spread around. Apart from my own possibly selfish interests in seeing this happen (as a Director of ClearlySo and Catalyst Fund Management & Research), is it not obvious that competing social finance firms offer the best chance of creating a vigorous and self-sustaining sector? Will this not be the best way to catalyse the many social entrepreneurs operating in this space–instead of a few? How on earth do you compete with such a beneficiary of state largesse? Has not Ronnie Cohen himself, Chair of the Commission on Unclaimed Assets, argued repeatedly for many players as the key to the sector’s ultimate vibrancy. He is right and knows this from his experience as one of the pioneers of the mainstream venture capital industry in Europe–and has said this about the now emergent social venture capital industry. Lastly, given that the SIWB will operate in areas such as market-making, is not the idea of one sole giant absurd? How can we best insure liquidity without having competing market makers?! This need for competition is true across the economy, it is certainly true in financial services and it will inevitably be true in social finance as well.

One final thought. I have to say that the folks from the Civil Service I have met so far and are active in this area are high-quality and have the best of intentions. Similarly, the Ministers for the OTS I have met (Ed Milliband, Phil Hope, Kevin Brennan and now Angela Smith), although a bit too numerous for our liking, seem to be of genuinely high calibre, well-intentioned and sincerely interested in trying to do their best in an area where Britain truly leads the world (in contrast to some of the other more doubtful claims). I may be a pathetic and hopeless optimist, and perhaps my naive good faith will be proven wrong, but I believe that in this area they seem willing actually to listen. Certainly the language yesterday suggested this to be the case.

Now the burden falls on us. If we are going to moan after the fact–far better to do so now when it might have an impact. If the Government says “tell us what you think”, let us as a sector seize the chance. Lets not muse afterwards about the letter or email we could have written, the call we could have made, the argument we could have put forth–do it NOW! If we believe Britain can lead, and we have at least several interests in ensuring this is the case, lets give those advising the politicians in the civil service the best advice we can. In short, lets make this work.

Rodney Schwartz

Sometimes things just happen in a way which loudly call differences to your attention. I was sitting in a coffee shop waiting for my meeting with Charles Middleton, UK CEO of Triodos Bank. I happened to be reading the FT (as one does). Just before Charles sauntered in I was clipping an article about 3i, the UK private equity firm. As I was tearing the article from the “pink paper”, I did not know what my next blog post would be–by the time our meeting ended, there was no doubt. It would be about values and how, in the future Social Economy, they would be a critical differentiator for financial firms–and it would even impact financial performance. So what does this have to do with 3i and Triodos?

For those of you who do not know, Triodos is a bank. It takes in deposits, makes loans and engages in some corporate finance and venture capital activity. Charles runs the UK subsidiary of a Netherlands-based bank, which has been going since the 1980s. But it is a bank with a difference, it is values-based. It runs itself on the principles of the Anthroposophical Society–some describe it as an ethical bank.

Charles from Triodos did look a bit tired. He claimed to have had the flu (swine perhaps?) but it also seems business volumes were very strong. Not only was demand good (business had hardly ever been better) but the pricing of loans was improving. This is unsurprising as the mainstream banks have been withdrawing liquidity from the commercial market and becoming far more risk averse. I always love it when banks do that–they seem inevitably, with few exceptions, to shut the door only after the horses have bolted. I guess in this period of near financial collapse, banks are slamming that old door shut with particular vigour! What ridiculous timing. Loan demand is now strong, margins are better–yet they are becoming risk averse.

What about 3i? Well the headlines suggested great progress by the company, “3i Achieves Goal of Halving Net Debt to £1billion”. Please do not ask me why a private equity investor has any debt in the first place. Private equity is a risky asset class and funding such illiquid assets with debt seems bizarre to me–but lots of behaviour of this type was unearthed in the recent crash. One cannot fault 3i’s new CEO, Michael Queen, for paying down debt he inherited–by definition, if margins are wide for banks, then borrowing is not a great idea–especially if your assets are illiquid. But here is the clincher–investments fell 82%! So now that prices are low, an investment firm is REDUCING new investments. Isn’t this the time to be increasing investments? Well, not if you have debt to pay down, I guess. So 3i, which as a private equity firm should possess financial acumen, is engaging in investment behaviour which one might describe as that of a classic amateur investor–it is selling low (yes, it disposed of assets) having invested quite a bit “high”. In fact, if I think back over the past decade or so, 3i may have done this sort of thing before–zigging when they should be zagging.

I will not belabour this point–we all make mistakes–and 3i is far from the sole culprit in this financial mess. But I think there is also a point is about values. 3i is about profit (at least in theory!!). When they thought there was money to be made, they chased deals–right up to the top. Now they, like other mainstream financial firms, are paying a hefty price. Triodos is indeed a commercial bank, it seeks to generate and grow profits, yet that is not its only value. It is also about building long term relationships with customers, it is about being sustainable and backing sustainable (and green) businesses–and not engaging in speculation to generate every last penny of profit. The result is that when the crash began they had no liquidity crisis and now that its clients need money–they are there to provide it. “Simples”–a certain meerkat might say (sorry, that joke only makes sense in the UK).

So the bank that practices the values of the Social Economy, where financial and social returns are both sought, has happier customers and better business growth (although a slightly tired CEO!) and other financial firms are forced to reduce investment despite lower asset prices. Interesting this social economy–higher social AND financial returns!

Rodney Schwartz

This vied with with the etymology of the name “Saab” (Swedish Airplanes AB, set up in 1937 to build up Sweden’s war effort) for “fact of the conference”. While knowing how the name Saab arose is interesting and will give me something to say at any upcoming cocktail party, I feel the high proportion of female MPs in Rwanda has more profound implications and may foreshadow a pattern we will increasingly see as we enter the Social Economy.

It is worth noting that not only have women come to dominate the post-crisis political world in Rwanda, but the country has made an unbelievably remarkable transition since the sectarian bloodshed of the 1990s. Perhaps the nation turned to women as they had far less blood on their hands? I cannot say and would not presume to be able to offer any authoritative answers, but we can speculate. I do wonder if also the nation felt, that in the aftermath of the genocide, women were perhaps a much safer bet. After all, there are very few (are there any?) instances in history when large bands of women go on a senseless murderous rampage. I have a suspicion that following on from this appalling catastrophe, women seemed a much safer bet.

Although far less tragic, cataclysmic financial developments in Iceland are also interesting in this regard. This small economy and its financial system simply melted down as a result of what appear to be “cowboy practices”. It is not also of interest that, in response, women have seized (or been given) all the senior positions in politics and finance? A fascinating pattern or just an unrelated coincidence. It is not clear.

Tallberg is about 50/50. I have been told it is a matter of policy–which I cannot confirm. What I can say is that this figure seemed accurate, based upon my unscientific analysis of the attendees (and the speakers, of whom the most famous was the Norwegian politician, Gro Harlem Bruntland). The conference hardly suffered as a result and is many ways was far more refreshing than the male-dominated affairs which seem the norm.

As I consider the leading lights in the UK social business sector, the large percentage of females is also notable. Cafe Direct and Divine, both leaders from the fairtrade sector, are managed by women. Abel & Cole and Organix, two highly successful commercial social businesses from the food sector, are run by women, and the most successful social business dotcom, Justgiving.com, is run by two women. I could go on.

The point is not that men cannot run great social businesses and enterprises–they do in abundance. What I do observe is that the world is less male dominated than the “mainstream” where I spent most of my career. If the mainstream economy has stumbled, in part due to the overly strong focus on profit maximisation at all costs, then I have written that the Social Economy will contain a greater balance of objectives. Women are often considered, by most stereotypes, to be better equipped to engage in this delicate balancing. I am not privy to research on whether or not this is “true”, but if it is, then it is unsurprising we see more women in the Social Economy. Reserach also seems to suggest that they deal more easily in conflict situations, or cope better with stress, and lets face it, these are stressful times. Possibly on a deep psychological basis, this crisis causes us to seek some “maternal” reassurance? If so, we can expect an increasingly percentage of women to come to the fore as the economy becomes more social.

Rodney Schwartz