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I just attended the Skoll World Forum on Social Entrepreneurship in Oxford, England. At the conference, Sir Ronald Cohen spoke of the need for a private equity model that would allow investors to back and build substantial businesses that promise a financial return plus social returns (increasing employment, role models, flows of capital, perhaps increased tax revenues, etc). The metrics around social returns, he said, are crucial to ensuring the true building of this market; otherwise, we will find it too difficult to connect with deep pools of capital.
His solution? To find ways of insisting on scale in everything we do. He argued that we need to establish in each country an institution that is expert in the area of social financial capital that can help build this sector into an asset class so that a wealthy family, pension club or foundation can choose social private equity as another investment option.
I agree with Cohen and would add that we need not only to measure social returns more effectively but that we must build scalable institutions. To do the latter effectively, we also need a better understanding of different classes of investors - their risk preferences and return thresholds. We also need to improve our ability to discern between classes of social investments and their relation to other sectors. Health prevention, for instance, typically will not be driven solely through private markets (nor should it be); moreover, the marketing costs associated with encouraging behavior change (so that people use malaria bednets, get vaccinated, use clean water, etc.) tend to be much higher than marketing costs in other sectors. Understanding these nuances is key to building effective business models associated with using entrepreneurial approaches to solving problems of poverty.
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Hi Jaqueline,
Were there any examples of the kind of social return metrics Cohen thought would work? For example in microfinance, some focus on getting people over the earning $1.00 a day mark to prove they have lifted clients out of “poverty”, but other find this misses the point entirely.
On the issue of scale, did he give examples of what he thought met his scale requirement? Again, in microfinance the easiest way to reach scale has been to piggy back of already large instutitions like the Unit Desas of BRI in Indonesia that has now been spun off - would that meet his requirement?
Ruth
Hi Ruth,
First, greetings to you (so good to hear from you!) From my recollection Sir Cohen gave examples neither of social return nor scale. This is part of the problem - we want measures but are still far from understanding which ones convey the most important information. Regarding your $1 poverty line indicator, I agree that this isn’t necessarily a strong metric. I am very concerned by the widening gap between rich and poor; one thing we know is that the relative difference between economic groups is much more important than the absolute level of poverty at the bottom. We know who we are in large part by who our neighbors are. In short, I believe we are a long way from specific measures - especially those that claim to be free of real bias.
I believe the Skoll website has video highlights from the conference, if you are interested in hearing remarks by Sir Cohen or other speakers.
Comment by Jacqueline 04.20.06 @ 10:13 amQ&A: party funding
What are the regulations around party donations? and conference center are obliged to disclose donations of and conference center than £5,000. Donations of more than £1,000 made to local party or constituency offices must also be disclosed. Parties are bound to spend no more than £20m on general election campaigning.
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