Microphilathropy is an approach to philanthropy based on smaller, more direct interaction between those who are in need and those who can give. Platforms such as Kiva, DonorsChoose and Facebook Causes have the ability to aggregate thousands of relatively small donations to make a big difference.
I had the honour of presenting at Social Venture Partners Toronto's panel discussion on, "How Microphilanthropy Is Changing Giving".
This white paper was prepared by MaRS and Ogilvy Renault LLP with the primary objective to increase capital directed at the community for delivering social and/or environmental benefits and two secondary objectives, to simplify and clarify the legal structures and permitted activities by creating a new form of legal vehicle and to provide a brand for social enterprise, social finance and community benefit, thus providing legitimacy and enhanced profile for such activities.
For many of you who read this blog, the Social Capital Partners story will be familiar to you. On Wednesday, I had the opportunity to hear Bill Young speak, and once again I was inspired, and I thought - this is a story worth repeating.
Bill Young came into a lot of money at the time of the technology stock frenzy, and he used it to found Social Capital Partners in 2001. He wanted to figure out the answer to the question “is there a way to harness market forces to do social good?”
Matthew Bishop and Michael Green have recently written an excellent article for the Innovations Journal titled "The Capital Curve for a Better World". The article is part of a volume prepared for the Tech4Society hosted in Hyderabad, India and offers compelling insights on social entrepreneurship and technology from leaders in the field (view the table of contents or full publication). Bishop and Green are also the authors of the recently-penned Philanthrocapitalist Manifesto, which proposes a number of 'radical' policy changes for the UK.
I recommend reading the entire article, as it spans important issues and opportunities around financing social innovation. There are several examples that illustrate the essential building blocks of a social capital market, and how they have - or can - be implemented successfully. A key theme is linking finance to the right kind of organization structure at the right time - and that this requires a more sophisticated understanding of social impact and metrics. On a related note, intermediary organizations can and should play a vital role in connecting demand and supply for social investment, but there is more work needed to build the right incentives and funding to establish and sustain these intermediaries.
The financing problems of social enterprise in Canada are well-known. Banks have difficulty extending commercial loans to social enterprises because they lack the security of hard assets, and private investors can't take ownership positions in businesses that -- as non-profits -- have no owners.
Yet there are fledgling models in Canada that have overcome these barriers. The Candian Alternative Investment Cooperative (CAIC), Access Toronto, Jubilee Fund in Winnipeg, and community loan funds in Montreal and Ottawa are some of the innovations that have successfully brought together socially responsible investors with local volunteers and publicly-funded agencies. The result is jobs and economic opportunity for low-income people in these communities.
The challenge now is to scale up. Is there a way to create an investment product that would attract not just thousands of dollars, but tens of millions of dollars to the social enterprise sector? As communities across Canada struggle with the effects of the current recession compounded by years of economic and social neglect, the need for such an investment vehicle has never been greater.
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Michael Lewkowitz on A Community Enterprise Corp for Ontario? A Response
Mar 09, 2010