SoCap08 provided all sorts of reasons for optimism about capitalism as a force for social good. A new breed of entrepreneurs is busting through old mental models and market forces to drive results based on the new metric called the triple-bottom line.
My take-away from SoCap08 was the realization that, as essential as the private market is in producing large-scale change, the public sector – government – is just as vital, for at least a couple of reasons.
First, the emerging social capital/triple bottom line marketplace is tiny, a couple of trillion dollars in the 60+ trillion dollar global marketplace. Only governments, in the U.S., European nations and other states, have the cash and policy resources at hand to multiply private sector investment rapidly and at a significant scale. It’s simple: when people begin to act collectively to match their voting and policy choices with their social vision, change will follow. At scale. The New Deal, the Marshall Plan, the G.I. Bill, the Interstate Highway System and the Civil Rights Act of 1964 come to mind.
Second, I’m increasingly convinced that the third or social sector — non-profits — in the U.S. are fatally disadvantaged by the philanthropic system as it’s currently configured. There are simply too many foundations supporting too many organizations with too few resources to be effective in most areas of social policy/social change. Charity has too often become a convenient excuse for individuals, companies and governments not to change their ways directly. Meantime, with foundations and non-profits allowed to pursue an endless litany of charitable ends, the roughly half a trillion dollars that fuels philanthropic activity each year is a mile wide and inch deep. Not a recipe for systemic change.
For me, the sweet spot, the holy grail, is the alignment of our best private sector strategies with our best public policy making capabilities. Let’s use the power of the public purse and policy to lift up and embolden the entrepreneurs who will bake into their business strategies the “charitable” purposes we’ve traditionally reserved for an underfunded, underregulated and diffuse community of non-profits. Sure, there will always be a role for strategic, smart non-profits in areas like human rights, health care and the environment, but to expect them to carry the load while letting businesses and governments off the hook is just madness.
Andrew Wolk of Root Cause gets this. He and a small group of other social entrepreneurs are sounding the call for the alignment of government and social enterprise. Unless and until this happens, I worry that social capital markets will continue to grow but at a snail’s pace, when what we need is the speed and power of a leopard.