SAN FRANCISCO (Thomson Reuters Foundation) - The more than 1,800 social innovators, investors and philanthropists getting together in San Francisco this week have a lot to talk about - from finding money to developing more sustainable business strategies to the vexed question of how to measure their impact, to name but a few.
SOCAP, the annual conference of Social Capital Markets, gets under way on Tuesday - a four-day talkfest to address topics like how to finance health infrastructure in developing countries, investing in women, finding deals and capital in the oceans' sector" and “place-based” innovation and development.
The sold-out conference, themed “Accelerating the ‘Good Economy”, aims to help social entrepreneurs and investors find ways to drive more money towards responsible investment in social good, mainly in the developing world.
"We're more than just a flash in the pan," said SOCAP co-founder and convener Kevin Jones. "Investing for impact and social good will continue to grow because there are so many problems, for example climate change, food crises, unequal access to goods and services and so on that need solving," he told Thomson Reuters Foundation in a telephone interview ahead of the conference.
"The old CSR (corporate social responsibility) thinking of just reducing the bad that your investments do were the dominant thinking when we started," said Jones. "Our goal is that higher, larger goal of growing a market where doing good is what the businesses are about rather than just reducing the bad things they do.”
IMPACT INVESTING IS GROWING
This new social capital market is gaining traction as ballooning deficits, wobbly financial markets and a host of pressing global problems prompt governments, businesses and non-profit organisations to look for deals that achieve a measurable social and environmental impact and a financial return.
According to a recent report by investment bank JP Morgan, impact investors plan to commit $9 billion in 2013, up from $8 billion the previous year and with a predicted market opportunity of between $200 and $650 billion in the next decade.
"Every downturn is good for a new economic model," said Jones. "When we first started it was about 2 weeks after Lehman Brothers collapsed - and I think we had a certain flood of attendees that made the event really happen just because there was a flight to hope.
"We've seen that we've become much more mainstream in this category ... When we first started, people found the concept so hard. They couldn't imagine investing their money in that way."
But what exactly is the meaning of "social" when it comes to social impact, and how to measure impact remain vexing questions for this nascent industry of bringing philanthrophic money to social enterprises. Lack of universal data makes it hard to spot trends and aggregate decisions - and simply counting numbers of people reached does not solve the problem.
PATIENT CAPITAL NEEDED
Jones said seed-stage funding for social entrepreneurs had been growing, thanks to incubators and accelerators such as Village Capital, but that later-stage investment was much harder to find.
“The timing of venture and the timing of impact is not the same,” said Jones. “Investors will get their money back - but they have to be more patient investors because it takes longer if you really want a positive impact.”
The conference, like the social enterprise sector in general, is not short of bright ideas on how to address some of the world's most pressing problems.
SOCAP’s Innovation Showcase focuses on health, clean cooking methods, protecting the world’s oceans and using mobile technology.
Attendees will also discuss strategies to help social entrepreneurs place their products and services in a sustainable way because a great idea - such as the famed silver-bullet to solve sanitation problems or improve the lot of smallholder farmers - is simply not enough to change the world.
Distribution and adoption by consumers are crucial and mean businesses have to understand the local context, and that’s not always a given when many of these bright ideas are conceived at business schools in the West.