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Archive for the ‘Social Ecosystem’ Category

The Macquarie Group Foundation that I chair celebrated its 25th anniversary recently. In celebration, I had reflected on philanthropy in Australia over the last two decades. I had also made some predictions for the future, which I will share again here. This is no tribute to my foresight: the harbingers of change are already evident.

Within a sector that will continue to become larger, I’d expect to see further developments in 3 key areas.

First, I anticipate that the increased capacity and scale of many economically-significant NFPs will see them evolve into true social enterprises. They will retain the vision that inspires their members, donors and volunteers but increasingly couch their benefits in terms of a blend of social and financial value. Already around 20,000 Australian community organisations trade to fulfil their public mission, reinvesting their surplus income (their ‘profit’) into improving their organisational capacity and scaling-up their activities.

Second, I expect to see new investment vehicles emerge to raise funds which will complement the donations of philanthropists. A contemporary challenge, which will be overcome in the near future, is building and accessing a capital market for social impact. Investors need to be able to make low-interest loans to or acquire equity in social businesses. The early signals are encouraging. The Commonwealth has recently announced a Social Enterprise Development Investment Fund and the WA government has budgeted for a Community Development Investment Fund. Both are intended to harness loan capital for community benefit.

The initiatives are intended to corral social impact investment from those who seek not only a modest financial return but an opportunity to do good. This is the bold business model underpinning GoodStart, which has emerged to manage around 600 of the ex-ABC Learning childcare centres. It’s dependent not on government grants and philanthropy but loans which offer lower than market returns. That’s just the beginning. Expect to hear in the near future of new vehicles such as social impact bonds or a social stock exchange.

Third, and in some ways most influential, the measurement of social and environmental impact will increasingly be incorporated into government measures of national well-being. The social costs (of externalities) and benefits (of community activity) will long before 2035 be fully integrated into measures of Australian economic income and growth. The extraordinary value of community engagement will be accounted for in our national statistics. The social economy, and the contribution which it makes to community well-being and civic engagement, will at long last be properly accounted.

Blog coordinator’s note: For info on the Centre for Socal Impact, please see http://www.csi.edu.au/.

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Globalization, long-term demographic trends, changing consumer preferences, and the state of public finances are driving the emergence of an “Impact Economy” for the first time in human history.
   Analogous to the New Economy, the Impact Economy will fundamentally transform business, the public sector, and civil society: A multi-trillion dollar integrated social capital market; companies who seek authentic engagement instead of PR-focused corporate social responsibility; and private risk capital funding the design and delivery of public goods are around the corner.  
   The financial crisis and the recent G-20 commitment to reducing public debt levels will accelerate the transition.
    Many new ventures and projects are under way to cover subsets of the Impact Economy. Beyond philanthropy, take microfinance, bottom-of-the-pyramid investments, clean energy and social investment banking.
   It feels like the early days of a gold rush. As in any innovation phase, some firms will succeed and grow. Many will fail without ever reaching scale.
    Meanwhile, the Impact Economy will change the way we consume, invest, and work.
   For more thoughts on the Impact Economy, see paper.

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The ecosystem paradigm provides a framework for understanding and influencing the forces of change facing the nonprofit sector.

At the core of the social ecosystem are the social purpose organizations and individuals who are helping their beneficiaries, and the capacity builders who seek to help the helpers. Around them are the individuals and corporations in the community, the media, and the government (including its role as regulator) who collectively provide the resources, support, and scrutiny to ensure that the core players function as intended.

Four key enablers of change—culture, leadership, technology, and finance—have resulted in three broad macro-trends in the social sector: the rise of global civil society and its attendant issues; the acceleration of social change through innovation; and the fusion of ideas, models, and practices of the social and enterprise sectors.

Interestingly, the social ecosystem is uniquely positioned as the catalyst of change for the state and enterprise ecosystems. Thus, even as players in the social ecosystem seek to change the world at large, they must realize that they need first to cope with the change drivers and trends occurring in their own sector. In other words, the ecosystem of change has to change itself for the better—at the same time as it goes about its mission of changing the rest of the world.

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