SoCap09 Recap

By Karim Harji - September 11, 2009 - Comments

Categories: Finance Models Impact Metrics Public Policy Social Enterprise Responsible Investment National International United States

The recently-concluded Social Capital Markets conference (SoCap09) in San Francisco clearly illustrated the tremendous interest we're seeing internationally around how "money and meaning" can come together. This year, we had a large Canadian contingent present that collaborated around a pre-conference "Canadian Day", where we had an opportunity to strengthen links between practitioners across the country, as well as define policy outcomes and objectives we'd like to see in the near future.

The blogosphere and Twitter continue to broadcast content from the conference, including excellent summaries of the plenary and panel sessions. Here's a couple of notable posts:

In addition to the excellent content above, I think SoCap brought out a number of key themes and questions that are relevant to Canada:

The Role of Government
Over the last few months, and in the lead-up to the conference, Sonal Shah's keynote was eagerly anticipated. For many of us engaged in this space, the move to create an Office of Social Innovation was just another sign of why - despite the financial crisis and subsequent fallout - we can find hope from the Obama administration. Expectations are high, perhaps unrealistically so, especially when we realized that the huge task of moving the social innovation agenda forward was to be implemented by a team of four!

Despite this, Sonal's keynote indicated that there is much already being done, even as there remains much more to do. Several times, she noted that government can't solve problems by itself - it is imperative that it partner with citizens, corporations, nonprofits, and others to address social issues. This role of government as an enabler must be defined by key principles: a defined and limited government role that does not duplicate efforts or replace existing good work; act to fill gaps and build bridges; while remaining flexible in the way it formulates and implements policy tools.

What is the role of government in Canada? At the federal level, there is not yet, I believe, a clear sense of how to engage - which is disappointing, At the provincial level, however, we're seeing some real movement. Quebec tends to be the first place that comes to mind, though "Canadian Day" illustrated the number of initiatives taking place in British Columbia. Ontario is also up there, and other provinces to a lesser extent (Nova Scotia and Manitoba). Despite gaps in representation across the country, provincial and municipal government may continue to be the driver of progress in building the social capital marketplace at the present time.

The Importance of Metrics
Metrics was a word that came up often, and the Metasizing Metrics session in particular was eagerly anticipated - and delivered! Whether we're describing metrics from the investor perspective - highlighting the ability to choose between alternative investment opportunities, for example - or the entrepreneur's perspective - successfully articulating impact to your key constituents, as another example - we need to quickly find ways to develop a shared understanding of what we are measuring, why, and how we propose to do so.

How can existing impact initiatives be aligned? On the international level, IRIS, Pulse, and GIIN are attempting to develop and implement standards. We must recognize that these will likely become influential, and represent opportunities for Canadian institutions to develop and refine them. On the other hand, existing Canadian initiatives such as the Demonstrating Value Initiative and the RISQ framework from Quebec have much merit, and have been field-tested on specific regional organizations. Where we need more effort is around a deliberate attempt to align standards, avoid duplication of data collection, and actually use the data we're already collecting meaningfully.

Facilitating Collaboration
There was much talk about the importance of collaboration, as well as amazing examples from several panel sessions. Despite all the optimism, for me anyway, a number of key questions remain. What, really, is true collaboration, and what are the parameters that ensure that collaboration works for each party? We all know it is important, but when the rubber hits the road, will this collaboration be of the kind that will actually build a marketplace? Or will there be incentives for the marketplace to remain fragmented as each organization seeks to narrowly satisfy its own interests or that of its constituents?

I am hopeful that, as we begin to build an ecosystem, we will build the right incentives to satisfy the needs of the various actors. This won't be easy, and will involve trial and error. However, I believe that there is an increasing appetite for innovative approaches that recognize and reward collaboration.

Growth of Impact Investing
We know that impact investing is on the rise - both in terms of interest, as well as actual numbers and deal flow. We know that the Responsible Investment industry is also growing. What is unclear, however, is how these two worlds can begin to find more common ground and leverage the relative strengths of each other. For example, one of the themes from SoCap last year was around finance (supply) as a driver to build a social capital marketplace - this year, I think, there is a similar message but a number of other factors were also emphasized: the need to build intermediaries and help them mature as the size of, and demand for, deals increases; the importance of building the absorptive capacity of social enterprises for different types of finance; and building innovative financial structures such as "first loss capital" to engage investors with different risk/reward/impact expectations.

As the SRI industry continues to grow, we must find ways to leverage the infrastructure and networks that are being built, as well as ensure that the social finance community is represented. In Canada, for example, we don't tend to elevate community investment as a pillar of SRI in the way we do for screening and proxy voting. Foundations who may want to engage in mission-related investing face a dearth of opportunities that meet their legal and fiduciary responsibilities. However, many groups are actively examining options to bridge these worlds: the Social Investment Organization (SIO), Community Foundations of Canada,Shareholder Association for Research and Education (SHARE), and the Carleton Centre for Community Innovation.

Concluding Thoughts
There's much more to say, and we'll have additional content on this blog next week after the SoCap debrief taking place at the MaRS Centre in Toronto on Monday 14th September. All in all, SoCap09 was every bit as exciting as we expected, and more. So many more people to meet (800+ attended, up from 600 last year), with so many exciting sessions happening in parallel. It's clear that SoCap is the premier conference for those interested in social finance, as the range of sessions and caliber of panelists demonstrates. There's a ton of information to sift through over the next few weeks and months, and I expect many of the conversations from the conference will converge around various blogs, Twitter and the SoCap09 LinkedIn group, and offline.

In concluding, however, one of things that I'd emphasize is that we need to "keep it real". If we don't truly listen to and address the needs of the social enterprises, nonprofits, and entrepreneurs, then all the exciting conversations over the last three days will amount to very little. There are many individuals and organizations that have to face hard realities around finding grants, the right legal structures, appropriate service providers, and much more. Those conversations are not necessarily as "sexy" as the panel sessions at SoCap, but they are very important - and they will define where the social capital market will go today, tomorrow and next week. This is the world that we're all returning to, and these are the issues we need to be inspired to tackle. SoCap's given plenty of food for thought around where we need to go in the next 5 to 10 years, but we need to start building towards this vision today.

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