New relationships between money and what matters

In anticipation of the April 26th conference  ReVisioning Value 2010, Springboard Innovation Founder and Executive Director Amy Pearl shares her thoughts on social profit in an interview with Portland-based Social Enterprises.

Social Enterprises: Tell us about the concept of an intersection of purpose and profit—and how it plays out in the world.

Amy Pearl: This is a very very interesting time. I had a conversation with a young man from Unitus’ non-profit and investment arm. He is building funds—so he goes around asks corporations and big businesses for money to invest in organizations that are driving social change through vehicles like micro-finance, which was popularized by Muhammad Yunus, who is a modern-day poster child for social innovation.

I said to him, “So you’ve been following this trend of micro-finance, right?” And he told me that they had, but that recently the market had become quite saturated. There are currently 120 channels out there for funding micro-finance operations—which is enormous. It’s astonishing. Micro-finance, a tool used to pull people up out of poverty, is getting, on average, a 30-40 percent return on the investor’s dollar—which is also incredible. It’s a really good case study for the idea of purpose and profit coming together. It’s a pervasive example of how you can serve the needs of the very poorest and still make a fantastic financial return on that investment.

SE: How does the idea of creating social profit fit in with sustainability?

AP: Sustainability was defined, in the United Nations Declaration of Human Rights back in 1948, as solving problems today in ways that don’t prohibit future generations from solving their problems. The notion of sustainability is to do things that are lasting and can be kept up in ways that provide options going forward. In terms of looking at social or environmental organizations, whether it’s building a wind turbine or designing a social program, if it’s designed well it will promote that on-going livability for both people and planet. It should also have a financial sustainability factor built into it as well, so that new strategy or service can be maintained. And all of this replaces that which is unjust.

The goal is to go upstream from the problem and get ahead of it. What is wrong with the system that it is actually allowing and maintaining issues like homelessness and hunger? What is the real root issue here? There is something that’s not at equilibrium in the status quo—something creating injustice. What we try to do is create organizations that, in order for them to be sustainable—and to sustain what we want to sustain in this world—have to get in front of the problem with a new kind of solution which is both effective and just. These are very deep problems. When we talk about social innovation, that discussion has to include environmental, financial and educational solutions.

SE: Can you give us a few examples of fresh, innovative solutions that you’ll be discussing at the ReVV Conference in April?

AP: There are some very interesting things going on around organizations developing finance tools. These tools are bringing in a lot of capital for those change organizations. Something I find very intriguing is that there are a bunch of organizations that are becoming for-profit organizations rather than non-profit organizations, and attracting substantial amounts of money to move the solutions ahead faster and farther.

That creates a new dynamic and opportunities for partnerships between money and what matters. And it hasn’t existed before to this degree. There’s a new interest on the investor’s side, even philanthropic investors, that says, “we want to make a difference AND make money.” There’s been a flip of circumstance. Now, change organizations have what the investors want—opportunities to make profit—whereas it used to be the other way around. Investors used to have the money and the change organizations were hoping for some sort of fixed charitable giving. It’s completely transformed the relationship between the two sides and it’s providing more capital to bring in expertise, funding for marketing and operations—which grants often don’t cover.

You can read the full interview with Amy Pearl here. Catch early-bird rates on the ReVV 2010 Conference before 2/1/10. Follow ReVV on Twitter @ReVisioningValu