Richard Graves

Archive for the ‘Innovation’ Category

Investing in Social Movement Enterprises?

In Innovation, Social Movement Investing on November 5, 2012 at 6:10 am

Richard Graves is the author of this blog and is currently VP of Business Development for Ethical Electric, among other projects he is engaged in.

What is a social movement enterprise? In my definition, a social movement enterprise is an organization that aligns their commercial function with a larger social movement for change, by directly contesting for social or political change through the operations of offering their product or service.

What does that mean and how is it different? There are many social enterprises and social movements around the world, seeking to provide services that benefit the world or mobilize enough collective action to create the change they want to see in the world. However, while many social enterprises seek to directly create social change and share staff or aims with a wider social movement, it is much less common for an enterprise to service or seek to support a social movement in its efforts to build a mass mobilization for social change.

Why does this matter? As the field of mission-related investment has grown and evolved, you can now find investments dispersed widely across the world and on all kinds of issues, from education, clean energy, sustainable food, clean water, and microcredit to medical service delivery. Many of these social enterprises have taken on functions previously delivered by aid agencies, international donor groups, or charities. The field of advocacy, from lobbying operations in western capitals to grassroots campaigns, has been seen as less likely to generate returns or ripe for investment by philanthropists and donors. While advocacy has been a lucrative field for for-profit lobbyists and political campaign consultants, they have often been in service to corporate interest groups or political parties, not social movements.

I believe that Social Movement Enterprises are investable, viable and incredibly high leverage, with the potential to offer market-rate returns while using their brands, marketing reach, and revenues for advancing the aims of a social movement. Critically, for investors that are also donors and seeking to generate additional funds for advocacy of causes, it opens the potential for using investment dollars into sustainable, return-generating companies that do organizing and advocacy and can grow and scale to respond to social challenges too large for current donor resources.

Before this is called to good to be true, there currently exist real world examples of social movement enterprises, even if it appears to be an admittedly sparse field. In the United States, there are a number of enterprises I have identified that share this mix of commercial services and offerings, an embrace of organizing for advocacy and change as an essential element of their business model, and alignment with a larger social movement for change. CREDO Working Assets and the Better World Club as examples of progressive social movement enterprises, Homeboy Enterprises as an example of an anti-gang social movement enterprise. Read the rest of this entry »

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New paradigms: How mission investing is transforming traditional philanthropy

In Innovation, Philanthropy on August 31, 2011 at 9:02 pm

This is a guest post by Sonja Swift, the Family Philanthropy organizer for Resource Generation and a NextGen Fellow in Mission Related Investment.

Traditional philanthropy is based on a very simple notion: make as much money as possible with the foundation’s endowment and give away grants to address social problems. Meaning that 95% of the endowment is invested in whatever will bring in the highest return, while the other 5% is donated annually. For the entire 100+ years of philanthropy’s existence this has been the accepted model; premising the field of philanthropy entirely upon the mere 5%.

I’ll be the first to admit this never made much sense to me.

Turns out that this premise is now being challenged even from within the original philanthropic institutions. “This works in a world where two assumptions hold true,” explained Antony Bugg-Levine, Managing Director at the Rockefeller Foundation during the first MRI Fellowship learning call, a year long learning series on mission investing organized in partnership by Resource Generation and Confluence Philanthropy. “And these assumptions have been taken for granted to the point no one articulates them. They are that 1): the only way to address social issues is through charity. And 2): the only reason to invest is to make money.”

Impact or Mission-Related Investing (same idea, different lingo: investing with values intact or more specifically, in alignment with the philanthropic mission) fundamentally rejects those assumptions. The assumption is instead that for-profit can be economically sound while also addressing social issues.  For traditional philanthropy this is a paradigm shift. “This has profound implications for philanthropy. Do not underestimate how disruptive this new truth is to existing systems of philanthropy,” furthered Bugg-Levine. Foundations have a fiduciary duty to use their assets mindfully and in line with their mission. When the notion that this mandate only applies to the grant dollars looses ground a lot of money comes into question.

The total amount of grant dollars flowing through the Environmental Grantmakers Association in 2008 amounted to approximately 600 million dollars.[1] Seems like a lot, no? But British Petroleum spent the same amount that same year on biofuels research alone. This is what philanthropy as purely grantmaking amounts to: not enough. On average foundations lost 40% of their endowments by spring of 2008, yet tales tell that foundations employing an MRI strategy lost more in the range of 10-20%. The 2010 report Socially Responsible Investing Trends in the US report findings convey a similar scenario, making a solid case for how prudent this kind of investing is especially amidst tumult. Read the rest of this entry »

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Resolving the Great Contradiction

In Articles, Innovation, Philanthropy on June 30, 2011 at 7:31 pm

At the heart of philanthropy is a great contradiction, one that our generation is struggling to resolve. Many philanthropists accumulated their wealth through disruptive innovations, ruthless business practice, or as Balzac said “great wealth with no obvious source is some forgotten crime, forgotten because it was done neatly.”

Many of the great industrialists, whose names are now synonymous with philanthropy, Rockefeller, MacArthur, and Vanderbilt, in life were rapacious men who struggled against labor, environmental, and social reforms, and lived in opposition to many of the causes that their legacies now support.

The reality that many of the leading climate change campaigners meet in John D. Rockeller’s mansion, Pocantico, to strategize how to implement climate legislation in the face of the hostility of Exxon-Mobil, the reunited children companies of Standard Oil, has an intrinsic irony that should be lost on no one.
Yet, this is the reality of philanthropy, where the fortunes from oil, railroads, aviation, and agribusiness fund civil society groups that take up the tools of petitions, boycotts, and organizing against latter-day robber barons.

This may be part of the reason why many foundations struggle with their split identities, working within the IRS defined mission of serving a charitable, scientific, literary, and educational purpose, but finding that many challenges have a root cause that implicates not only where their money came from but how it is currently used. Read the rest of this entry »