Social investment, before you say its an oxymoron… check out Big Society Capital. According to BSC –
“Social Investment is the provision and use of capital to generate social as well as financial returns. Social investors weigh the social and financial returns they expect from an investment in different ways. They will often accept lower financial returns in order to generate greater social impact. Some interpretations of social investment include the provision of capital without any expectation of financial return. When we refer to social investment, however, we mean investment mainly to generate social impact, but with the expectation of some financial return.”
This has been called a lot of things, Public-Private Partnership etc and I am also seeing a lot of movement in this space. I think this is a good thing. Given the devastation caused by the Financial Crisis of 2008, it makes sense for funds to be created and capital allocated to improving the social impact on communities with a investment return built into it. I really don’t like the notion most people take around extremes i.e Capitalism is all bad or Socialism is all good. I am not so sure if I buy the premise that Socialism for all its good can be administered with the right kind of metrics and accountability that a capitalistic/investment centric approach does. The social impact is hard to measure, takes too long and there is no accountability whether the right things are done. I think the merging of the above two is a good way to balance the initiatives. Ensure there is a investment horizon and return built into a project that justifies the capital.
I really think with the age of internet, mobile and all the communication technologies at our disposal, we need to bring more accountability to Government initiatives. If one thinks about Government initiatives, there not much accountability, for example, why should a specific governmental entity exist? how do you measure whether that entity is delivering the “good” that it was created to deliver etc lets take the example of a company, if the company is not sustainable i.e does not generate enough value to pay for the costs then it ceases to exist but that is not so in the Government Entities. Most of the Social projects are implemented or passed over by Governments because of budget constraints or whatever. I believe there is a better alternative and Big Society Capital is one way to implement this.
If you look around the world, Government budgets and decifits have been sky rocketing causing many fiscal and monetary crisis. Why is that? Why should Governments have such huge budgets? Why should Governments raise so much money to keep functioning? I have studied the literature of Taxes and Governments, and I believe we are currently in a phase where the way we fund and administer Governments is not sustainable. It has been a huge burden on the community or the society, when any natural system becomes too big it inevitably collapses. How does one fix this problem? I think the above Social Investment approach is a way where the social benefits are implemented by capital raised by intermediaries, they are accountable to specific results social and financial, audited and measured by the market or investors. Governments were suppose to do that but the scope of what Governments do has expanded to too many things. I think its about time we did a sanity check on this. I don’t believe in a Welfare state, I believe in enabling a Man on how to fish, so he does not have to ask anyone for food.