On the first day of the Social Enterprise World Forum, reflecting on the past 15 years, when NESsT was founded, I recall that we were very concerned about the lack of the financial capital market. There were really very few actors, particularly in the emerging market countries, that were interested or supporting social enterprises and social businesses at the time. Our publication Profits for Nonprofits, which researched the environment in Central and Eastern Europe, demonstrated that many organizations were trying to launch social enterprises, but really had very few financial instruments to sustain themselves, other than the short term project grant.
Today the landscape is quite different. The Investor Day event planned for this afternoon, reflects this change. We are gathering a large group of donors and investors, many of whom are already very committed to supporting social enterprises, and others who are very interested to learn and enter the field, to discuss how we can channel capital – both philanthropic and investment capital- to develop, grow and scale social enterprises. The fact that Vale Mining Company has organized a whole morning on how to engage the Mining Industry in supporting and investing in social businesses, and that BNDES, the Lemelson Foundation, Brazil Capital, UBS, Sebrae, Coca Cola, Rockefeller Foundation, Avina, and many others are participating in this afternoon, demonstrates that we are really at a turning point.
However, there is still a great deal to be done. Unlocking philanthropy from High Networth Individuals in emerging market countries, and promoting “homegrown” support for social enterprises is one. The other is aligning expectations with what is feasible. Donors and investors need to be patient on the financing needs of social enterprises, the amount of time that it takes them to reach break-even and generate profit, and if and when they can really begin to scale. The expected financial return needs to be reasonable, particularly the need to cover the many social costs of social enterprise. And the social sector also needs to provide clear metrics and to spend time educating the philanthropic and investing communities on what they should expect in terms of social impact. A variety of instruments are needed, and they need to be mixed, and used for the appropriate financing needs.
No doubt if we can walk away from today having a clearer set of expectations from both the supply and demand side, we will be much better positioned to truly solve the critical social problems of marginalized and vulnerable communities around the world.