A panel on “Speaking Innovation to Power: The uses and abuses of power of social innovation” displayed some Canadian talent. The moderator was Frances Wesley, an MA and PhD grad from McGill and Chair of Social Innovation, University of Waterloo. One of the panelists was Thomas Lawrence, Weyerhauser Professor of Change Management, Simon Fraser University. This session grounded the dynamics of challenging and channeling existing power resources to support lasting change.
CAPITAL MARKETS IN CRISIS
In light of the present unstable economic environment, the session titled “Capital Markets in Crisis: Threat or opportunity?” was very intriguing. The session was moderated by Matthew Bishop, Chief Business Writer & New York Bureau Chief, The Economist.
In his introductory comments, Bishop noted that financial innovation and capitalism must be grounded in values and needs to show benefit to society. One of the panelists was Sam Moss, Gray Matters Capital, invests in social venture activities. One of his key points was that large investment funds are beginning to understand that you can have good financial and social returns, even when investing in social environments.
SIR RONALD COHEN
One of the panelists was the dignified and thoughtful Sir Ronald Cohen, Director, Social Finance Ltd. His wide industry experience provided a platform for much insight for attendees. How did the world get in its current financial mess? Cohen noted that the finance sector up until recently had a gargantuan appetite for risk. Cohen compared the willingness to take a huge amount of risk to a balloon that is blown up to its stretching point and then the air has been let out. His assessment was that economic recovery will be gradual, once uncertainty has been removed nad consumer confidence restored; this could still be 1-2 years out. He thought there would be gradual improvement, but that there will not be immediate growth. Social organizations need to bear these realities in this mind.
Cohen spoke about government interaction with social entrepreneurs, primarily from a UK perspective. He explained that the UK government is in a position a lot less to support social service groups in view of current climate. The government does not have sufficient resources especially if capital markets do not support them in their own bond issues.
At the same time, social entrepreneurs in the UK should remember that the government has been generally very supportive of social initiatives. His word of caution was, “We cannot give up on government.” For example, the government has and can provide tax relief for social investments. Cohen related his role as founder of Bridges Ventures where the government matched a GBP20 million investment from the private sector. He noted that there are also opportunities to use innovative skills and energy to define ways for government to pay for commitment to results. One innovative concept is a “social impact bond.” The concept is that the government issues a bond with community investment tax relief (i.e. 5% offset for each of 5 years). There is an agreement with the government that upon raising a specified amount of money, the government will then pay the organization, such as an offender rehabilitation agency, on the basis of results for people who don’t re-offend. The net result is repayment of bond and interest.
There is another interesting source of capital for social entrepreneurs which appears to be unique in the UK among all western countries. In the UK, unclaimed funds traditionally stayed with the banks. Prime Minister Gordon Brown says the money should instead be used for social good. Cohen and group proposed a social investment bank which will then channel money to volunteer sectors. At this point the bill has not yet been approved. Despite the important role of government as a financing source, Cohen cautioned that social entrepreneurs need to create sustainable organizations that are not dependent upon government
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