| 
  • If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • Stop wasting time looking for files and revisions. Connect your Gmail, DriveDropbox, and Slack accounts and in less than 2 minutes, Dokkio will automatically organize all your file attachments. Learn more and claim your free account.

View
 

Investing in socially good projects

Page history last edited by Brian D Butler 9 years, 6 months ago

 

page director: Hernan PisanoPisano, Hernan

contributors:  Brian D. Butler, if you are interested in contributing see here

 

Table of Contents:


 

social investing...what is it?

 

In this section of KookyPlan, we are looking at investing with a social conscience.  Socially responsible investing.  Sustainable investing.  But, what you might ask is a "social entrepreneur"?  Its someone out to do a world of good...

 

 

see also our discussion on Sustainable development 

 

 

What do social investors do?

Focus on "creating value" rather than "extracting value"

 

To me, the essential difference between the past and the future--and the source of the advantage of next-gen strategies--is value creation versus value extraction. In a world with the transaction cost of information reaching zero and commodification of many products and services, the question becomes--where do companies differentiate each other? How do they compete? I think they compete in two ways:

 

-Creating value for the customer (as opposed to extracting value from the customer)

-Credibility and trust

 

The companies that best solve a real economic need (and thus create value), and the companies that act, essentially, as the nicest and most honest, will do the best (assuming a ceteras parabus situation in terms of products, services, technology, etc, etc).  These are two things that can't be mass produced or commodified or faked. Either you create value or you don't. Either you treat people well and have integrity or you don't. Companies that do those things will be in a big position of advantage over those that don't

 

 

Examples of Sustainable Business Models

for inspiration..

 

  1. the OLPC project which aims to bring one laptop to each child (at a cost of $100+).  
  2. the municipal wi-fi, and the potentials that WiFi in general have to bring broadband internet connections to poorer regions.  
  3. projects involving peer-to-peer lending, or microfinance, with such companies as Kiva leading the way in innovative business models that should help lift millions out of poverty.  see also Grameen Bank
  4. The Aravind Eye Hospital (a model for sustainable eye care from India)... a role model for care for other emerging markets?
  5. Patrimonio Hoy  - project from Cemex - to bring affordible housing to the poor of Mexico
  6. If you have any other projects that you think we should highlight, please feel free to add them here....

 

 

Clever ideas:

 


qbtuktuks Wifi-equipped tuk-tuks tour the streets of Phnom Penh
Marketing & advertising / Telecom & mobile

Cambodian telecoms provider qb has fitted tuk-tuks with wifi routers,
providing free internet access to anyone nearby. The vehicles
also function as mobile showrooms for qb products and services.

 

 

 

 

Why is Economic Development important?

 

facts:  4 billion out of 6 billion people on the planet are poor.  50% of them (2 billion people) live on less than $1 a day.   Moving these people up the economic pyramid is not just a moral issue, but its also an economic one.  There is a massive potential market of consumers waiting to be tapped.  See our discussion on economic development for more....

 

 

 

Philanthro-Capitalism Business model?

 

There is an ongoing debate on whether social enterprises should introduce more business-practices, or whether they should stick to a more Philanthropy model of operations.

 

The pro-business view of the debate...

Here is an argument presented by NextLogics Capital in favor of the Philanthro-capitalism model....

 

 

As globalization keeps its rampant and seemingly inexorable ride, the financial implications of international social investing become apparent for all economic players, and painfully so for Social Investors. The current international finance environment, marked by the dollar devaluation, the global financial markets crisis and the international trade liberalization has a significant impact on social investing.

 

1. - The Dollar Devaluation

 

Used to the matchless status held by the dollar as the globe currency of choice, U.S. social investors have seen the impact of their invested dollar shrink proportionally to the dollar devaluation. The ubiquitous Dollar/Euro benchmark tends to overlook the appreciation emerging currencies had against the dollar.   According to the U.S. Federal Reserve Data, using the dollar values of 2000 as a baseline, each 2008 dollar provided 25.80 % less help in Thailand, 45% less in Brazil, 15% less in India, 15% less in Sri Lanka and 18% less in China.

 

This “helping power” erosion has been experienced unevenly by the actors in the international social investment field. Big investors such as governments, multilateral organizations, and some NGO’s had access to advanced Foreign Exchange (FOREX) risk hedging strategies including futures contracts,  options and other more complex derivatives, and thus they kept their “helping power” intact, isolating themselves from the FOREX market’s volatility

 

Either because of their inability to attract financial managers skilled in FOREX hedging and/or their inability to access the derivatives market, smaller-scale investors (a bracket made up for the most part by social investors and philanthropists) have seen their “helping power” significantly eroded. Some actors, losing their advantage as the dollar devaluate  have been unable to keep operational costs at bay and have been forced to “go out of business”, as they become a sub-optimal solution and other organizations with stronger currencies are now doing the job. Last week’s Federal Reserve’s interest rates decrease down to 2.0% will likely keep the dollar at the current low prices for the foreseeable future.

 

2. - The Financial Markets Crisis

 

On the funds sourcing side, the worldwide “deleveraging” of the financial markets and the feverish debt sell-off experienced in the last months made investors (both return and socially motivated) even more risk averse, and liquid capital even more scarce. The planned new regulation for the financial markets currently in the works in the U.S. congress is likely to obliterate the liquidity levels we experienced in recent years (e.g. the planned requirement for trading ouses to keep a leverage level at the 10 to 1 ratio, significantly below their 33 to 1 of shops like Bear Sterns just six months ago).

 

The cash dry-up will affect Social investing just as it is affecting the Private Equity sector, whose size and quantity of deals is close to one third below what they were in the same period in 2007. Given the inertia of the government and grant making processes, we will see the effects of the funds drought in the first semester of 2009. Combined, the dollar depreciation and the financial markets crisis will have a significant impact at “ground” level.

 

Social “investees” are facing increasing challenges. Many of them are inserted in economic ecosystems whose development hopes were put in incipient exporting sectors, much in the lines of the IMF advice and the Washington Consensus ideas. Dollar-denominated exporting revenues made exportersincreasingly less competitive and the relentless laws of  competitive advantage are putting many of them out of business, raising unemployment across the emerging economies.

 

Latin American economies, with significant linkages with the U.S., are particularly vulnerable to the fate of the dollar. Adding to these complications, the momentous rally of commodities and food prices, the rising worldwide inflation, and an impending U.S. recession lay a gloomy outlook in the emerging economies.  In short, more help will be needed and fewer dollars will be available.

 

3. - Global Trade

 

The thorough implementation of the Washington Consensus ideas pushed worldwide tariffs down by more than 15% in the last 20 years. As a consequence, emerging economies have growth significantly, fueled by the possibility of selling their goods into developed markets. However, the successes of these policies have not come without some caveats;

 

First, the Gross Domestic Product (GDP) computes economic output and inflation but not the dollar depreciation. Since GDP is denominated in dollars, a GDP increase does not necessarily mean a real increase in  economic output, or purchasing power.  (Oversimplifying for illustrative purposes, Thailand might have increased their GDP by 25% since 2000, but that is a 0% real economic output, if we input 25% dollar depreciation). Second, research sponsored by the World Trade Organization (WTO), suggest a worrisome positive correlation of withincountry inequality and trade liberalization. The United Nations GINI index, designed to measure inequalities within the countries, suggests a widening gap between rich and poor in some emerging economies that successfully implemented trade liberalization policies. An illustrative example of this phenomenon of steady growth and increasing inequality is Chile.  Chilean’s often praised macroeconomic figures reveal a sustained growth of nearly 6%, on a compounded annual basis over the last 20 years, and a noteworthy reduction in extreme poverty levels now similar to those of developed economies. At the same time, it ranks in a distressing tenth place among the most asymmetrical income distributions in the world. 

 

4. – Food For Thought

 

Looking forward, the cost-conscious, impactoriented international social investor and policy maker might want to consider the following suggestions:  

(a) Policy makers and practitioners should encourage the use of non-speculative derivatives to hedge FOREX risk both trough managerial education and regulation aimed to increase smaller players’ access to the derivative markets in emerging economies

 

(b) In order to preserve their “helping power”, social investors might invest in the U.S. or in countries that present positive historical correlation with the dollar, like Mexico and Central America. Opportunities to help in countries where the dollar is still powerful abound (Honduras, has 21% of its population living with less than $1 a day and 44% with less than $2)

 

(c) Organizations designed for sustainability are in better position, particularly if their funding strategy combines U.S. funding with local currency sources (local philanthropy) or local revenues (social enterprises)

 

(d) Macroeconomic metrics such as GDP must be paired with microeconomic data, in order to understand intra-country disparities in wealth. That way, for instance, some of the poorest population in Chile would not be left outside the “radar screen” only because Chile’s macroeconomic success. 

 

 

 

Unique challenges for Social Entrepreneurs:

 

a social entrepreneur's task of raising financing poses unique challenges.

 

For one thing, social ventures are often structured as nonprofits, which means they can't offer an ownership stake in exchange for capital, like a traditional business might. After all, "a nonprofit doesn't have equity," says Rick Aubry, a social entrepreneurship professor at Stanford University's Graduate School of Business. However, some social enterprises are mimicking equity-like structures to work around the ownership issue, he says.

 

But even for-profit social businesses have trouble, too. For starters, such companies typically don't have the potential for market-rate returns, as they often cater to impoverished communities within developing nations. Not to mention, many social ventures have long incubation periods—meaning that years can go by before they will become profitable, let alone sustainable.

 

Despite these challenges, there are a number of like-minded investors willing to consider the social as well as the financial impact of a business. And, in exchange for that support, some investors may accept little or no compensation.

 

 

 

 

Funding Social Entrepreneurs

 

for more funding sources, please visit our guide to Global Directory of Funding

for tips about how to raise capital, visit our guide to raising capital - ideas for the entrepreneur

 

Here's a look at some of your funding options...

 

Social Investment Funds

 

Social investment funds, like the Nonprofit Finance Fund, pool together various sources of funding, such as donations from wealthy individuals, foundations, financial institutions and corporations. These funds differ from regular investment funds as they generally anticipate lower than market-rate returns. Their larger motive tends to be advancing social causes instead.

 

Additionally, some investment funds are aimed at specific disadvantaged regions or populations. For example, the Acumen Fund, a nonprofit global venture fund based in New York, trains its funding eyes on locations in India, Pakistan and East Africa. Yasmina Zaidman, a spokeswoman at Acumen, says that the fund's social investors are less interested in reaping financial rewards. Instead, she says, "they are looking to invest in philanthropic ventures; the return they're looking for is the social impact."

 

Foundations

 

A number of foundations including Ashoka and Skoll Foundation provide seed-stage and growth-stage grants (that don't need to be paid back) to social ventures. The Draper Richards Foundation for Social Entrepreneurship, for example, provides early-stage grants of $300,000 over three years to social entrepreneurs.

 

Grants can be tough for for-profit social enterprises to secure. However, foundations also can give loans though "program-related investing" or PRI. These type of investments are legally considered charitable although the foundation doesn't have to accept below-market rates. A for-profit social enterprise can ask for a loan at little or no interest. "The expectation is that [the money] will be paid back at much more beneficial terms for the recipient" than regular lenders might require, says Aubry, the Stanford professor.

 

Banks and Corporations

 

Some community banks may loan you the money to get your social venture started. These banks typically earmark federally-backed funds to lend to ventures with community development or social missions. An example of a bank that offers such loans is ShoreBank based in Chicago.

 

Do-gooder corporations often have similar community development missions. For example, Deloitte & Touche and Pfizer both offer support to the Nonprofit Finance Fund. Typically, corporations block off a portion of their budgets to donate funds (or products or services) to socially responsible endeavors. Meanwhile, a number of corporations including Citigroup and Google have set up foundations, which also offer grant money or other aid to social ventures.

 

Angels and Venture Capitalists

 

For-profit social enterprises can seek out cash infusions from angel investors or venture capitalists that have a social bent. These investors typically want market-rate returns in exchange for their financial support. They're partial to entrepreneurs with plans to do good in the world — and usually, they're willing to wait a little longer (than traditional angels or VCs) to reap returns. For example, The Investors' Circle, a network of angel investors and VCs, says it invests "patient" capital in companies that address social and environmental issues.

 

Of course, any entrepreneur who works with an angel or a VC gets more than money. Angels and VCs work closely with entrepreneurs to shape the company, sometimes taking board seats or management positions. A social angel or VC isn't any different, but will work within your mission to eke out market-rate returns, says David Berge, founder and managing member of Underdog Ventures, a social venture capital firm in Island Pond, Vt. "A social VC is going to be predisposed to like what you're doing," he adds.

 

source: smSmallBiz.com 

 

 

List of funding resources - LINKS:

 

USA:

        Social Equity Venture Fund   

        New Cycle Capital

        Google.org

 

 

 

News sources:

 

 

Links from KookyPlan

 

 see also Kookyplan links:  making technology affordable ,  and opportunities with consumers of low income

 

Socially Responsible Concepts:

 

Sustainable concepts

companies:

concepts:

 

Bottom of Pyramid marketing concepts

Launching a Social venture

 

How to value a social venture? 

 

 

more...

 

 

 

 

 

Companies / Industries we are following:

 

water

 

 

Education

 

 

 

 

 

 

 

Health Care

 

 

Environment

Sustainable Environment

Environment message

 

 

Consumer products

World of Good - fair trade consumer goods

 

 

 

 

Finance

  • Microfinance - focus on both credit and savings for the working poor
  • Microcredit - focus just on credit, mostly for the very poor.

 

 

YouTube plugin error

 

 

 

 

 

 

Using Technology to eliminate poverty?

 

ABSTRACT

 

 

YouTube plugin error

 

 

 

 

 

 

 

 

 

 

organizations we support

 

MBA's without Borders:

MBAs Without Borders was formed as an international not-for-profit organization bringing innovative solutions to developing countries by matching experienced business volunteers with local businesses and NGOs to unleash a big secret…Business Can do Amazing Things!.  MBAs Without Borders partners with international and local businesses and not-for-profi ts working toward the better good of developing countries and we recruit MBAs who best support such organizations.  http://www.mbaswithoutborders.org

 

 

 

 

 

Investors without Borders: 

Investors Without Borders (IWB) will link the global investor community with opportunities to lend directly to Small to Medium Sized Enterprises (SMEs) in developing countries. Through its proprietary web-based peer-to-peer lending and credit assessment platform, IWB will help investors generate a financial return while engaging in social and economic development initiatives. Investors can finance loan requests for as little as $100 while connecting with SMEs anywhere in the world. SMEs gain access to affordable loans and expand their exposure and networks abroad.  IWB fills the void between microfinance and institutional finance.Our investments target growth-oriented SMEs with the least access to capital, yet the greatest potential to innovate, create jobs, and generate solid returns. IWB will launch in 2008 in Ghana, West Africa, with additional investment regions to follow. IWB is a self-funded start-up company, consisting of the Founder/managing director, advisory board, and a strong network of ancillary advisors, pro bono consultants, and volunteers. Additional networks, research, and strategic direction is provided through The George Washington University: www.investorswithoutborders.net

 

 

 

http://www.changemakers.net/

Aid Through Trade

Aj Quen

Antakarana

Beacon of Hope

De la Selva

Development Wheel

Footloose Tanzania

General Welfare Pratisthan

KNN

La Chamba

Lao Women's Union

Nan Women's Sewing Cooperative

Noah's Ark

Preda Fair Trade

Safrudi

Taxco Women's Jewelry Cooperative

Tesoros Trading Company

 

 

Africa

Africa Smiles

Alize Sarl Landy (Alasora, Madagascar)

Bombolulu Workshop (Kenya)

ED Imports (Kenya)

Egypt Crafts (Egypt)

Gone Rural (Swaziland)

John Nyakusengwa (Harare, Zimbabwe)

Kisii artisans (Kisii, Kenya)

Mbare Ltd. (Zimbabwe, Kenya)

Muungano Artists Self Help Group (Kenya)

Nagada Silk Weaving Project (Egypt)

NAWOU (Uganda)

Rabane Emoi (Madagascar)

Rootz Creationz (Durban, South Africa)

Streetwires (Cape Town, South Africa)

Swahili Imports (Kenya, South Africa, Ghana)

Trinity Jewelry (Kenya)

Uganda Crafts (Uganda)

Undugu (Kenya)

Serrv International

 

 

Americas

 

 

Circle of the Sun, Bolivia

Aj Quen Weavers (Guatemala)

ArtCamp (Mexico)

Arte en Mate (Peru)

Artesanos de Pomaire (Chile)

Circle of the Sun (Alto Plano and Central Highlands, Bolivia)

Comparte (Chile)

Cooperative of Cinco Pinos (Nicaragua)

CreArte (Guatemala)

De Colores (Guatemala)

Florentino Quispe (Peru)

Intiwarmi (Bolivia)

Jaime Rosselot (Chile)

Jessica Palacios (Chile)

Jolom Mayaetik (Chiapas, Mexico)

Joyeria Semilla (Colombia)

Madero de Jesus (Chalatenango, El Salvador)

Manos Amigas (Peru)

Mariposa Indigenous Arts (Costa Rica)

Maritza Quintero (Chile)

Maya Traditions (Guatemala)

Mercado Global (Guatemala)

Miguel Salinas (Chile)

No Artisan Group

Other Artisans - Americas

Patricia Gonzalez (Chile)

Piel Acida (Colombia)

Recycled Planet (Brazil)

Reed Basket Weavers (Huanchaco, Peru)

Rene Cerda (Chile)

Rene Oses (Chile)

S.H.A.P.E (Haiti)

Salvarte (Colombia)

San Antonio Palopo Weavers (Guatemala)

Taxco Women's Jewelry Cooperative (Mexico)

Taxco Women's Jewelry Cooperative (Mexico)

Tiendas Campesinas Camari (Ecuador)

UKUSH (Guatemala)

Serrv International

 

 

Asia

 

Baskets of Cambodia, Cambodia

Aid Thru Trade (Nepal)

Asha Handicrafts (India)

Au Lac Designs (Vietnam)

Ban Nong Kong (Thailand)

Baskets of Cambodia (Siem Reap, Cambodia)

Chainat Basket (Thailand)

Cheppu Himal (Kathmandu, Nepal)

Conserve (New Delhi, India)

Craftlink (Vietnam)

Deepak Joshi (Nepal)

Dwaraka (India)

Ecofriendly Paper (Sanganer, Rajasthan, India)

Freeset bags (Calcutta, India)

Fuen Fu (Thailand)

Godavari Delta Lacemakers (India)

Handloom Ikat weavers (Indonesia)

HEED Handicrafts (Bangladesh)

Himalayan Healthcare (Nepal)

Independant Artisans (Kathmandu, Nepal)

India Marketplace (India)

Issan Weavers

Kaithun Weavers (Rajasthan, India)

Kala Aparajita (Gujarat and Orissa, India)

Kandahar Trading Company (India)

Kandari (Bali, Indonesia)

Khom Loy Project (Thailand)

KMVS (Kutch, India)

Lanka Jathika Sarvodaya (Sri Lanka)

Lao Women's Union (Laos)

Lao Women’s Union (Vientiane, Laos)

Marusthali Bunker Vikas Samiti (Meghwal, Rajasthan, India)

Maya Organic (Karnataka, India)

Mayadevi Imports (India)

MitraBali (Bali, Indonesia)

MKS (India)

Namm Intertrade (India)

Nan Women's Sewing Cooperative (Thailand)

Nan Women's Sewing Cooperative (Thailand)

Narathiwat Basket (Thailand)

Nazir Creations (Nepal)

NCDP (Cambodia)

Other Artisans - Asia

Padang Coconut (Thailand)

PRADAN (India)

PREDA (Philippines)

Ramona Enterprises (India)

RCC (Cambodia)

Rupalee Exclusifs (India)

Sarwan (Nepal)

Sasha (India)

Sentosa (Cambodia)

Shiva Shakthi (India)

Spiral Foundation (Vietnam and Nepal)

Tara Projects (Gujarat, India)

Teddy Exports (Tamil Nadu, India)

Thai Payap (Thailand)

Thai Tribal Craft (Thailand)

ThaiCraft (Thailand)

Tibet Collection (Nepal & India)

Toucan Krafte (India)

Tribal Fiber (Thailand)

Van Klee (Indonesia)

Vieng Sai Weavers (Laos)

Village Weavers (Thailand)

Volga River Trading Company (Russia)

Wild Boar Creek (Cambodia)

Yak and Yeti (Nepal)

Serrv International

Ten Thousand Villages

 

 

 

 

 

 

Social Finance in the news:

 

 

1.  Pension funds use their clout:

 

"The CalPERS (California's massive pension fund) board on Monday will take up discussion of AB 1967, a bill that would prohibit the pension system from investing in private equity funds whose management companies are partially owned by sovereign wealth funds of governments with poor human rights records. It already has received a staff recommendation opposing the legislation, and you can view both the bill and the CalPERS staff recommendation here. AB 1967 also would apply to the California State Teachers’ Retirement System (CalSTRS), whose trustees have already come out in opposition. "

 

 

"This is a state legislature setting investments boundaries for its public pension systems. The people have a right to oppose support of particular industries or nations. Examples include bans on tobacco/firearm investments. The people also have the right to withhold their investments in order to influence foreign governments, whether it be in today’s Sudan or 1980s South Africa. This is not interfering with the federal government’s ability to make foreign policy, any more than were those silly boycotts of French products at the beginning of the Iraq War."

 

 

 

 

 

New Cycle Capital, a new venture firm focused on profits and social benefit

 

 

Two Silicon Valley venture capitalists are creating a new venture capital fund that aims to produce competitive profits and also “social benefits.” The fund, to be kicked off next year with at least $50 million, will focus on the “green economy,” as well as financial and other services that help low-income groups.

 

Called New Cycle Capital, the firm is led by Josh Becker (pictured left) and Benjamin Black (pictured right), both investors who have worked for mainstream venture capital firms. Becker spent time at Redpoint Ventures, while Black worked at Maveron and Rosewood Capital, and was VP of corporate development at Harris Interactive.

 

Becker has long been socially active in the community, serving on the board of the Full Circle Fund, a San Francisco group of executives that fosters relationships between businesses and non-profits.

 

Early this year, the two began to raise the fund, after they realized it’s wrong to assume that investments in companies that provide tangible social benefit don’t make as much money as other investments, Becker said. They want to focus on early-stage companies, producing stellar returns in areas such as the ecosystem of services around clean-technology.

 

They’ve already invested in a few such companies. One is Sneaker Villa, a retailer with $20 million in revenue that operates in inner-cities and seeks to create $100 million in stock option wealth for employees working in America’s poorest communities. They hope it will go public. A couple of others, including an energy efficiency company called Positive Energy, are still secret.

 

The two are trying to create an ecosystem of top-skilled entrepreneurs and executives who are ready to join up. To this end, they also organized a conference, held yesterday in San Francisco, called” Zero Tradeoff.” The gathering discussed how foundations can invest with the same approach. Private foundations — which have $500 billion in investable assets — should devote more of their money to causes that create socially beneficial areas like renewable energy and lower income communities, but which also produce strong returns, Becker said.

 

Major foundations participated yesterday, including The Annie E. Casey Foundation, which declared that three percent of its assets, or $100 million would be devoted to such causes. It said wants to do more in coming years. Casey’s representative, Christa Velasquez, laid down a challenge that the greater foundation community generate $10 billion for such causes. Another company presenting at the conference, Progress Financial, helped showcase the cause. It generates loans to low income communities, but is backed by hard-nosed Silicon Valley venture capitalists Charles River Ventures and Greylocks that want to make serious money. That wouldn’t have happened a few years ago, said Becker.

 

The majority of foundations don’t follow this thinking. The Gates Foundation, for example, invests in for-profit causes, and then gives away five percent of its profits to philanthropy efforts it thinks will have the biggest impact.

 

To be sure, Google’s foundation, Google.org, does use this philosophy for choosing its investments, and we’ve written about Google’s initiatives in this area, for example its decision to invest hundreds of millions to create clean electricity. However, Google is an outlier, said Becker. “This is the leading edge,” said Becker, of the new way of thinking. “These guys [Casey and others] are dipping their toes into the water. We want to turn that into a Tsunami.”

 

 

 

 

 

 

 

 

 

 

 

 

 

Digg!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

number of visitors

 

 

 

 

 

 

 

Comments (0)

You don't have permission to comment on this page.