Social Capital Markets conference buzzes with ideas for funding social change

With the economy in disarray, it's a little counterintuitive that a conference on funding social causes would be booming. But over the last three days the Social Capital Markets conference in San Francisco drew close to 1,000 investors, fund managers, foundations, social entrepreneurs and corporate executives in just it's second year in existence. Attendees came from 32 different countries to connect with other leaders and innovators and find new ways to "accelerate the flow of capital to good," as conference co-founder Gary Bolles put it.

The challenges to building a financially viable market in socially beneficial investment are many. Sonal Shah, the director of Obama's new Office of Social Innovation gave the conference's keynote address outlining the lofty goals of her new office, which will be charged with identifying and supporting the best social innovations in the country--and which consists of a staff of four. She said the federal government can provide leadership with the new $50 million social innovation fund, but emphasized that the business and philanthropy sectors would need to do their part and stay engaged with government (nationally and locally) to support the best programs. "We recognize there’s a scarcity of capital for successful programs ready to scale," she said in the speech, adding, "now more than ever it’s important to invest in what works."

What works, in the social good sector, is not always the most exciting new idea, according to another panelist Carla Javits, president of REDF, a San Francisco-based NGO that provides jobs for vulnerable populations. She pointed out that the core problem with scaling good ideas is the real cost of keeping organizations running over time. "We haven’t come to grips with any kind of capital model for infrastructure of organizations we expect to carry out the work," she said.

Meanwhile investors are fickle, throwing money at the latest trendy idea and then moving on. Running social programs of all kinds require consistency, said Javits, which comes from developing policy and funding approaches that allow good ideas to be replicated and scaled. "Success is not being distracted by the beautiful new kid in town," she said. "It's often not about innovative change, it's about excellent implementation."

The final plenary session of the conference underlined the point. Moderator Antony Bugg-Levine of the Rockefeller Foundation asked what it would take to live up to the title of the conference, to truly establish a capital market based on achieving social returns. The response from the panelists was a surprising amount of passion for a remarkably dull topic: metrics and reporting. "You don’t often hear words passion and accountant in the same sentence," quipped Chris Park of Deloitte Consulting. But Park, Brian Trelsted of the Acumen Fund, and Andrew Kassoy of B Lab, were adamant that the only way for social causes to attract more capital was to commit to standards of tracking and rating their social and environmental impact.

Kassoy's B Lab has developed the B Corporation standard of social and environmental performance for companies who want to prove their ethical and green cred with consumers. Now, B Lab, Rockefeller, Acumen and several other major players are trying to encourage use of a new set of investor rating tools that provide consistent information for investors and fund managers. Kassoy emphasizes that the disparate group of idealists that make up the sector need to unite around a consistent method for tracking social and environmental performance. "This is a space fragmented by people’s passions, but if we all want those passions to turn into impact we have to put aside those agendas for a greater good," he said.

In the social enterprise and non-profit sector, it's the social entrepreneurs with their creative, out of the box ideas and often hot-headed passion for the cause who get most of the attention. But this conference is testament to the fact that it's the financiers and policy makers who will ultimately determine whether social enterprise lives up to the promise of its fiery young advocates.

By Carmel Wroth