Influencer Series: Social Enterprise Beyond Grantmaking

Influencer Series

In a recent speech, Heron’s James Joseph says community foundations should use five forms of capital, not just grants, in their second century as institutions.


At the 2014 Council on Foundations conference celebrating 100 years of community foundations, Heron board member Ambassador James A. Joseph discussed how community foundations can go beyond deploying financial capital in service to their communities. He poses three important questions for consideration:

1) What does it mean to help make a community more of a community in a world that is integrating and fragmenting at the same time, a world in which the more interdependent we become, the more people are turning inward to smaller communities of meaning and memory;

2) What does it mean for the mission and impact of a community foundation when our communities are neither fixed nor final. They are always in the making; and

3) Are we sufficiently imaginative when we speak of the community foundation as a social enterprise that goes beyond grantmaking?

It is now time to take the next step and begin the examination of how a foundation can use not just conventional assets, but the other forms of capital that are so easily overlooked or, at best, underutilized. I have been pleased to see more foundations addressing the long-term disconnect between grantmaking and investment functions. But let me be bold enough today to suggest that the foundations with the most impact in the second century may well be those that integrate into their operating plans, goals and strategies the use of at least five forms of capital at their disposal. Some of my friends who have heard me make this argument have started to call this the SMIRF plan, in that it calls for an integrated use of social, moral, intellectual, reputational and, of course, financial capital for making a community more of a community. ... The third asset of a community foundation after its financial and social capital is moral capital. ...While I emphasize the importance of moral capital, we do not necessarily need moral language to achieve moral ends. Nowhere is this more obvious than in how we address issues of equity and inclusion. Long before the authors of the book The Spirit Level documented how more equal societies almost always do better than less equal societies, there were community foundation leaders arguing that inequality lowers the quality of life for all of us, not just the poor. Many years later, the picture that emerges from comparative national research is that inequality is socially corrosive. In other words, there is now empirical evidence that inequality damages social relationships, and that measures of trust and social cohesion are higher and violence is lower in more equal societies. That is the message we must convey as we remind our fellow citizens of our obligations to each other. We have an opportunity to change the narrative from simply a moral imperative to enlightened self-interest. I learned a long time ago that the language of morality can sometimes be a deterrent to achieving moral ends. Enlightened self-interest sells in many instances where public interest does not.

See the Council on Foundations website for the full transcript. Check out more from thought leaders in impact investing and philanthropy in our Influencer Series.


This post was prepared by Deirdre Hess.

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