A burgeoning number of investors, enterprises, academics and policymakers “are using the tools of capitalism and capital markets to tackle social issues,” according to a recent article in Institutional Investor. The accompanying video interview features Heron President Clara Miller, B-Lab Cofounder Andrew Kassoy, and The Social Entrepreneurs’ Fund President Liz Lucket.
The three point out that the resources of the nonprofit sector are too small to fully address the pressing issues of our society. Capital markets, by contrast, offer a vast pool of resources that can be used to support quality businesses seeking both social and financial performance. See the video here.
Clara Miller argues that this “new” economy recalls the original purpose of capitalism:
To me, it’s really a return to the fundamentals of capitalism. It’s a return to what the promise of pluralistic capitalism has always been; which is to have an economy that serves the broadest number of people, not a lesser and lesser number of people…
Its’ really important that all of us understand the limitations of foundation assets alone. We are on a good day maybe one percent of total assets under management. So I think our best use is to not only be funding the best companies as we see it, but also to be influential so that the kinds of things we care about become standard in the economy.
Liz Luckett says that Millennials in particular are inspired by this trend, finding ways of supporting or creating businesses that deliver more value for all of their stakeholders, including employees, the environment and their community, not just shareholders:
I feel over the last five to ten years that investors and high net worth individuals feel they can solve social problems through the way that they have created their own wealth. And they do this by looking at business models with earned revenue that allow social problems and social issues to be solved in perpetuity without a dependency on philanthropy.