Does Bridging the funding gap mean proving your worth?

This week’s reading were both frustrating and encouraging for someone who wants to work for a social enterprise in order to get the best of both worlds and yet feel as though we have some control over the success of our future (growing the enterprise, scaling up the mission etc). On one hand, it is frustrating to hear what we already kind of know, but hate to admit - that social enterprises are often limited by the very same thing that makes them so exciting to be a part of. And yet, it is understandable that philanthropy doesn’t always extend to organizations that blur the lines between pure social mission and profit generation, especially when there are thousands of pure non-profits all aiming to do good work and make a difference. Similarly, it is understandable for commercial investors to be cautious of investing in organizations that are not clearly defined and many decisions could be considered subjective which goes against the mantra of smart investing. As a result, there is a funding gap.

The good news is that this issue is gaining ground and people see the benefits of social enterprise which means more people have turned their attention to how to address it and how to help. Impact investments based on assessments of organizations based on accepted indices seems to make a lot of sense. I like the idea of the hybrid organization- a structure that has two distinct but related organizations with closely related missions and overlapping operations. However, this only solves one half of the issue: So, you may have the attention of both sides of the funding issue but now you still have to prove yourself - how do you demonstrate that you are worth the investment? Enter impact assessments: let’s take the best of the best, launch the Global Impact 50 Index and essentially create a benchmark that can be used to evaluate validity. This definitely drew my attention, so I took a closer look at the Global Impact Investing Network (GIIN) and wanted to see how they plan to execute this. They have 4 great initiatives that work well together to give social enterprises a great place to start.
1.                    Investors' Council: an exclusive membership program that serves as a platform for leading, active impact investors to share experiences, learn about emerging sectors, explore opportunities for collaboration, and contribute to industry development, including impact metrics.
2.                    Impact Reporting and Investment Standards (IRIS): a set of metrics that can be used to describe an organization's social, environmental, and financial performance.
3.                    Impact Base: online, global directory of impact investment vehicles
4.                    Outreach: highlighted examples of impact investments, tracking industry progress, and sharing market information and best practices with the diverse impact investor community, potential impact investors, and the general public
 Of these initiatives, I am most excited about IRIS as it addresses issues that I have witnessed in the industry – the lack of transparency and clarity about goals in a social enterprise – why do we do what we do and how do we make it as meaningful to the people we share our story with as it is to us? I look forward to the refinement of the criteria for IRIS and its launch and hopefully eventual standardization of evaluation. http://www.thegiin.org/cgi-bin/iowa/home/index.htmlhttp://iris.thegiin.org/