William Drayton of Ashoka calls for a more robust capital market to support social ventures: Start up money, long term funding, investments as well as grants, bringing together social entrepreneurs with investors through financial services intermediaries.
In financial services so many clients are themselves entrepreneurs that you wonder why we have not been better at hooking up successful entrepreneurs with social venture opportunities. Entrepreneurs who cash out are givers, often enough. And you would think, given the chance, that they would enjoy investing their philanthropic capital in ventures, rather than plain dull grants. In developing such a market, a hybrid of forprofit and nonprofit, somehow we have to get the financial services reps and firms paid, while also working through the regulatory issues. A grant from a donor advised fund into a nonprofit venture for start up, or a loan from a foundation into a forprofit venture, is either of those private placement? Can reps get paid on such, for making the market? What are the regulatory and compliance hurdles? What are the disclosure and suitability issues?
I sense that this market is on the verge of coming together. Firms have done well at asset gathering in philanthropic accounts, like foundations and donor advised funds; now how can they make a buck putting those dollars to work in grants, or ventures? Once the financial services firms figure that out, look for a major expansion, as reps seek out clients for such deals. The community foundations may be left wondering, "What the heck is this?" As dollars sweep around them from entrepreneurial donors, via profit driven advisors, into philanthropic accounts inside the financial servicds firm, and then in grants and investment into the community bypassing the current philanthropic bastions.
Social class ain't what it used to be. Spiff up the white bucks, adjust the corsage, but the newcomers are looking for transparency, accountability, action and results.
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