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The New Economy and What it Holds for Social Enterprise and Social Firms in Particular Rodney Schwartz Chief Executive, ClearlySo Manchester, 14 July 2009.

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Presentation on theme: "The New Economy and What it Holds for Social Enterprise and Social Firms in Particular Rodney Schwartz Chief Executive, ClearlySo Manchester, 14 July 2009."— Presentation transcript:

1 The New Economy and What it Holds for Social Enterprise and Social Firms in Particular Rodney Schwartz Chief Executive, ClearlySo Manchester, 14 July 2009

2 A Bit About My Background Financial Sector and Investment Social Investment 20091999 198020091999 1980

3 Social Enterprise & Investment Experience Founder of Catalyst Fund Management & Research, a venture capital firm focused on social businesses CEO of ClearlySo–the first marketplace for social business & enterprise, commerce & investment Advisor/Non-Executive Director at several firms including: – Ethical Property Company (Non-Executive Director) – The Green Thing (Chair) – HCT Group (Advisor) – PST 2020 (Trustee—behind the 2020 Commission on Public Services) – (previous Chair) – Shelter (previous Chair) Lecture on Social Finance at Oxford’s Said Business School Regular columns in social enterprise magazines & sites

4 Structure of Today’s Discussion Cursory analysis of the current economic and financial situation Recent developments and issues in social investment The case for the emergence of a new Social Economy from the ashes of the old one What a Social Economy might look like? How Social Enterprise in general and Social Firms in particular might feature in this Social Economy? Possible constraints

5 One Man’s Analysis of the Current Economic and Financial Situation A complete meltdown of the financial system Crisis deferred at an estimated cost of $3 trillion—some say much more The full impact will be realised over the next 20 years— seems unlikely to be paid for by the banks (this can be euphemistically described as a “negative externality”) The choices we will need to make in the coming decades will be profound, painful and unavoidable The current economic slowdown is not cyclical, but represents a discontinuity—really fixing it requires systemic changes

6 Developments in Social Investment: The UK Picture The attraction, growth and futility of Socially Responsible Investment (SRI) Microfinance and Cleantech (and selected themes) have boomed and become part of the investment mainstream Impact/social Investment (II) has entered the lexicon, as have “ethical shares” Government sponsored/backed II funds and companies have reached a sort of maturity (Bridges, Unltd, NESTA, Venturesome, Futurebuilders) Independent firms are attempting to gain traction (WHEB Ventures, Impax, Catalyst)

7 Developments in Social Investment: Emerging Issues in the UK Measurement of social “impact” Sources of funding—Government; hopefully transitioning to foundations, financial institutions, HNWIs or even individual investors “Crowdfunding” Liquidity The supply and demand (im)balance

8 Developments in Social Investment: Some Interesting International Cases Global Federation of Social Stock Exchanges Rockefeller’s Global Impact Investment Network Renewal Partners’ (Canada) first fund close Developments spreading across the globe—much more on the continent than we realise (e.g. the Global Economic Symposium in Germany) Surging interest in the sector (the press, business schools, other graduates, conferences, the wealthy, politicians)

9 The Case for a “Social Economy” Consumer preferences have profoundly shifted, as: Product and service purchasers Voters (who are incredibly angry) Employees (existing and prospective) Investors The mainstream investment area has been…disappointing Successful UK social/high impact businesses emerging The Body Shop Organix The Ethical Property Company The early phase of the impact of social networking

10 What a “Social Economy” Might Look Like Success measured in financial/risk and social/ethical/environmental terms Investment takes place across a 3D horizon Far greater variety of financial instruments to fund more diverse organisational aspirations A “tilt” in the tax code to reflect externalities Smaller involvement on the part of Government Some fundamental changes in “our” democracy

11 What Could be the Role for Social Enterprises in this New Social Economy? Source of products and services for an increasingly social consumer body As a new investment possibility for a growing body of more socially-minded investors Beneficiaries of a tax code which may become more tilted Laboratories for experimentation given their greater latitude on funding More interesting and rewarding places to work

12 How Social Firms Might Feature: Social Firms’ Market Position (and the SFUK) Robust growth since the late 1990s; up to 274 members and more than doubling in the last five years A strong history therefore, in a newish sector, with European (ISFA, CEFEC) and international links A considerable profile, built over years, that could be further developed A diverse sector meeting a range of vital client needs Broadly spread across the UK Offering vital services: – For the disabled (jobs, training and empowerment) – For society – For the economy (especially now)

13 How Social Firms Might Feature: Some Strategic Issues for the Sector Still a small sector with relatively small players Funding uncertainty stemming from the current fiscal predicament (for those receiving Government and Foundation funds) Some confusion due to social enterprise “buzzwordism” Mixed attitudes from those dealing with Social Firms specifically and the disabled generally

14 How Social Firms Might Feature: Some Modest Suggestions from an Outsider Consider mergers to achieve scale Reduce your dependence on Government sources of funding and increase those which come from trading with individuals and the corporate sector Embarrass Government for favouring big over smaller firms, businesses over people and the advantaged over the disadvantaged Focus on tapping into a broader array of sources of capital—explore crowdfunding and other means Leverage your social orientation—its now fashionable Increase your profile, by leveraging modern media platforms—its called social networking for a reason

15 ii ClearlySo has built a marketplace, which is designed to assist firms like yours… Vendors Investors Social Enterprises...and we invite you to join it! There are handouts at the back.

16 Social Firms UK Members Already Present on ClearlySo Bioregional Charity Bank (Member) Decoda Forth Sector (Vendor) Fuse Jobs (Vendor) Mow and Grow (“Speed Dating” Investee and Member)

17 Thank You

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