- Global Competitiveness
- In the Field
How to Move Beyond Binary Choices in the Global ConversationMay 16, 2013
An event held by the Aspen Institute discussed how to best use the global social innovation space.
On May 14, the Aspen Institute hosted a launch event for the “Policy Guide to Scaling Social Innovation,” produced through a collaboration between the Schwab Foundation for Social Entrepreneurship, PCV InSight, and the Initiative for Responsible Investment at Harvard University.
The Policy Guide, according to its introductory chapter, “is intended to add a perspective to the global conversation already under way about how we move beyond binary choices in crafting responses to social, economic, and environmental challenges.” It identifies the impediments to dual-purpose business models and offers in-depth case studies that exemplify governments and private enterprises appropriately bridging incentive and investment gaps, some more successfully than others, to effect scalable social change.
The Aspen event featured a report of research findings, presented by Harvard University’s David Wood, and a panel, comprised of social innovation experts. The panel focused on the fact that while so-called “impactful investments,” whether incidentally or intentionally socially impactful, occur regularly, most occur in a financial return vacuum.
Jane Wales, Vice President for Philanthropy and Society at the Aspen Institute opened the discussion by saying that investors and lawmakers around the world are ready to “harness the powers” of cooperation and collaboration, but have been waiting for leadership to guide this global process.
Elizabeth Littlefield, President and CEO of Overseas Private Investment Corporation (OPIC) said that one challenge is identifying metrics of success: should we evaluate success “financially or by social impact?” Littlefield observed that many companies responsible for the most significant impactful investments, such as a hotel company that builds three-star residencies in Afghanistan, get little credit or recognition from doing so, largely because their primary motivations are financial. Creating a marketplace for impactful investing both incentivizes and rewards collaborative and conscious efforts to be a savvy investor and a social entrepreneur simultaneously.
An experienced non-governmental organization administrator, Kyle Zimmer, who runs the NGO First Book, expressed optimism that investors and governments could agree to a set of definitions to explain the social innovation space. She said that “once we organize [the social innovation field], we will see changes.”
Mildred Callear, Executive Vice President of Small Enterprise Assistance Funds, pointed to the Guide as a set of tools, but insisted that the responsibility for understanding and clearly stating social and financial goals belongs to the investors. The Policy Guide, Callear noted, merely begins the process of “aligning personal incentives,” which is a key step in breaking the binary of social innovation: if investors need not choose between financial returns equal to or greater than their initial investments and measurable societal gains, we have successfully changed the social innovation mindset.
Asking the right questions and finding definitive answers has proven to be a complicating obstacle in the push to increase impactful investments, Julie Katzman, Executive Vice President of the Inter-American Development Bank, noted. Luring a broad array of investors with different risk appetites and from both the private and public sectors into making societal investments will require more certainty.
While the panelists described a need for more specific definitions for social innovation, they agreed that the Policy Guide does identify six current policy drivers of social innovation, including: engage market stakeholders, develop government capacity for action, build market infrastructure and capacity, prepare enterprises from growth, grow and direct private capital and review and refine policy. As each of these conditions already exists internationally, broadening the appeal of social innovation so that it may be cultivated, replicated, and scaled is merely a matter of disseminating information about them and perhaps tweaking these conditions for a broader appeal. Positive societal outcomes are hardly anathema to financial windfalls, but imperfect approaches to investing for either social or monetary gain could negate the potential to enjoy both at once. That is, knowing where and how to invest can beget societal and financial benefits simultaneously—the Policy Guide helps here.