Brooke Avory, Manager, Partnership Development and Research, BSR
Everyone is talking about inequality these days. Whether it is a discussion among business leaders at the World Economic Forum, in Stanford’s recent report on poverty and inequality, or a debate about Thomas Picketty’s Capital in the Twenty-First Century, people in all corners of the globe are focusing on inequality and the fact that the economy isn’t working for everyone. (Indeed, BSR has an organizationwide initiative on just this subject.)
In Asia, many countries’ economies are growing fast, but an uneven distribution of wealth, combined with weak social safety nets, means that many people are slipping through the gaps. An aging population and a boom in urbanization are putting pressure on already stressed social services like healthcare and education. In China, the government desperately wants to avoid social tensions caused by inequality.
At the recent Asian Venture Philanthropy Network (AVPN) conference in Singapore, impact investors, social entrepreneurs, foundations, and intermediary organizations discussed the latest developments and best practices in social impact investing and venture philanthropy in Asia. Social impact investments, as defined by the Global Impact Investing Network, are investments aimed at generating measurable social and environmental impact alongside financial returns. Venture philanthropy, on the other hand, involves both financial and non-financial resources such as business expertise, to help grantee organizations increase their operational sustainability. As the number of social and environmental issues facing Asia increases, individuals and organizations can use both approaches to support social enterprises or nonprofits in their efforts to address inequality.
During his opening address, AVPN Chairman Doug Miller urged participants to take a regional and collaborative approach to impact investing. Following the conference, I came away with three clear developments the sector needs to realize Miller’s vision:
New approaches to address inequality: This includes challenging established ways of giving, such as one-off grants. Venture philanthropy can spur subsequent investments in social enterprises that can come up with more innovative solutions to social problems.
A “total portfolio” approach: Investment is needed to support social enterprises at different stages of development to support the overall social entrepreneurship ecosystem. This can range from high-risk grants for newly established organizations that have no track record, to impact investments that can generate returns and help larger organizations grow to scale.
A path through the artificial divide between “for profit” and “nonprofit” organizations: All types of organizations can create social impact through their products and services, their technology, and their human and financial capital. By recognizing the role of organizations working within the entire social impact ecosystem, from traditional donors to impact investors, and finding opportunities to pool these investments, we can create a more collaborative approach to social change.
For more information on how BSR is working with companies and donors to build a more inclusive economy, see our recent articles on the topic.