SOCAP Recap: OPTIMISM … With a Dash of Skepticism:
It might seem like everyone involved in social business and investment is attending SOCAP this year, but we know that’s not the case. So NextBillion editors James Militzer and Kyle Poplin are doing their best to convey what it feels like to be among the 2,700 funders, social entrepreneurs, startups, multinationals, academics, etc., taking part in the four-day event which concludes today. (Find their post from yesterday here.)
There’s always a buzz at SOCAP, as the information-hungry attendees network and get to know each other. But the buzz gave way on Thursday to the thundering Blue Angels, the U.S. Navy’s flight demonstration team, which spent much of the afternoon practicing jet maneuvers over San Francisco – and plenty of time directly over Fort Mason, where SOCAP is being held. It was a fun diversion … for a while (until the noise started drowning out the voices on stage). But the crowd and panelists were soon back at it full force, tuning out the overhead theatrics.
Nice of the Blue Angels to show up at #SOCAP15! pic.twitter.com/0N0WUTpt3C
— Calvert Investments (@CalvertInvests) October 8, 2015
Tyler Norris of Kaiser Permanente got Thursday’s opening plenary off on an inspiring note, challenging the crowd to change the world: “Let’s do something that is worthy of our lives.” He drew cheers when he said, “My vision of the American Dream does not involve rationing health care by wealth.” Some have predicted the current generation in the U.S. will live five years less than their parents, and that prompted Norris to ask why the U.S. – where almost 20 cents of every dollar goes toward health care spending – isn’t better at actually “producing health.” He said Kaiser, with nearly 10 million health plan members, isn’t trying to make money out of “sick care,” but by investing in things that keep people healthy, and told the entrepreneurs in the crowd, “To be successful we need your partnerships.” (Note: NextBillion will publish an interview we conducted with Norris on the sidelines of SOCAP in the coming weeks.)
We can provide best #healthcare in the world, but if we put that person back in toxic community-what the heck? says Norris @KPShare #SOCAP15
— NextBillionHC (@NextBillionHC) October 8, 2015
But Norris wasn’t the biggest name in the opening plenary – that title would have to go to former Massachusetts governor Deval Patrick. He’s currently managing a new impact investing fund at the storied private investment firm Bain Capital. Asked why he chose to follow his political career with such an unexpected move, he gave an answer that seemed to resonate with the SOCAP crowd: “To have meaning in my life, I need to have meaning in my work.” As he sees it, impact investing represents a return to a focus on long-term value creation, as opposed to the relentlessly short-term focus common in today’s economy. But that’s not to say that the Bain fund will be agnostic when it comes to profits: Patrick mentioned not only deal flow and scale, but also market-rate returns among the fund’s priorities. He also seemed determined to not let social impact get lost in the shuffle:
From our perspective, #socimp is not secondary. We screen for it first, says @DevalPatrick @BainCapital #SOCAP15 #impinv
— NextBillionFI (@NextBillionFI) October 8, 2015
Patrick shared the stage with Deborah Winshel, Global Head of Impact Investing at BlackRock. She addressed concerns about “greenwashing” with a call for transparency and managing investor expectations, saying “We need to be clear about which of our investments are really impact investments” – as opposed to ESG or socially screened investments. She also revealed some intriguing background to BlackRock’s decision to pursue impact investing: Apparently, a group of millennial-aged employees got together to lead the way.
scalable, liquid, mainstream – this is what @blackrock‘s Deborah Winshel wants to bring to impact investing #SOCAP15
— Anna Ghosh (@AnnaGhosh) October 8, 2015
Calvert Foundation CEO Jennifer Pryce had promised a big announcement during her speech during the plenary, and she launched into it with an interesting segue. She asked the audience to close their eyes and picture an impact investor, encouraging people to visualize their every physical detail. Then she asked them open their eyes: “Did your image resemble these people?” she asked, as a photo of Latinos appeared on the screen. “If investing is to become a mainstream practice, that means Latinos must be involved,” Price said. To that end, the foundation is putting its money where its mouth is: $25 million, to be precise. That’s the amount it will invest in a new fund aimed at Latin America and Latino communities in the U.S.
What’s your vision of an #impinv? Does it look like these people? This is the future @calvert_fdn #SOCAP15 pic.twitter.com/AELAVpFOJ2
— Kellogg Net Impact (@KelloggNetImp) October 8, 2015
In an interesting discussion of the role of foundations in impact investing, Christine Looney of the Ford Foundation joined Debra Schwartz of the John D. and Catherine T. MacArthur Foundation on the plenary stage. Schwartz said the new economy has an “incredible spectrum” of both social entrepreneurs and investors, and the challenge for foundations is to help build a market to make it easier for both social entrepreneurs who need money and those who want to invest in them. To that end, the foundation is collaborating with investment banks, family offices, and other partners that go beyond its fellow foundations. Looney expressed similar sentiments, saying Ford is “going to try to support as many things as possible that will be catalytic to the impact investing market.”
MacArthur Foundation: market-building, collaboration, put capital at risk in different way and get others to do so @macfound #SOCAP15
— Impact Entrepreneurs (@PSUimpact) October 8, 2015
In an on-stage chat with ImpactAssets Managing Director Fran Seegull, Arjan Schutte of Core Innovation Capital pointed out that “it’s expensive to be poor,” because poor people have to rely on alternative financing instead of traditional banks. Low-income people around the world spend about $100 billion on “very basic (financial) products that almost everyone in this room gets for free,” he said. And the U.S., he said, is “antiquated and behind” in its financial services for low-income people – in part because it’s been slow to recognize social collateral. “Millions of Americans have no FICO score,” he said. “So they’re invisible.” He said his company is looking to invest in “visionaries driven by a desire to make a deep impact,” but who are also “effective in the business of business. … Almost all of our entrepreneurs are accidental social entrepreneurs.”
But Schutte also had some hard truths for the SOCAP crowd: Most entrepreneurs are “more mercenary than missionary,” he said, and won’t do the hard work to reach the poorest markets. That’s why Core Innovation Capital has an independent “impact audit committee” that helps it assess its social impact, which is then tied to staff compensation. “We shouldn’t just rely on our good intentions,” he said. “Setting up an accountability mechanism is important.” Also important: looking “beyond the converted” to form relationships that will take a business to the next level. Many of these people, Schutte said, “won’t be at SOCAP.”
“I’d like fund managers to self-impose and measure impact more. What’s not measured, can’t be achieved” – @arjanschutte #SOCAP15
— Ela Madej (@elamadej) October 8, 2015
His sentiments formed part of a solid current of skepticism (or realism, if you prefer) that has run through much of the conversation at the conference. In spite of all the legitimate enthusiasm and celebrations of momentum in the social business sector – the positive vibe that defines SOCAP – a number of voices have sounded more troubling notes.
For instance, in a panel about inclusive business and impact investing, Megan Mukuria of ZanaAfrica, which provides feminine hygiene products in East Africa, made a resonant point: “I don’t think there’s a single African investor at SOCAP15,” she said. “For a conference that’s trying to help Africa, that’s a problem.” On the same panel, Acumen’s Chief Innovation Officer Sasha Dichter said that “A lot of what I’m hearing [in the CSR conversation] now sounds like what I heard 15 years ago – I’m a bit skeptical that things will change.” What’s more, he said, “The momentum in impact investing seems to be ‘Look at us, we’re real capitalists.’ We might come to realize that we’ve come to the wrong party.”
#BlueAngels are symbolic for #socap15: well paid experts on a fast fly-by. Lots of hot air, little lasting value. We just watch from below.
— Oh Really? (@take_two) October 8, 2015
Some of this might be understandable frustration due to the fact that social business and investing – in spite of all its momentum – is still far outweighed by the scope of the problems it addresses. Some might be due to the persistent nature of the challenges facing sustainable business alternatives – we discuss these challenges at conference after conference, and it seems like they’ll never go away (indeed, many of them won’t). But perhaps the most important takeaway from events like SOCAP is the need to stay positive and focused in the face of the generational challenges and intractable problems we’re facing. Nobody said that changing the world was going to be easy.
- Health Care, Impact Assessment, Social Enterprise