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Symposium 2010

Growing the Social Economy in a Fiscal Crisis

The Challenge

The financial crisis in the western financial system seems to have past its apex and the banking system, especially certain large investment banks, appear in nearly rude health. However, the cost of the rescue has been borne by governments, or more specifically the taxpayer.

Moreover, the deep recession caused by the meltdown has severely depressed corporate profits, reducing tax intake, and government efforts to stimulate the economies has seriously depleted fiscal reserves.

A number of western countries (and the Euro) have been pushed to the brink of collapse, with many European countries in serious state, owing to governments’ financial positions and the response of bond, currency and share markets. As actions unfold to cope with the crisis, citizens in countries such as Latvia, Iceland and Greece have engaged in mounting civil unrest. Domestic tranquillity is threatened as the extent of public service delivery and state welfare systems are likely to be reduced.

Into this brink step social businesses and enterprises. Introduced conceptually to last year’s GES, these organisations contain considerable advantages in public service delivery—especially with respect to funding and input costs, especially labour. They deploy their creativity, skills and hard work to utilize the methodology of capitalism for social outcomes.

However, the sector, though it has grown fast is still very small; at best 5-10% of GDP. Although its activities save governments millions in expenditure, this benefit is hard to capture and incentivizing its generation is problematic. Moreover, many social enterprises have relied on governmental largesse, and the financial structures in which they reside have been highly subsidized. How can the sector see its scale increase massively, for the public benefit, while at the same time reducing its state reliance, or becoming a net contributor to the public purse? This raises important questions, including:

  • What role can private capital flows play in social investment, and how can this be encouraged or facilitated?
  • The corporate sector is already fostering social innovation; how can this be accelerated?
  • What can governments do from a legal and fiscal perspective that is revenue neutral or better to address problems in poverty alleviation, transport infrastructure, health, education and training, criminal justice, the environment and welfare provision?
  • Are academia, civil society and the non-governmental organization (NGO) sector promoting socially entrepreneurial solutions? How can this be made more effective?

    Solutions

    Solution
    Symposium 2010

    Include a course on social enterprise in all master’s programs in business and management.

    Include a course on social enterprise in all master’s programs in business and management.

    Include a course on social enterprise in all master’s programs in business and management.

    Polity, Academia, Civil Society
    Solution
    Symposium 2010

    Introduce mandatory metrics to measure the impact of social investment for all national and multilateral lending and investment organizations that receive public funding.

    Introduce mandatory metrics to measure the impact of social investment for all national and multilateral lending and investment organizations that receive public funding.

    Introduce mandatory metrics to measure the impact of social investment for all national and multilateral lending and investment organizations that receive public funding.

    Polity, Academia, Business, Civil Society
    Solution
    Symposium 2010

    Tilt the fiscal system—via taxes, charges, credits and social impact rebates—to reward the positive externalities of companies that provide collective goods for the economy through social investment and to penalize ...

    Tilt the fiscal system—via taxes, charges, credits and social impact rebates—to reward the positive externalities of companies that provide collective goods for the economy through social investme ...

    Tilt the fiscal system—via taxes, charges, credits and social impact rebates—to reward the positive externalities of companies that provide collective goods for the economy through social investment and to penalize the negative externalities of social disinvestment.

    Polity, Academia, Business, Civil Society
    Solution
    Symposium 2010

    Create scalable, common civil society-driven media platforms for communicating and disseminating social investment to offset the gaps in government provided services, particularly in education.

    Create scalable, common civil society-driven media platforms for communicating and disseminating social investment to offset the gaps in government provided services, particularly in education.

    Create scalable, common civil society-driven media platforms for communicating and disseminating social investment to offset the gaps in government provided services, particularly in education.

    Polity, Academia, Business, Civil Society

    Proposals

    Proposal
    Symposium 2010

    Growing the Social Economy in a Fiscal Crisis

    (1) “Tilt” the tax system. Specifically, rebalance the playing field so that all costs and benefits to society (positive and negative externalities) are taken into account. By punishing the negati ...

    (1) “Tilt” the tax system. Specifically, rebalance the playing field so that all costs and benefits to society (positive and negative externalities) are taken into account. By punishing the negative, even more than we do now, as in the case of “polluter pays” models, and giving credits to those business that generate positive externalities, such as social businesses, we can make society wealthier on a fiscally neutral or even lower tax basis. (2) Share the upside. Insist that Governments share some of the savings associated with social investment with those who undertake such investments. For example, in the UK the

    Polity, Business
    Proposal
    Symposium 2010

    Introduce a required course on social entrepreneurship and social enterprise in every master of economics and management

    Since a long time, private entrepreneurial dynamics driven by social aims have existed in societies besides traditional for profit enterprises and public enterprises. When looking at this debate, what ...

    Since a long time, private entrepreneurial dynamics driven by social aims have existed in societies besides traditional for profit enterprises and public enterprises. When looking at this debate, what is striking is the diversity of concepts which have been used across different contexts in space and in time to describe these entrepreneurial behaviours with social aims: “voluntary sector” “social economy” "non-profit venture", "non-profit entrepreneurship", "social-purpose endeavour", "social innovation", "social-purpose business", "community wealth enterprise", “social enterprise”, “social cooperative”… Since a dozen years, the debate is fastly growing. If the concepts of "social enterprise", "social entrepreneurship" and "social entrepreneur" were rarely discussed,

    Polity, Academia, Civil Society
    Proposal
    Symposium 2010

    Promote the Concept of Social Investment for Lasting Value Creation

    In searching for the root causes of the global financial crisis, attention should be paid to investors’ shortsighted approach to shareholder value in the run-up to the crisis.  As investors, we mus ...

    In searching for the root causes of the global financial crisis, attention should be paid to investors’ shortsighted approach to shareholder value in the run-up to the crisis.  As investors, we must question the ability of company managers to create intrinsic value when performance horizons of 12-months and the maximisation of dividend payouts solicit aggressive valuations on estimates of future value.  Such a short-term, profit-maximisation outlook has two consequences:  first, it makes value creation not intrinsic but externally affected and highly volatile since it is driven by market cycles; and a second consequence is that it becomes even more challenging

    Business
    Proposal
    Symposium 2010

    Multilateral development organisations should use metrics to measure their social performance and enhance their efficiency

    Multilateral development banks and financial institutions such as the World Bank, EBRD or EIB have tremendous investment resources, reach, and experience and can be effective in catalysing the market ...

    Multilateral development banks and financial institutions such as the World Bank, EBRD or EIB have tremendous investment resources, reach, and experience and can be effective in catalysing the market for social investments. These institutions, which manage mandates on behalf of their shareholders or third parties, implement market-based financial instruments but, due to their public owners and development missions, are inherently social institutions. If asked how they are doing in accomplishing their respective missions, for instance, in alleviating poverty, improving transport infrastructure, health, education and training, it is ironic that we actually can’t know, because most of these institutions do not

    Polity, Civil Society
    Proposal
    Symposium 2010

    Growing the Social Economy in a Fiscal Crisis

    This idea is offered in the spirit of Peter Drucker who said, famously, that there are two essential things in business; innovation and marketing. Everything else is an expense! The solution. There is ...

    This idea is offered in the spirit of Peter Drucker who said, famously, that there are two essential things in business; innovation and marketing. Everything else is an expense! The solution. There is a new, global Marketplace; the Marketplace of Social Change. If they are to thrive and compete in this marketplace, Social Enterprises and Ideas need a new level of effectiveness in marketing and Partnership Development. The demand and appetite for social change ideas – market based and otherwise - continues to expand. It is evident in the public’s expressed levels of concern on issues ranging from climate change

    Polity, Academia, Business, Civil Society
    Proposal
    Symposium 2010

    Femina – 10 years to reach 10 million

    Solution to creating nation wide citizen engagement and building social capital. Femina HIP, the citizen media initiative, started as a small project in Tanzania in 1999. By 2010, Femina had become th ...

    Solution to creating nation wide citizen engagement and building social capital. Femina HIP, the citizen media initiative, started as a small project in Tanzania in 1999. By 2010, Femina had become the country’s biggest media platform, and a significant shaper of contemporary culture and values, reaching 10 million (out of 40 million) people in Tanzania, with over 300 distribution partnerships reaching across the country. The original aim was to initiate popular education about healthy lifestyles, embracing sexual and reproductive health and rights as well as HIV transmission. The focus was on young people and the approach was ‘entertainment education’ –

    Polity, Academia, Business, Civil Society