Social investment: Are you a social enterprise tree hugger?

It's a claim that was made in an article on the issue of social investment that's been troubling me for some time.

t comes from the CEO of Merism Capital, Stephen Rockman who says that investors tend not be involved emotional which "might cause a problem when entrepreneurs at seed stage need a bit more hands-on support and confidence building to grow, and understand how to grow."

That much is understood and acknowleged by many including ourselves, especially in our 2006 paper which set out a proposal for a national scale social enterprise incubator, which called for support from forward thinking business to augment a social investment fund. A model shared online with the social enterprise community.

Rockman sees the Community Interest Company dividend cap as an obstacle to the would be investor, drawing attention to his ethical stance of only wanting twice the return on investment, rather than 8 to 20 times. He says that the for profit business model of B corporations is "a CIC with brains".

His ethical stance would appear to be that he's not as bad as the rest, as investors go..

I was interested to learn that he holds a franchise for Village Capital which is connected to someone called Nathaniel Whittemore I remember introducing our work to him in 2008, in a conversation about Obama's social enterprise support plans.  

The P-CED approach to place funds in the hands of those needing it most it began in 1999 with the experimental Tomsk Regional Initiave and the stratefgy to fund social enterprise in the same way, very much part of our copyright plans for a social enterprise investment fund. 

Social enterprise incubators making a return on investment is all very well, but at some point those incubated have to go out into the world and attempt to tackle problems for which there is no financial return. As you may read, ours was "joined up" with a nation's most urgent social problems. 

Like job creation schemes for which there are no jobs on graduation, this is funding incubators for social innovation which in turn, will not find investment, because the short term gains are simply not there.   ,

In his interview with Axiom news P-CED founder Terry Hallman relates how a non dividend distributing business can align with a social investor for a share of financial return. He it talking of 10% return in total. which would really mean 10% plus full cost recovery.

The 6 million dollars invested in creating the Tomsk community microfinance bank for example, became self-sustaining in the second year and achieved full cost recovery, while helping create around 10,000 businesses. .

For us,the new bottom line is people, especially those in greatest need.

The B corporation evolved in 2007, which coincided with both the very public initiative described above and Muhammad Yunus' book on Creating a World Without Poverty. So it's reasonable to assume that it was build on intellectual capital which others had invested. In 2009, I approached them with a view to collaborate, given the likeness of our own approach and what we had to share.

So what can the social benefit of a B corporation be, other than an extensive authentication methodology? Does it align with what Stephen Rockman alludes to, doing good by not being as greedy as the others? 

Social enterprise outside the incubator is a long way from tree hugging. A point I hope was made clearly when we called on the US Senate from the "foxholes, silos and trenches" where we were toe to toe with predatory capitalism.over institutions farming children for profit and the trade in human foetuses.

Rockman says Merism supports entrepreneurs with intellectual capital,

Our intellectual capital is invested in the profit-for-purpose social enterprise model and designs like the national scale incubator i describe above, we fought mafia to defend our IP but in the end it was hijacked by corporate investors,

The pressing question is, who will defend our intellectual capital from "social" investors who fail,to comprehend the full social objective?  

"By going with the normal flow of free-market enterprise and the emerging replacement of monetary capital with intellectual capital as the dominant form of basic enterprise capitalization, it becomes easier to set up new companies primarily on the basis of invested intellectual capital. (See Post-Capitalist Society, by Peter Drucker). In plain English, socially responsible and forward-thinking companies can be set up quickly and cheaply--and these companies have indefinite potential for earnings and localized, targeted economic development. The initial objective is to develop model enterprises and communities, then implement successful strategies from those models into surrounding communities regionwide or nationwide, as needed."

(From the P-CED White Paper 1996)