By Stuart Yasgur, Managing Director of Ashoka SFS
Ashoka’s Social Financial Services group starts with a single question: “How do we engage the market to improve people’s lives?”
It’s motivated by three simple observations. The market affects everyone – there’s no system that’s more pervasive. It profoundly shapes the fabric of our lives. And, it has the potential to be transformative.
To find the most promising answers, we search for social entrepreneurs on the leading edge of innovation, people addressing some of society’s thorniest problems at a systemic level with market based ideas. This has led us to explore hundreds of the most promising market based innovations emerging today.
What we are seeing is challenging us to rethink our strategy.
We see it in innovations like the Social Real Estate Investment Trust (SREITs) that’s been developed by Darin Gunesekera to deal with insecure land tenure facing residents of informal housing settlements. And we see it in innovations like Bancos Palmas created by João Joaquim de Melo Neto Segundo, to stimulate growth in less affluent communities like Fortaleza in Brazil.
These innovations are different from many of the social enterprises and financial vehicles we’re familiar with. The impact they create is not as much a result of the income they generate, the goods/services they provide or the people they employ. When they work, these innovations have a multiplying effect because they shift the market to align financial success with creating social impact.
In SREITs, putative landowners stand to profit most when informal tenants have safe, resilient and growing communities. Banco Palmas helps make community ties visible, giving customers and businesses an incentive to spend, hire, and invest locally.
By changing what it takes to succeed, these innovations change the strategies of other participants in the market. This changes the focus of their efforts and how they deploy resources.
Innovations like these begin to demonstrate a powerful way to engage the market to improve people’s lives. When we shift the market to align profit and impact, business can create impact by focusing on what it does best, pursuing profit.
But that depends crucially on our ability to create and maintain that alignment over time. And that requires thinking differently.
It is not enough to ask: How do we create profit to support our impact? Or even: How do we create impact while generating profit?
We need to ask: How do we change the market so the pursuit of profit creates the greatest impact?
To find the most powerful answers, we need to support a new wave of innovations that shift the market to align profit and impact.
This presents an opportunity to build on our successes to date, to shape and correct our markets and to create tremendous leverage.
Join us in supporting this new wave of market changing innovations.
This article was originally published by Social Capital Markets on October 3, 2015.