Today marks the launch of the Social Finance Task Force Report. The task force is meant to identify opportunities to mobilize capital and catalyze the Canadian market for social finance.

The Task Force’s first report, aptly named Mobilizing Private Capital for the Public Good, was also launched today. The report outlines the massive opportunity that exists in social finance, while also highlighting areas that need further development.

There are a few key take-aways:

There is momentum in the right places to create robust financial instruments to address social issues. The Task Force has a powerful line-up of contributors, (i.e., Ilse Treurnicht, Rt. Hon. Paul Martin, and advisors like Jed Emerson) pointing to growing consensus among key decision makers within commercial and government sectors.

The recommendations identify specific actions that can catalyze a Canadian marketplace. Hopefully, this bias towards action will continue in future reports because we need a clear, concrete voice that can argue for real policy change amongst financial intermediaries.

There is a need for more market data: the size of the investment opportunity is pegged to the growth of the American market, which is a starting point but would benefit from Canada-specific data.
Young social entrepreneurs will surely welcome the call for financial capital. As these recommendations are implemented, it will be necessary to create funds specific to the needs of young social entrepreneurs, who represent a sizeable portion of the social entrepreneur demographic in Canada, including the over 3,000 in YSEC’s current network.

As future task forces and reports are commissioned, it will be necessary to include the perspectives of young social entrepreneurs.

On the whole, the report shows an increase of momentum in the Canadian social enterprise landscape amongst important stakeholders. The recommendations are a welcome step in the right direction to accelerating the sector’s growth.

Analysis provided by Anshula Chowdhury, President of Social Asset Measurements (SAM).

In 2007, I spontaneously left for a week in New York City to meet my cousin, who was flying into NYC from the UK. A miscommunication left me arriving into the city about five hours early with no access to our housing. With nothing better to do, I wandered around Greenwich until I came upon one of those charming, slightly over priced New York bookstores with patrons leafing through political non-fiction.

Out of boredom, I picked up Power and Idealists by Paul Berman, a book about the 1968 student revolutionaries in Europe. The first few pages captivated me. I spent much of that week reading Berman’s book, finding spots on the parks and sidewalks of New York.

Power and the Idealists traced the development of personalities like Bernard Kouchner, a young, leftist radical revolutionary of the sixties, who later became a prominent member of Sarkozy’s right-leaning government. Daniel Cohn-Bendit and Joschka Fischer were also examined as student politicians who’s ideas transformed as adults.

What stood out to me was Berman’s treatment of how these ideas developed to create a movement of the New Left. He framed the growth of politicians like Kouchner as a process that happened in concert and conflict with colleagues and friends of the same generation, yet was also grounded in a rich historical context that was passed on through parents and grandparents.

What started out as a rebellious, idealistic movement of young people morphed into a policy of humanitarian interventionism that affected Kosovo and Rwanda. I was fascinated by the notion that an idea could ripple through society, not only affecting the people who came into contact with it, but having the idea itself change and evolve through this movement.

In Kouchner’s case, it was the people that he engaged with who affected his ideas, and these ideas affected his actions. His actions set him apart a major change agent (although we may not always agree with the direction of that change), first manifested through his days as a resistant in the student revolution, and then as founder of Doctors Without Borders, and most recently through his post as Foreign Minister in Nicholas Sarkozy’s government.

Boiled down, Berman’s ideas might be synthesized as follows: ideas spread through networks, changing both the idea and the network through this movement. It turns out this has a lot of applications to social value metrics, but we seem to have missed these connections because of the focus on appeasing the needs of investors. If we approach social value metrics as a tool for helping social ventures optimize their impact, then it becomes important to understand how this impact is created and spread.

Power and the Idealists provides clues to this puzzle: social impact creation is about changing behaviours, and behaviours are learnt through the people we know, much as Kouchner learnt about resisting totalitarianism through his grandparents’ experiences in World War II. In another light, social impact (a complex mixture of ideas and action) is created and spread through networks of people. By creating connections, we are opening the door to learning about more sustainable ways of living. As we take on these practices, we also adapt them to our own situation.

We can go one step further:

If we can deepen our understanding of how and why social impact is spreading, then we can start making ‘impact optimization’ decisions: placing resources in areas of networks that are conducive to achieving the mission of different social ventures. If we invest more resources into understanding the mechanics of social value creation, then we have the opportunity to scale up social impact to unprecedented heights. These ideas are the kinds of ideas explored and developed by myself and a few others at Social Asset Measurements (SAM), a social value metrics firm.

At its height, social metrics should give information on how we as social entrepreneurs are creating social value so that we can make better decisions about where to put our resources.

At SAM, we believe that sustainable social impact is created by changing unsustainable behaviours. And, we behaviours spread through networks. By extension, when it comes to measuring social impact, we need to study the sustainable behaviours that emanate from social enterprises and nonprofits through their programs. This is the rough outline of a deeper theoretical framework developed at SAM; this approach has informed a lot of this organization’s work on social impact.

Growing this theoretical framework and constantly applying it to the social enterprises that come through our doors is part of the work Social Asset Measurements (SAM) concerns itself with. We are focused on understanding the growth of social impact, of which measurement is a key part.

In fact, there’s been a lot of thinking around networks and how behaviours spread, providing a rich body of literature to draw from.

Most recently, Nicholas Christakis gave a TED Talk on the hidden influence of social networks. Christakis suggests that emotions tend to populate and emanate from specific areas of networks. But it’s not just emotions that are effected by our social networks, but also behavioural illnesses. According to Christakis, we’re 57% more likely to become obese if we know someone who is also obese. At its crux, Christakis argues that behaviours spread through networks and that they can be

This is fascinating stuff, but also fairly intuitive: we’re not just atomistic actors, instead we are effected by what people do around us. This is one of the main premises behind evolutionary economics, a new and growing field of academic study. However, the visuals and methods that accompany social network analysis provides a powerful tool for representing these kinds of relationships.

Gernot Grabher also noted a few things about networks: the types of relationships in each network vary. He identifies two types of “ties”, or relationships: weak and embedded. An embedded tie is both economic and social and a weak tie tends to be only economic, or only social. There is very little mutual dependency in weak ties. The kind of tie you have with someone also effects the amount and depth of information you would receive through that relationship.

There are two key premises here: First that social networks spread behaviours, and second that relationship qualities, context, and content differ between actors within the network. This also effects the spread of key behaviours. By studying these connections, SAM has created a model that is aimed at producing useful information to social entrepreneurs. We hope the result will be more efficient social change.