How do you spot the difference between a fad and a trend?

When you've hung around the social sector for decades you learn to be discerning.  At the outset they appear the same, capturing interest, attracting pilot funding, developing constituencies, attracting academic research, even influencing policy.  Inevitably there is a fork in the road. Despite the rhetoric, fads disappear. Nothing changes except perhaps people use new language to describe the same old thing. A shuffling of chairs on the deck but not much more.  Soon to be replaced by something else. 

Trends on the other hand, survive although they often morph, change and evolve. In fact they often take some time to gain traction.  Paradoxically this may be a distinguishing characteristic between fads and trends.  If something is quickly adopted it likely means the tensions, strains and hard grinding work of change isn't happening.  Paradigm shifting trends confront our deeply held beliefs, ingrained habits and the structures we have erected to maintain them.  Neither individuals nor systems surrender easily!

Is social finance a trend or a fad?  In Canada it is too soon to tell.  Elsewhere there is every sign it is becoming a trend.  I wrote recently about a recent European Union report, The Future European Style, that contends innovative approaches to our social challenges is central to improving economic performance in each EU country as well as to confronting the challenges themselves.  Here is further evidence of the durability and impact of social finance which will inform our exploration and adaptation in Canada. 

Recently the UK Telegraph quoted Sir Ronald Cohen, known as the 'father' of the venture capital and private equity industry in the UK, declaring that entrepreneurship should be harnessed as an agent of social change.  Speaking to Harvard business students he advised the next big thing in the business world is social finance.  If I had been leaving Harvard in 2010, this would be the area I would want to be going into, he added.

“I think societies everywhere will come to the conclusion that an important part of the capitalist system is having a powerful social sector to address social issues, because government doesn't have the resources."

Ronald Cohen has already played a major role is the growth and development of a
social finance infrastructure in the UK. He seems poised for another great roll forward.

Fortunately Cohen is not alone.  Here are quotes from Judith Rodin, President of the Rockefeller Foundation in her speech: Innovative Philanthropy for the 21st Century: Harnessing the Power of Impact Investing.

At the Foundation, we also see an unfolding tale of two globalizations.  One generates
substantial progress for many.  Another leaves many more by the wayside – families and
populations that fall further behind as the pace of change quickens.     

Although philanthropists can only muster billions of dollars against the trillions of dollars of
social needs, private investors like you in this room manage more than $100 trillion in for-profit capital markets. So we no longer ask ourselves,
'why isn't there enough money to solve social problems?  Instead we ask, How can we tap into these enormous private capital flows to create both financial profit and social return?

And in a marriage between like minds, Rockefeller funded Investing for Impact: Case Studies Across Asset Classes.  The report was prepared by Bridges Venture an organization founded by Cohen!

And there's more:

Ireland just released a report: Adding Value, Delivering Change: The Role of Social Enterprise in National Recovery.  Its findings and recommendations emphasize the blending of social, environmental and economic goals. Here are a couple of excerpts from the Executive Summary:

  • Countries that recognise and value social enterprise as part of the ‘real’ economy have achieved significant growth in employment and output in the sector while addressing genuine social and environmental needs.
  • Social enterprise in Ireland has the potential to grow significantly to represent 5% of GDP and to generate at least 65,000 jobs.

Fad or trend? I invite you to join the exploration and discussion and consider for yourself.  One way or the other, those of us in the non profit, community, social, charitable, civil sector need to address our declining resource base. Currently, it's too shaky a foundation to launch durable social environmental and economic justice strategies. Let's profit from the 'social profit-making' struggles and learnings, elsewhere.

NOTE:

I know I have many readers who are only just being introduced to social
finance
. I define social finance as: Leveraging revenue from
'grants' to attract other sources of capital i.e. loans, and private
investment (equity).  
Social finance is the intelligent use of all the financial assets of non
profits – properties, assets, cash flow, influential connections,
purchasing power. It is the necessary financial infrastructure for social entrepreneurs as the Irish report highlights. 

See Social Finance: A New Approach , a post I wrote for social finance.ca last December.

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