“Giving in its purest form expects nothing in return.” – Anonymous

There are a lot of confusing buzzwords being thrown around these days: ending charity, dead aid, patient capitalism, impatient optimists, and investment over aid. What does it all mean?

My initial thoughts on this subject were spurred by zyOyz founder Steve Jennings’ repost of an article titled: “Charity alone not the answer to tackling poverty”. Well I agreed with the article’s basic premise that just giving money is not the only solution or the best, I was troubled by the article’s absolute statements that business models and capitalism will save the world.

The article, reposted from the Financial Times, notes the work of the Acumen Fund founded by Jacqueline Novogratz, which invests in small businesses with a social impact termed as “patient capital.” It has become a highly successful model, however Novogratz is quoted as saying: “We need creative approaches to reinvigorate capitalism and make it more inclusive.” The most inclusive business model that I know, with high degrees of success, is the cooperative model based on needs of those involved, inclusion, and participation. Looking at history, capitalism has generated exclusion: great amounts of wealth for many people, but it has also perpetuated extremely flawed systems that create great degrees of poverty for many people. The evidence is in any major city where the consequences of capitalism lay bare the desperation of good people who are left with nothing.

At the root of the article, “Charity alone not the answer to tackling poverty,” is the long-running debate on whether investment is more effective than aid. Professor Bill Easterly made popular the fact (through his book, “White Man’s Burden”) that over $1 trillion in aid has been given to Africa over the last 50 years with limited positive results, Dambisa Moyo has termed this “dead aid” and calls for a complete end of aid to Africa. Others like Bill and Melinda Gates, who have given vast amounts of aid (which they often call “investment”) to Africa with their foundation, label themselves as “impatient optimists.” They are hopeful for the future and want more done at the present time.

However, there is a problem with their impatience that many have critiqued. Impatience tends to push solutions that are ineffective. Ian Wilhelm gets further into this topic in a blog about “irrational aid.” In the post he writes about Alanna Shaikh’s critique of ineffective aid, such as outdated pharmaceuticals and medical equipment that has no use in the field. This argument is countered by Isaac Holeman’s disagreement that well that aid may be irrational, it provides immediate personal stories of need to bring in more donors. I have to agree with Alanna in saying that this irrational, possibly impatient, aid does more harm and basically no good.

How have we now moved from decrying the failures of charity and aid to highlighting the benefits of business models and the capitalist system back again to smiling about greater benefits of monetary investment in people and ideas? Where is the line drawn between investment and aid? As far as I can tell it is mostly semantic. Isn’t aid when transparent, effective, and driven by best practices an investment? Giving an investment is essentially the same as giving aid or charity.

Investment is the buzzword used by social enterprises, microfinance, and has become the new fad in international development organizations. I think that it is important to make a distinction between what is effective and what is not. Aid can be very effective and investment can be very ineffective. The reverse is also true. Where does effective aid change from being a type of investment? When experts talk about the broken aid system do they forget that the broken aid system is merely a reflection of the broken financial system. The same interests and individuals who have run financial systems have run foreign aid systems.

The real issue in this debate need not be if businesses are better than charities or who’s money is better spent. What is most important needs to be the question of, “How?” The systems, structures, and practices that implement aid and drive investment need to be cooperative, inclusive, needs based, and people-centered – in one word: effective. If you are looking for a return on investment (ROI) or accolades for your donated or invested dollars, then maybe you should reconsider why you give?

(photo credit: WDI University of Michigan)

Over the years SCOUT BANANA’s work has been termed “social entrepreneurship.” Unfortunately, the definition of the social enterprise has slowly become muddled and confused with other ideas. During a discussion last month a friend said that calling someone a social entrepreneur was like “cutting the balls off of a socialist.” He may not have been as far from the truth as I once thought. As the term becomes more prevalent within aid and development we must delve deeper into the history of social enterprise and decide what it really means for the work that we do.

Jeff Trexler wrote an excellent post on the history of social enterprise. He writes that a social enterprise is essentially “a venture with a social purpose.” As many wrongly believe the ideas of social enterprise did not come from capitalism or corporate business models at all.

“In socialist jurisprudence, social enterprise was a term designed to replace the capitalist notion of businesses dedicated to the pursuit of profit. The social enterprise generated revenue in excess of the costs of production, but profit-making was not the goal of socialist business–rather, its fundamental organizational purpose was to serve collective benefit. More over, in keeping with Marxist/Leninist ideology, the social enterprise was owned & controlled not by private shareholders–a hallmark of bourgeoise capitalism–but by workers themselves, from the workers immediately connected to the enterprise to society as a whole.”

Jeff continues to write that “social enterprise” migrated to Western minds and charities much the same way that “civil society” was reborn and co-opted. Meaning “citizen’s society,” the term was used to unite individuals against centralized government power. Now the term is best understood as a descriptor of anything “non-governmental.”

It seems that “social enterprise” has drifted just as far from its original conception. As a social venture that was meant to give power back to people and allow them ownership, much like a cooperative, “social enterprise” has best come to represent corporate philanthropy and cause marketing campaigns. Both of which are focused on turning profits and not helping people. Julia Moulden asks, “is making a difference only for the rich?” She easily gives examples that it is not, but is it? As far as the foreign aid/ international development arena it appears that social enterprise is geared towards engaging wealthy Western populations in feel good campaigns, like Product (RED), that are best defined as image marketing campaigns for corporations to try and look better as a way to bring in more customers. Lucy Bernholz has termed this business model “embedded giving” where “commerce is used to generate funds for a cause.” She writes:

“Embedded giving is just one more example of the blurring of sectors and roles between commerce, philanthropy, and public good. [...] Maybe today’s teens and kids who have seen so much embedded giving will grow up to expect that every product and every service comes with a charitable affiliation.”

SCOUT BANANA’s work was first called “social entrepreneurship” in 2004 when I was selected as one of Netaid’s Global Action Awardee and was asked to contribute to a discussion on SocialEdge about young people and making a difference. Then, I was not too sure what the term meant or why it might be significant. More recently Spotlight Michigan has highlighted our work and called us a “social enterprise.” They select “innovative” companies and organizations in Michigan to feature on their website. Their criteria breaks down into three categories: creativity, risk-taking and adaptability. In the true spirit of a social enterprise we are an organization built for adaptation because we operate by members involvement and input. We have always been called creative for our fundraising tactics, use of yellow and bananas, and our ability to connect people. The risk-taking is another story. We never faced any risk in our venture to make a difference. If we failed the only people who would potentially suffer were those relying on our support to access basic health care. Alanna Shaikh wrote an excellent piece on how “global health is not about altruism.” While our actions may have been seen as risk-taking, we really work to create accountable, long-term relationships with communities developing their own sustainable solutions.

Personally I define social entrepreneurship within its original conception; a socialist structure (for social good) that is meant to give power and agency back to people as well as present an alternative to ineffective governments. Civil society still exists because honestly the government can’t do it all and often are not very good at meeting the needs of people. SCOUT BANANA sees the world’s problems as a simple equation of connecting communities; linking the necessary social capital (people and ideas) to social problems. We embrace the idea of “social enterprise” by focusing on presenting an alternative to government aid schemes and other big philanthropy and development programs that go for the quick-fix, band-aid solutions without being people-focused to produce long-term social change.

Is SCOUT BANANA a social enterprise? Yes and no, it depends how you define the term. If you are thinking of an organization cooperatively owned and operated by its members, focused on providing an alternative to what hasn’t worked, and supporting community-based solutions that do work – then, and only then are we definitely a “social enterprise.” In her Spotlight Michigan article I think Caitlin Blair put it best: “A society of entrepreneurs and innovators simply could not exist without social entrepreneurs because where business entrepreneurs typically work to enhance markets, social entrepreneurs completely transform the necessary infrastructure and attitudes of a society.”

See our features on Spotlight Michigan:
profile
article
photo essay