Good & Gasp #4
Scaling Social Enterprises, iPhone Guilt, Ethical Rankings, Philanthropy Time Limits
Themes that caught my attention, interest or made my eyes roll while roaming the web world of doing good:
- Scaling Social Enterprises – how can social enterprises scale post seed-investment stage?
- iPhone Guilt – is Apple or its loyal consumers (you) to be blamed for the Foxconn debacle?
- Philanthropy Limits – should foundations consider spending their money quicker and winding down (dying) earlier?
- Ethical Rankings – if weapons companies make the list of most ethical firms, what exactly do we mean by “ethical”?
- The Gist: One of the sessions at this year’s Skoll World Forum, “Too Big To Be Small”, dealt with the topic of how social enterprises can keep growing past the initial seed investment stage. VisionSpring (formerly ScoJo Foundation) was used as a case study for a company that sees difficulty attracting funding to scale to the next level. One part of the debate centered around if, when and how social enterprises should plan for a for-profit “exit” strategy within a given time window.
- My Take: The issue of “scaling impact” is certainly not a new one but the more I think about it, the more the exit strategy as a concept gains some appeal. But perhaps not in the way one of the panelists envisioned. I always wonder why is it that social enterprises see a need to begin with to “own” all the scaling of impact themselves. To that end, perhaps the debate of how to scale should be shifted from how to infuse more money with a leading/pioneering social enterprise, but instead how to hand the work over to real big hitters who have tons more money to wield, i.e., the government.
- Questions: Should we keep trying to figure out how to make individual companies more “impactful”? What stands in the way of talking about partnerships, and scaling through social change model replication? Are we just too concerned with the issue of control, especially around program quality, if we entrust these tasks on a large scale to government? Or are we strangely importing our visions of the 20th century individual successful corporation onto the field of social enterprises and hope that individual SEs will similarly rise to expand globally to become the next GE or Microsofts of the do-gooder world?
- The Gist: In the wake of the latest Apple/Foxconn public outcry regarding poor labor practices in Apple’s Chinese manufacturing plants, Annie Leonard poses a provocative question on a Huffington Post article: should we keep feeling guilty as consumers about the bad corporate practices that we condone by purchasing their products? Or should we blame the companies instead for creating and maintaining a system that keeps us wanting more? Leonard argues for the latter, i.e., that companies are to be blamed in a way for their billions invested in creating new wants and needs every day that previously did not exist, thus perpetuating the consumerist culture. Her final point is that we should stop thinking of ourselves as mere consumers who vote only with dollars, but instead see ourselves as citizens who can also actively engage in the political or civil society channels available to us to demand changes. To paraphrase her reference, she eloquently puts it that power is given to those who “create the menu”, not to those who “simply choose from the items listed on the menu.”
- My Take: On the one hand, I like Annie Leonard’s idea that we should take on a wider responsibility as full citizens of a state instead of mere consumers of some globalized commercial machinery that do not feel empowered to act to make the changes they seek. On the other hand, I would be a little careful with the claim that companies are at the root of creating vicious cycles of behavior that lock us into a perpetual consumer mindset. Not because it’s not true, but because perhaps we should not abandon the notion of consumer power just yet. Sure, setting regulation is the ultimate way of controlling markets – but how many people realistically can participate in this? Perhaps a lower-hanging fruit would still be to retool our mindsets and not just vote with our consumer dollars – but simply not consume that much to begin with (remember that crazy piece I wrote a while back?). As I have pointed out in the past, I am worried that there are always two to tango – in this case, the dance of “unsustainability” – and we should play our role to stop our craving for goods that we fundamentally don’t need to lead happy lives.
- Questions: How far can we realistically push the idea of citizenship in the race to sustainability? Are ads really controlling us? If so, why don’t we just stop watching TV? Personally, I haven’t done it in six years and never missed it for a moment. What do you think about how much room there is left for companies to improve on the matter of making responsible choices?
- The Gist: Kelly Kleiman from The Nonprofiteer had a nice discussion on SSIR blog asking essentially why foundations shouldn’t just consider winding down earlier (“dying”) while spending their endowments in larger sums. Instead, what most foundations especially in the U.S. do is stick to a rule of dispensing around 5% of assets through charitable giving, while the rest gets invested for capital appreciation. As the problems foundations face are so large, Kleiman argues, why not put more skin into the game, disburse greater funds and ultimately have a bigger impact? Especially for foundations left by dead individuals, how close should the institution stay to the original founder’s wishes?
- My Take: I thought the fundamental idea was not bad at all to challenge foundations to take more risk and rise above the relatively small 5% annual disbursement requirement. After all, what’s to prevent harsh critics otherwise to think of foundations as glorified asset management funds with a tax-sheltered charity component? How are they then different from corporations with big CSR programs (and funds), other that foundations arguably don’t produce as much as corporations as far as a primary good is concerned? Ah, but that’s where the tricky part may be. In a response I posted, I questioned whether we may be overplaying the importance of the FUNDING component at the expense of the intangible component of foundations’ major work. In other words, I argued that foundations nowadays play an important role as some of the biggest full-time champions in many important social and environmental issues. They are not distracted by pesky shareholder value maximizing rules, they are not busy selling cars or televisions on the side, they in fact exist only according to serving their mission. And that mission can be served on the one hand by grants and other monetary disbursements. On the other hand, foundations also play a leadership role in advocacy for a cause, commissioning critical knowledge pieces (e.g., the state of impact investing, anyone?), convening stakeholders across sectors for conferences to raise awareness (Skoll World Forum anyone?) and thus essentially occupy the role of “full-time work horse” for civil society.
- Questions: If now foundations started all winding down quickly after making a big splash with their money in the short-term, who would then continue their work? Who would retain the institutional knowledge and relationships that they had built over the years? Can we easily replace the current big foundations should they subscribe to the idea of dying out early? Should we in fact encourage the old guard to go away, leaving behind a big impact of money, to let newer foundation generations take over?
- The Gist: I came across this odd but thought-provoking article on how it came to be that a major defense company, Rockwell Collins, happens to be part ranked as one of the world’s most ethical companies by NY-based think tank Ethisphere. As the article puts it, we are talking about a maker of “navigation systems for fighter jets and business aircraft, as well as products like the FireStorm Integrated Targeting System, and NavStrike™ 3.3 munitions-guidance system for clients like the U.S. Department of Defense, as well as militaries in places like Saudi Arabia and Bahrain.” Hmmmmm. Interesting. And weird.
- My Take: There are several grounds to find this actually not uncommon situation so perplexing. First of all, what do we mean by an “ethical” company anyway? Do we mean one which has transparent, fair and sustainable procedures, processes and compliance protocols that are considered “ethical”? Or do we mean one which does not make products designed to hurt and kill people (more effectively)? This article made me think about this distinction and its confusion, and why in return I believe the majority of “rankings” that proliferate are so utterly useless. Why does everyone and his mom nowadays issue a CSR/ethics/sustainability ranking? Besides the obvious points of contention for a particular ranking system, such as Ethisphere’s in this case, I would rather want to make a case for why we don’t just make a “ranking of rankings” to spot which systems are useful, well articulated, and meaningful, and those that are not (redundant, unclear, wannabe).
- Questions: What is the purpose of “ethics” rankings for companies, given that we would expect all companies to have a minimum standard of conduct anyway? Shouldn’t everything falling short of such rankings not instead be codified into laws and compliance rules that come with the commensurate penalties for companies violating these standards? More problematically: for the wider question around the “purpose” (or telos) of companies, such as tobacco firms and arms dealers, what would be the appropriate forum to decide their legitimacy? Right now there is no such forum. Everyone makes and sells whatever they want save for (certain) drugs. Do we need more rankings to point out that these firms exist, or should we not bring this matter a step higher and make a decision as society on which goods are not aligned with our values?