A New Paradigm?

 A post by James V. Toscano 

Traditionally, help in supporting poor and vulnerable populations was largely the responsibility of government, foundations and nonprofits. There didn’t seem to be opportunity for the third sector, the market, to intervene in significant ways.

Certainly, businesses give charitable dollars to help alleviate such conditions, but it has never been its focus for profits. Now, the ground is shifting. Privatization of some governmental functions has attracted the for-profit sector, now in a number of areas.

Politicians of one stripe or another are talking about new ways to meet societal need through market-based competition, especially in such areas as health care and retirement income.

One of the largest charities, in terms of donations given, is run by Fidelity, an investment firm, which accepts and invests donor-advised charitable funds.

A Unique Collaboration

All of the lines are blurring, so it was no surprise by the recent announcement that the Rockefeller Foundation, the Omidyar Network and US Agency for International Development together were giving the Global Impact Investing Network $6.5M to fund growth of impact investing.

According to the press release announcing this collaboration,

“Impact investments are investments made into companies, organizations, and funds with the intention to generate positive measurable social and environmental impact alongside a financial return. The impact investing industry has the potential to steer significant capital to market-based solutions in sustainable agriculture, affordable housing, affordable and accessible healthcare, clean technology, financial services for the poor, and other sectors addressing the world’s most pressing problems.”

Global Impact Investing Network (GIIN) is a nonprofit dedicated to increasing scale and effectiveness of impact investing through building infrastructure, education, and research that help accelerate the development of a coherent impact investing industry. The  $6.5M will be used by GIIN in to help attract increasing investment capital in poverty alleviation and environmental solutions.

Judith Rudin, the visionary president of the Rockefeller Foundations, sums up the motives for this action,

“In 2008, knowing that it will require more dollars than philanthropy and governments have to solve the world’s most significant challenges, the Foundation began a multi-year initiative aimed at fostering the impact investing sector to help support poor and vulnerable populations. Supporting important networks like the GIIN has been an integral part of achieving impact and contributing to large-scale social change.”

A New “Aha?”

Is this the beginning of a new “Aha!” for all of us, for us to realize that no one sector can, by itself, deal with many of the larger problems affecting our nation, our world? Logically, then, can we deal with many of the same problems on a lesser scale, demographically and/or geographically, through the same cooperation?

Is this the beginning of a new chapter in cooperative problem-solving bringing together all of the various forces, motives, values, action necessary to reach out and bring together the forces necessary to solve a problem?

What it is saying is:  “Pay attention to the needed result, not the source of that result.”

If an appropriate profit can be made in the alleviation of poverty, why not take the risk? If a nonprofit can partner with a for-profit and each receive their specific rewards of success, why not do it?

This reasoning then leads to an overall conclusion for nonprofit organizations. Take the blinders off. Loose the restraints. Partner with whomever. As long as it’s legal, as long as it’s highly ethical, as long as there is mutually respect, find the resources to solve the problem. And the resources are everywhere.

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