At Skoll's Annual Oxford Confab, Capitalism In Shift

The world economic crisis tends to sharpen the focus at this year's Skoll confab, nicknamed the 'Davos of Social Entrepreneurship.'
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Even as the system of capitalism that supported the growth of social entrepreneurship in its more enlightened margins changes drastically, 800 delegates from 60-odd countries flocked to the 900-year-old University of Oxford last week for the annual Skoll World Forum - the sixth formal gathering of the leadership of the blended social sector that may well have to redefine its own model on the fly to keep up with a decimated marketplace.

Much of what had become the accepted underpinnings of social entrepreneurship during three decades of general economic growth has been swept away since the Skoll forum last convened in Arnold's "city of dreaming spires," including the now-quaint twin notions of the permanence of massive, interconnected financial institutions and a self-regularing capitalist marketplace. As the Economist put it in an article on the global rise of the entrepreneurial culture, "The downturn is also confronting supporters of entrepreneurial capitalism with some awkward questions. Why have so many once-celebrated entrepreneurs turned out to be crooks? And why has the free-wheeling culture of Wall Street produced such disastrous results?"

The world recession has placed government as square in the front and center of the social commons as it's been at any time since the end of the Second World War. As former Irish president Mary Robinson told the opening plenary session in Wren's 17th century Sheldonian hall, entrepreneurs can and should "come to the recognition that government matters." Yet, this is even now a somewhat controversial statement for the social ventures sector, which has long prided itself on self-sustaining models of finance and development - a sector that holds the large-scale success of Grameen Bank and the socially-conscious microfinance industry as a paradigm. The old school Skoll Forum crowd (not so much the newbies and the start-ups who flooded the halls of the Said Business School with their business plans and their constant Twitter streams) very much sees itself, in my view, as the enlightened adjunct to world finance - as a movement that prods capitalists to do well by doing good, and to fund new financial models of change.

And so when Philanthrocapitalism author Matthew Bishop suggested in his panel on the economy that social entrepreneurs should consider seeking government stimulus funds to support their ventures, it was as if a modern-day Luther had nailed an anti-capitalist screed to the doors of the Skoll Centre. The "aid is not the answer" mantra attempted a riposte, but it died like a TARP-funded CEO's pay package. And besides, argued Bishop, there's opportunity in the to goverment and the widespread distrust of financial institutions around the world: "why not just get the people who run Charity Bank appointed to run Lloyds?" he suggested.

The tone was set at the opening, when confab founder Jeff Skoll insisted that the debate has "shifted from the future of capitalism to the viability of capitalism." Or as Stephan Chambers, chairman of the Skoll Centre for Social Entrepreneurship, said about the economic crisis: "it expands our definition of risk ... [and allows social entrepreneurs] to reconcile the brilliance of capitalism with its shortcomings." Well, it does certainly expand the definition of risk! And yet there were scores of young entrepreneurs with brilliant ideas walking around Oxford doing that thing that young entrepreneurs with brilliant ideas do: trying to raise money. What was clear when I attended this conference in 2007 - and even more in focus last week - is the fact that social entrepreneurship is, in fact, generally underfunded - that even with interesting models for self-sufficiency in the out years fully charted in their Powerpoints, founders pitching clean water solutions or education for girls in South Asia or new forms of microfinance in Africa are all seeking start-up or bridge capital.

Indeed, this was clear on the panel I was privileged to moderate at Skoll. The world economic crisis tends to sharpen the focus at this year's Skoll confab, nicknamed the 'Davos of Social Entrepreneurship' but itself a mere baby against Oxford's ancient spires, yet the panelists in my session took the long view, despite the weekly press of funding challenges. Together, they represented a fairly broad spectrum of online social enterprises - from the pure philanthropy of Global Giving, to the popular online success of Kiva's nonprofit peer-to-peer microlending community, to the for-profit start-up MyC4 which syndicates mid-range microcredit directly from investors who can expect a financial return on their social investment.

"Our goal is to become the first public company owned by the world," said Mads Kjaer, the serial entrepreneur who founded MyC4 two years ago. MyC4, based in Copenhagen, allows users in Europe to bid on microloans to middle-range business owners in Africa, allowing investors to realize a return on their peer-to-peer online lending. Mads has facilitated 14,000 small loans to 4,100 businesses valued at 10 million euro with an average interest rate of 12.9 percent. It's not charity in any way, yet MyC4's founder says the site has an inherent social goal that stems from his belief that government aid and philanthropy will never really change the African economic climate.

Premal Shah, the president of Kiva, has a challenge most social ventures would love to have: how to take a small but iconic brand with a model that works to a larger scale. After only three and a half years, Kiva's numbers are startling: $65 million in microloans from the general public, $25 at a time, with a current average of $1 million loaned per week and climbing and a payback rate of 98%. Yet as Premal noted - with partner Matt Flannery, Kiva's founder, looking on - that $65 million is still small in the grand scheme of things. When the idea of merging the three platforms at the speaker's table was used as a stalking horse for more collaboration in the online sector, Premal had a very clear response: these are still the early days - let's all continue to build and experiment and create brands. His message: collaboration by all means. Consolidation? Not yet.

The collaboration question was taken up by Mari Kuraishi, Global Giving's president and founder. She said there's really no reason why the many platforms in the online social sector don't collaborate more - except for a lack of personal bandwidth in each organization. Like any small organization, said Mari, Global Giving has goals and taking their collective eye off of the goal "would be irresponsibility." And Global Giving has done some wonderful work, spotlighting projects big and small around the world - the nonprofit, which has been in operation since 2000 and has founded more than 1,200 projects for more than $20 million. Mari talked openly about the challenges of fundraising and the promise of crowdsourcing for the projects the Washington DC-based organization supports. She said that technology should never get in the way of good story-telling and developing trust with donors. And yet simple technology decisions can change the model. Twitter, she told the Skoll audience, has become the channel of choice for workers to file reports from the field.

And Twitter was also the channel of choice at my panel: upwards of 20 people were Twittering during the 90-minute session - and even more are Twittering from Skoll using the #SWF09 hashtag. It's a huge flow of information that contains everything from the ideas of Ashoka founder Bill Drayton (originator of the term 'social entrepreneur') and Jeff Skoll, the eBay co-founder who created the Skoll Centre for Social Entrepreneurship here - to the information on locations for our "Tweetup" pub crawl last night. Yet as I stood on a darkened Oxford corner last night with Peter Deitz, founder of online aggregator Social Actions, we joked about Twitter overkill - since it had taken the equivalent of unreliable long-distance shortwave radio to finally connect over pints.

When I wrote CauseWired last year, I argued that online social activism and peer-to-peer philanthropy and microfinance was developing into a real, discreet sector of its own - lodged between social networking platforms and social entrepreneurship, and taking the best of both worlds to increase citizen involvement in changing the world. I'd still make that case, even as the number of online platforms has increased wildly in the 10 months since I handed in the manuscript. This is a sector with real leadership and leading brands (like Kiva and DonorsChoose), a real depth of experience (like Mari and the folks at Global Giving), and a huge grassroots movement of small-scale entrepreneurs creating great projects in their garages. Yes, it should collaborate more - but it also needs support: a group of venture funders willing to lock into online social ventures as an investment area. Any takers? We'd hope so.

For despite the world recession, there was still a palpable optimism in the lecture theaters and hallways (and pubs) of Oxford last week. "The economic crisis is, of course, at the forefront of the conversation," wrote Nathaniel Whittemore at "Perhaps unsurprisingly, there is a resigned optimism and silver-lining ethos among most of the people here. The two arguments that seem to be being advanced for the upside of this down turn are: first that the conversation about a more just, creative, and sustainable capitalism has moved from peripheral to central and second that in some ways, a dearth of resources makes us even more creative and focused on responding to real needs."

And perhaps social ventures represent a way forward for causes and improvement of the human condition, even as the capital markets sort themselves out (or capitulate to central government). "The growing ranks of business innovators who also want to solve the world's social problems ... now seem the best hope for institutional innovation in the 21st century," wrote Marcia Stepanek at Cause Global. She quoted Colin Mayer, the dean of the Said Business School: "Our trusted institutions have turned out to be stunningly untrustworthy. While governments around the world believe they are in control and that the old order will soon re-emerge, you can be sure they are not and it won't. Now, more than ever, there is a need and opportunity for institutional innovations."

He's right: the order is rapidly fading. And even amidst Oxford stones set a millennia ago in a time of agrarian feudalism, you can see the shadows shifting.

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