A passion for inefficiency
Social investors are driven by results, outcomes, impact and efficiency. But is the focus stifling creativity and undermining social ventures? Ben Metz makes the case.
Many impact investors assert that philanthropy is an inefficient use of capital and that redeployment into impact investing represents a more efficient and effective use of philanthropic funds.
However, this pursuit of efficiency may be doing more harm than good; driving out the creativity necessary for problem solving and reinforcing the position of those in power.
A loss of creativity
Tim Dartington's 2004 paper explained: "The concept of efficiency is held onto as a way of avoiding the uncertainty of an environment." He argued that the majority of our environmental interaction is with other people, over whom we have no control. Set in this light, the drive for efficiency is a way of specifying, and so controlling others. If something is efficient we can measure it. If it is measurable we can control it. If it is controlled it is no longer uncertain, unknown or downright scary.
Jennifer Gerarda Brown, of Yale University, describes "ventur[ing] out from the accustomed way of considering a problem, to find something else that might work” as a necessary prerequisite for problem solving. This kind of thinking requires a relatively free and unbounded mental framework for success.
Consider Google's staff policy, where 20% of the working week is given over to work on personal creative projects. Gmail, Google News and Speak to Tweet (the voice based twitter service devised to work around the Egyptian regime’s closure of the internet in 2011) all have their origins in this 20% time.
Comparing the control frameworks imposed by drives towards efficiency with the expansive thinking required to innovatively solve problems, and we might begin to wonder if impact investors are throwing the creative baby out with the bathwater.
Reinforcing the status quo
One would think that the dispossessed actively seek to change the status quo. While those in power seek to maintain the current state of affairs. In fact the opposite is true. Those in power maintain their position by taking control of the processes of change while the dispossessed remain as they have no purchase on these processes.
In 'The Corrosion of Character – The Personal Consequences of Work in the New Capitalism', Richard Sennett suggests that the “pursuit of flexibility has produced new structures of power and control, rather than created the conditions which set us free".
Look at the changing narrative across the social investment world, brilliantly captured by Dan Gregory in his Common Capital Blog. As more of those with power (read money) come in to the sector the narrative has shifted from being demand led to being supply led. Those with power are crowding out the needs of the dispossessed.
In reviewing ten years of publications and special reports, Dan Gregory identifies a fundamental shift in language and approach:
"First, back then people talked about 'social enterprise access to finance', looking bottom-up from the needs of the sector. Today, the narrative is one of 'social investment', which looks top down from the point of view of the investor.
"Second, the more recent (Atlantic?) drift towards a language of 'impact investment' suggests a rational and more deterministic emphasis on results, outcomes, impact and ends rather than an attachment to a particular model of ownership...[or] social raison d’etre.
"Third, the debate has shifted from a focus on market failure to a leap of faith in social investment as a good thing per se [and] that investors know how to make the world a better place."
The fundamental shift that Dan captures so well, while loaded with good intention, would appear to be subordinating the needs of the recipients of social investment to the needs of investors. As such, this is a rich example of how those in power maintain their positions, at the expense of the dispossessed.
So, rather than rushing headlong to place our philanthropic funds into social investment perhaps what's needed is to embrace (and fund) the uncertainty of real world human interaction from which much of the inspiration for change is derived. Rather than simply accepting a discourse dominated by finance perhaps we need to listen to those stories of empowerment full of inefficiency and human endeavour.
After all, how often is efficiency considered when dealing with the really important things in life, like caring for a close family member, pursuing a passion or falling in love?