Please enjoy this post from staff writer, Mitchell Pauly. Mitchell blogs over at SnarkFinance.com.
Social finance is charity for capitalists. If your uncomfortable giving directly to charity or don’t have the time to volunteer—or you’re an asshole—social finance may be a way for your to feel good about yourself while you bath in virgin’s tears. There are a multitude of outlets for participating in social finance:
- Microfinance: small, “micro” loans to individuals or businesses that lack the access to capital markets. So far, microfinance has played a large role in improving the standard of living in poor countries, but has also allowed people like Zach Braff to indulge their egos and make super pretentious movies. Not all Social Finance is perfect.
- Socially Responsible Investing: a broad category of investing that upholds the core values of improving social and environmental outcomes. My wife tries to get me to do this every day by buying our groceries locally, which I do by going to our local Walmart. Does that count?
- Green or Sustainable Business: businesses that seek to minimize their impact on the environment and are probably located in Portland, Oregon or Vermont.
- Venture philanthropy: like venture capitalism, but for philanthropic organizations. This is mostly for rich people trying to make up for all the rainforests they cut down.
There are other forms of Social Finance, but these are the major players. Based on the fact that you are reading this article instead of attending a soiree at the White House, not all Social Finance avenues are available to you. Chin up though, kid. There are still plenty of ways for you to participate in Social Finance.
How to Participate in Social Finance
- Try microlending sites such as Prosper.com which allow you to loan money in a way that benefits individuals and society.
- Donate to non-profits that work to solve social and environment issues, or contact them to volunteer. I don’t do this personally, so consider this an opportunity to be better than me.
- Invest in the equities of socially responsible companies. Begin by writing off your list any company Dick Cheney was ever involved in.
- Buy shares of a community investment fund. There are investment funds that provide capital to social enterprises in exchange for equity. Shares will rise and fall with the fortunes of the companies the fund invest in, just like any other fund.
The Best Form of Social Finance: Your Skills
This might be as obvious as a sweatpants boner, but social finance is not something I personally participate much in. In fact, I don’t donate to charity. I prefer to lend my skills and services as a financial professional, businessman and writer to companies that couldn’t otherwise afford professionals like me. I believe this is the best thing you can do for a socially minded venture, and is the best form of social finance. I gain skills, experience and contacts while the organization gains services they normally wouldn’t have access to—like I said: charity for capitalists.
How do you feel about participating in social finance? Do you give to charity? Or, do you give in other ways?