SoCap08 Keynote: Matthew Bishop

Matthew Bishop, editor of The Economist’s New York desk, and author of the just-released “Philanthrocapitalism,” just gave a great overview of his understanding of the emerging social capital market space. It basically came down to highlighting a few key trends and conversations we can pick up.

Bishop thinks that the key question of social change is how you leverage relatively small amounts of capital for complex problems. For him, the scarcity of capital for social benefit creation – whether its nonprofit or for-profit funding and talent – means that people who want to tackle social issues need to focus on:

• Increasing transparency. People need the ability to understand how others are approaching social change, and they need to be able to compare their activities in some sort of rational way.
• Capacity building and infrastructure development: We need to stop the fetishization of the ‘reduction’ of overhead in the nonprofit sector and invest in human resources we have.
• Reduce duplication: Bishop thinks the nonprofit has major “filter failure” and organizations that simply aren’t that great limp on forever, often duplicating eachother’s efforts.

Additionally, Bishop had a few insights based on his intensive research. An important one is that he believes that both nonprofit and for-profit actors approach partnerships with one another with mutual skepticism. People from the business sector often behave like they’re dealing with idiots and all you need to fix the nonprofit sector is more business acumen. Nonprofit actors, for their part, think that business folks just don’t understand the nonprofit world at all. He thinks (and I agree) that both need to approach the other with humility.

Finally, Bishop echoed Jed Emerson’s point this morning, that there are problems best solved by the market, and others (he used the example of how to fix the United Nations) where a focus on finding revenue streams could be counter productive. For him, the point is to be able to take a sober look at any problem and figure out what the best path may be – for-profit, nonprofit or something else entirely.

That wasn’t the answer for everyone in the debate that followed. More on that tomorrow.