MT Masterclass - social capitalism

What is it? Capitalists are in it for the money; social capitalists are trying to achieve positive change and make money at the same time.

Last Updated: 09 Oct 2013

They are 'social entrepreneurs' who have identified needs in their communities and worked out commercially viable ways of meeting them. A social entrepreneur might, for example, want to create jobs in an area of high unemployment by setting up a new business that serves a specific market. Social capitalists move in where conventional business people fear to tread. But this is not charity. These enterprises have to survive in the real world of supply and demand.

Where did it come from?

In the 1990s, there was a growing desire on both sides of the Atlantic to build businesses that were about more than just making money. This inspired the concept of corporate social responsibility. Social capitalism takes CSR and turns it on its well-meaning head. Instead of bolting on an ethical bit to a straight commercial enterprise, social capitalists sought out disadvantaged areas and important causes and launched businesses to help them. This is not an apology for business but an attempt to use the creative power of business to do good.

Where's it going?

In the US, 70 community funds are managing more than $500 million invested in social enterprises. A new UK fund, Bridges Community Ventures (BCV), set up 18 months ago, is the first UK investment fund of this kind. It has capital of £40 million. BCV has the solid backing of (and matched funding from) the Government. Treasury minister Paul Boateng has declared: 'In our inner cities and old industrial areas we need more businesses, not more benefit offices.' For once, the phrase 'an idea whose time has come' doesn't sound so ridiculous.

Fad quotient (out of 10)

Eight and rising.

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