Brugge Blog

Here’s something I like to see: new alternatives to answer the question “what can I do with my money?” that are getting more and more progressive. For about the last 20 years, it seems like the main answer was “make the most money you can in whatever stocks and bonds have the highest return” and the alternate choice was “make decent money in stocks and bonds from organizations that have a conscience” (socially responsible investing). That’s not a bad option, but the variety showing up in just the last five years is amazing:

• go to Kiva and invest in a small business that otherwise never would have had a chance
• go to Vittana and provide a student loan that gives access to education that wasn’t there before
• go to MicroPlace and find some other unmet need that connects with you
• choose a course of impact investing to support business values you feel are important

What is heartening is how an alternative mindset, when articulated well and carried out with passion, can tap into a huge human need: to open the door to chances that can change lives.

Okay, so that’s a high-minded sentiment that’s pretty vague, and could be said about lots of efforts to bridge the cultural and economic gaps in our world, but apply it to investing and it gives people choices they hadn’t thought of before. For instance, we don’t necessarily invest in mutual funds and stocks because they reflect our values, we do it because that’s what’s been offered.

Muhammad Yunus, the founder of the Grameen Bank and winner of the Nobel Peace Prize, tells a compelling story of the rise of Grameen and the microfinance model in “Banker to the Poor”. His struggle was just this, to change the entrenched way that people, bankers and lenders, view “finance”.

Because of the way in which the orthodoxy of economics has given shape to the existing world, all the investment money now is locked up in only one category of investment: investment for making personal profit. This has happened because people have not been offered any choice. There is only one type of competition: competition to amass more personal wealth. The moment we open the door to making a social impact through investments, investors will start putting their investment dollars through this door as well. Initially, some investors will divert only a part, and maybe a small part, of their invesment money to social enterprises. But if social entrepreneurs show concrete impact, then this flow will become larger and larger. Soon, a new type of investor will begin appearing on the scene–those who will put all or almost all their investment money into social investments.

This also points out how the change in finance is just another thread in the blanket of “social enterprises” being built today. His business model is not one of a charity, but of a business with a social cause rather than a traditional profit focused business. This is the world of the social entrepreneur.

I profoundly believe, as Grameen’s experience over twenty years has shown, that personal gain is not the only possible fuel for free enterprise. Social goals can replace greed as a powerful motivational force. Social-consciousness-driven enterprises can be formidable competitors for the greed-based enterprises. I believe that if we play our cards right, social-consciousness-driven enterprises can do very well in the marketplace.

The other thing I’ve found curious is that these new financial models, while just coming in to the mainstream now, have their seeds much further back. Yunus started in the 1970s. Socially responsible investing took root in the 1980s. I found a book at the library this summer, “Economics as If the Earth Really Mattered,” by Susan Meeker-Lowry, published in 1988, which saw a potential for what is growing today. There were certainly opportunities like we have today back then, but you had to work a lot harder to find them. A few quotes here from the introduction.

I began to see how we can use money as a tool to make things happen. Money can be an extension of ourselves, and what we do with it can be a very personal expression of who we are and what we believe in.

This all takes time and patience, and it is often hard to see that we are making a difference. It is tempting to sit around analyzing theories and waiting for the one idea that will save us or what we love. But as long as we wait for the definitive solution, nothing will change, or rather, we will have to no say in the changes. We must remember we are part of our world, that the changes we see are created by people like us.

When the wind blows, it is easy to see its effect on the leaves and branches of trees. Not so obvious is the trees’ effect on the wind. They lessen its force, creating a space in which other plants can root and thrive. It is a subtle power, but a dramatic one.

Kind of a zen-like view of investing, but hey, why not? It’s your choice, not theirs.