This is partly because in the social enterprise / social investment model, there is no “recipient” as such, just as there is no “donor”. Wall Street doesn’t have those concepts – they have investors who invest in companies, who in turn serve customers through the goods / services they produce / deliver. The question of failure, then, would apply to the business that is seeking to work the social sector – in our metaphor, that would be the fishing business.

To continue the metaphor further, as a guide to exploring and understanding this question, let’s say we help this guy by first teaching him how to fish and then seed-funding / coaching / mentoring him as he sets up a fishing business. At a certain point, we step back, as any parent should (to borrow the part of the metaphor that you added through your comment). If the fishing business starts faltering immediately after we step back, we may want to step forward again and help out (open question), but once we’ve taken our hands off the case, it should pretty much be on its own. If it fails, it fails. Same goes for our children, doesn’t it?

So I guess the short answer would be that social investing is just like any other form of investing – i.e. it does not underwrite the enterprise being invested in, forever.

“At some point, even helping to set up the fishing business becomes a charity… question being that in a capitalistic or semi capitalistic society when do you allow failure? Is failure an option for sustainable solutions?”

To which my response is:

It is precisely the charity involved in helping to set up the fishing business that I am referring to, in the title of this post, as Charity 2.0 – the new avatar, if you will (as different from Charity 1.0 which is, let’s say, giving a man a fish, or Charity 1.5 which would be teaching a man to fish).

As regards your question on failure – just like any other human endeavor, social enterprise is vulnerable to failure. Lack of clarity in vision or strategy and/or poor execution (including inability to adapt to change) are typically the main causes of failure of any initiative, program or organization, be it in the private sector or the public sector or the social sector. The ‘journey towards sustainability’ that we keep talking about across a lot of the pages and blog posts in this web-site, is a transformation journey, not a destination. It is as fraught with risks and threats of all kinds as any other transformation journey. Perhaps a more important / relevant question is how resilient the social entrepreneur is. Resilience and resolve, even in the face of failure, is key – for failures there will always be.

This requires some brainstorming, but here’re some initial thoughts – it may be useful to blend Parenting principles into the spirit of Partnership. I would still root for Partnership (as opposed to Patronage) in spirit, though I take your point about doing a “lift and shift” adoption of standard B-school management ideology onto social initiatives. I am beginning to think that the secret sauce in a successful model would lie in the way one adapts management principles to the social sector, not in whether or not they are relevant … or good. Certain things – like cost management (as an idea) cannot be bad. The adaptation of those ideas to organization in the social sector is where one can go wrong. Or right.

While we cannot win on data security considerations , we should again look at the issues that they have with our IT expertise and sustainability and see why they are willing to spend more on a nearshore destination.

From an HPA perspective, where there is no self-regulation there will always be externally-applied regulation – such is the overarching need for sustainability. Our values and principles are consistent with this view. The need for policing need never exist in a mature society where citizens are highly evolved and regulate themselves and their actions. The same would be the case if one were to substitute the word ’society’ with ‘economy’, and ‘citizens’ with ‘businesses’ in the previous sentence. Taxation should take the form of contribution, and in the example of Brazil that you have cited, the enterprises concerned should do this voluntarily. Again, this comes out of understanding that the Common Good transcends narrowly defined self-interest / profitability, and the vision of the Common Good as being constituted by what we call ’social relevance’, ‘environmental responsiveness’ and ‘economic viability’ as elucidated in our earlier post: http://hemantputhli.com/2009/12/01/hpa-perspective-on-sustainability-faqs-2

COP15 in Copenhagen focused on climate change while WEF in Davos focused on the global economy. No doubt there will be other global conferences that focus on issues related to society and social development (poverty, hunger, etc.). The point is that the way the world is organized right now, these conferences do not take a holistic view …. you really cannot talk about environment without talking about, say, food and water, and you really cannot talk about food and water without talking about economics. According to me, this is the main reason why these talks ‘fail’ (i.e. result in outcomes that at best are weakly positive, at worst just a waste of time). Then of course there’s the politics – regional, national, racial, economic (haves vs. havenots) etc. and the “What’s in it for me” attitude of delegates (generally speaking). But even without that, solutions will be difficult to find if we take a uni-dimensional approach.

The HPA definition of sustainability address the core issue, taking a holistic perspective that includes all 3 key dimensions. The earlier two posts in the FAQ series aimed to elucidate exactly that. Here’re are the links once again:
http://hemantputhli.com/2009/11/07/hpa-perspective-on-sustainability-faqs-1
http://hemantputhli.com/2009/12/01/hpa-perspective-on-sustainability-faqs-2

Just to reiterate: We don’t claim to have invented this approach from scratch – the 3-dimensional view was already enshrined in earlier definitions of ’sustainable development’ from many years ago – we just bring this holistic perspective to traditional business management frameworks that deal with ideas like ’sustainable competitive advantage’. In short, it is not too difficult to arrive at a converged definition of ‘Common Good’ if one take a multi-disciplinary approach and looks at the bigger picture. However, like common sense, it may not be so common! (and in that sense I agree with you).

On the ‘half-full’ side – both the COP15 and the WEF this year had the attention of just about anybody anywhere in the world who can make a difference. I think this is unprecedented, and hopefully paves the way for more effective action going forward.

Thanks for sharing your observations.