Banking on social innovation
February 4, 2006 Comments Off on Banking on social innovation
San Francisco , USA
Scaling anything (e.g. telecentres) is about passion, good ideas and hard work. That’s for sure. But, like it or not, it’s also about money. Not just having it, but also structuring it in the right way. This was the main topic for the ‘innovative funding practices’ panel at the Innovation Funders event.
As Lee Davis from NESsT pointed out, the financing options available to non-profits and social enterprises are both slim and rigid. The commercial world has access to a diversity of financing tools: venture funding for risky yet promising start-ups, equity to bring in cash for scaling, debt to handle cash flow, and so on. Most social enterprises, non-profit or for-profit, just have access to grants (unless they’re so big that commercial banks trust them). One financial instrument, but clearly a diversity of needs.
This is surely a problem we face in the telecentre space. Whether it has come from governments, donor agencies or corporate philanthropists, almost all of the money in telecentres has come in the form of grants. This is good for some things: building out purely pre-market infrastructure; developing foundational materials and services; creating a sense of movement. However grants actually can’t be the whole picture if we are truly interested in scaling the number of telecentres and creating a rich palette of well packaged, replicable services to offer through telecentres. You see this especially when you look at microfranchise networks like Drishtee, TaraHaat and Nlogue, with great ideas but the need for resources that take things to the next level.
The (many) million dollar question: what does diverse financing in the telecentre space look like? Certainly, one thing we need is a small, nimble mechanism to finance service research and development. It’s pretty likely we can create this within telecentre.org. In addition, there is probably a need for microcredit plus (larger than a phone loan), patient debt or low return equity aimed at scaling. One day, commercial financing might play a role, too. But that’s a long way off.
Interesting and important stuff, and something I’ve been background processing for a while. I am grateful to Lee and others at the Innovation Funders event for helping me to dig a bit deeper.
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