The slow flow of corporate capital is disappointing

Third Sector, 25 September 2012

Rodney Schwartz

Rodney Schwartz

Rodney Schwartz of ClearlySo says his initial enthusiasm for corporate capital has faded

Recently, my ClearlySo colleague Jonny Kates tweeted about a blog I had written in August last year about corporate capital and its potential to play a vital role in the funding of social enterprises.

I was genuinely excited about this possible influx and how it could amplify the efforts of government, Big Society Capital, social business angels and financial institutions. Not only do corporations have abundant financial resources, but there is much more they have to offer to the nascent social economy.

Considerable progress has been made; multinationals, for example, have offered sponsorship, mentoring and free or low-cost resources. ClearlySo has itself been a beneficiary of such corporate generosity and I would mention the names of these firms specifically, were it not to seem exceedingly cheesy and self-serving.

Nevertheless, I cannot help but feel that, on balance, the progress has been disappointing, particularly among those leading corporations that seemed most ready, willing and able to engage.

The best-known setback, which was nearly a disaster, involved the US software services group Salesforce, which recently sought to trademark the term 'social enterprise'. Eventually, to its credit, Salesforce relented, but not before causing considerable confusion and ill-will. This whole episode, which ClearlySo covered extensively on its blog, was especially surprising because Salesforce had previously seemed so willing to connect positively with the sector.

The main disappointment, however, stems from the simple lack of investment capital or substantial commercial flows into the sector from large corporations. I struggle to think of any notable developments along these lines and I believe a great opportunity is being missed. From this criticism, I exclude financial institutions, where solid progress is being made. Of course, readers are welcome to challenge me with examples of significant flows of corporate capital - in fact, I would love to be proved wrong.

Large corporations repeatedly state their intention to engage with the social enterprise sector - but, despite the good intentions, they generally lead nowhere. Instead, the corporations often absorb much of the meagre resources of social enterprises that could be used more productively elsewhere. I suspect that, on balance, large corporations have been a net user of, rather than a contributor to, the resource base of the social enterprise sector.

It is not all the fault of these multinational companies. As we warned last August, corporations move slowly and deliberately. But our sector has failed to be sufficiently creative and resourceful in capitalising on the good intentions of the many employees of the world's largest companies. Somehow, we have been unable to identify a critical client need or, as I have pointed out in the past, charge appropriately for the services we do render.

Perhaps this will just take time - more than most of us anticipated. But it is time for corporates to step up to the plate.

Rodney Schwartz is chief executive of ClearlySo, which helps social entrepreneurs raise capital

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