August 29, 2017 | By Bridget O’Neill
Government, business, and the social sector are often conceptualized as disparate entities; engaging the three together is a shift that is far past due. In isolation, each falls short. A push for more horizontal thinking is being driven by the millennial generation, but the limited scope it exists in now must be made mainstream. Braiding together efforts of the public, private, and social sectors begins with a fundamental first step: linking money to the tangible change we expect dollars to materialize into and acknowledging that this requires an intentional and interdisciplinary approach. As my generation enters the workforce, this change is nothing less than expected. The majority of millennials (57%) list doing something they find enjoyable or making a difference as their primary concern for career choice – a marked shift from older Americans, 64% of whom listed making as much money as possible or learning a new skill as a priority.
This, coupled with millennial enthusiasm for impact investing, shows promise, but fighting the narrative that this requires a financial tradeoff is a central challenge. We need a greater shift in mindset to drive the financial and the social out of their largely mutually exclusive spheres. The concept of achieving social and financial outcomes in parallel is not a new one, but the ways in which it manifests itself today – at least in the US – is limited to small, isolated pockets: namely impact investing, pay for success, and social impact bonds.
There are examples of where financial success charts with social good – let’s take clean energy as an example. Solar companies are profitable and produce a social benefit — reduced carbon emissions. Organic foods are another example of social and financial benefits working hand in hand. While tying financial success to social good might seem like an obvious way to approach the growing need to address large-scale systemic problems (poverty, inequality, environmental concerns, etc.) impact investments only represent less than half a percent of all the assets managed globally. Integrating impact into the mainstream operations of the cities and communities in which we live is a step at which we fall short; simultaneously, millennials are demanding impactful rather than solely profitable careers. Within this dichotomy lies opportunity: we can and should move beyond impact investing as a tool and instead connect the social sector to the business and government world.
To explain, boosting the economy is framed as a question of finances alone: increasing jobs and increasing the circulation of capital is the sole goal. Combining – or at least connecting – the social and financial sectors pushes the limits of this narrow conceptualization. The experiences and the wealth of citizens ought to be considered as interrelated issues: it is an issue of shifting the questions asked and diversifying the metrics used to chart growth. The quality of experiencing services (healthcare, education, transportation, etc.) cannot be measured in solely economic terms, nor is this an issue that one sector is responsible for isolation. Capital – human, social, and financial – are funneled into these resources; the outcomes must be presented and considered in the same multifaceted way.
A case study the Beeck Center will soon release offers some insight into the New Zealand government’s approach to weave financial and social capital into the fabric of an existing government infrastructure project. A recent program focuses on reducing recidivism through a public-private partnership contract between the New Zealand government and the private sector, led by consortium private company Secure Future, which financed, designed, built, operates and maintains a brand-new prison – the Auckland South Corrections Facility.
What is perhaps most intriguing about this policy is the fact that their innovative approach to public-private partnerships charts money alongside social change, bridging the interstitial space between actors to achieve results. For instance, funds are awarded based on the success of shared goals – in this case, the trackable outcomes include improving safety for communities and inmates while also tackling the disproportionate incarceration of indigenous people. Simultaneously, funds are revoked should disruptions – inmate violence, attempted escapes, etc. — occur. The project incentivizes private companies to do public good, melding the two spheres together; it is a simple yet largely unprecedented approach to tackling widespread social problems.
New Zealand’s Prime Minister Bill English described the program’s philosophy aptly: “we’ve found that cash isn’t what constrains the improvement we can make for the most vulnerable. We’ve found that often the social service system itself impedes our ability to make meaningful improvements in the lives of New Zealand’s most disadvantaged people.”
Throwing money at a problem doesn’t render it solved. The outcome of combined efforts (financial and otherwise) hinge upon the ability of different sectors to work together; millennial attitudes must be translated to action, should our economic metrics be diversified. Finances and the social good we expect to result cannot be distilled to a ‘money in-change out’ algorithm: if the two are not conceptualized as complementary every step of the way, the system becomes its own barrier, money is wasted, and our biggest questions go unanswered.