How Social Actions Will Transform The Global Economy
Social Actions engender beneficial outcomes for society and the environment, from someone helping a neighbour to major global development programmes by multinational corporations benefiting millions of people worldwide → the permutations are endless.
A Boundless Ocean of Potential and Possibilities
Social Actions are central to life itself – without us doing something that benefits others, not just ourselves, we would not have survived for long as a species. Yet, the immense transformative power of Social Actions still remains untapped due to the lack of centralised organisation.
► When Social Actions are properly structured, organised, commoditised, traded, tracked, measured, valued, verified, made legally binding, transferable, exchangeable and enforceable → through a centralised global platform such as Re-Give → they will have the capacity to effect significant positive social, environmental and economic change across the world – at scale.
This is because this structural underpinning gives Social Actions quantifiable socio-economic value and makes them transactional, thus enabling them to be used, on an organised basis, to enhance or augment most types of transactions or to replace certain of their components. This would, ordinarily, be in the form of you giving me something (or doing something for me) and in return (or as an addition to our arrangement), I carry out a Social Action that has some form of value to you.
The Tao of Social Actions
Putting aside any Social Actions that benefit you directly, any quid pro quo arrangement between us comes into its own when you seek Social Actions (at any scale, at any level, local to global) that benefit others, not just yourself → thus benefiting those that are unrelated to the original, underlying arrangement between us.
This means you and I (and all others who have similar arrangements) can go about our business – while society and the environment benefits from the flow of positive Social Actions this generates.
► Imagination. Ignited ®
A vast range of things can be done by a great number of people, business and organisations to help society and the environment but they just don’t get to do it because of the lack of opportunity, ideas, imagination, inspiration, inducements, motivation, encouragement, etc. Often, what they can easily do is within their easy reach, but they don’t see it (or want to do it) unless someone points it out to them or gives them the incentive, the impetus to do it.
The mass catalyst for this impetus are organised, transactional Social Actions → wellsprings that will open up boundless oceans of potential and possibilities as the need for ever more innovative and impactful Social Actions demanded by those funding them ignites the world’s imagination → unleashing a limitless surge of ingenuity and inventiveness → for the betterment of society. For instance (assume all other relevant factors are also taken into account):
Social Actions → In Action
- I offer you equity in my company in return for your investment and to enhance my offer → I or my company carry out a series of impactful Social Actions that you are really inspired by and which gives life chances to a large number of disadvantaged people in a developing country.
- You buy my products or services or help me to secure some resource or asset or give me expert advice on a matter you are knowledgeable of and in return → I carry out a stream of environmental Social Actions that have positive effects across the globe.
- You make a financial contribution to me for my personal, business or other purpose (or make a tax-efficient charitable donation to a charity, NGO, institution) and in return → you agree to a major, one-off Social Action being carried out that you care about and which benefits the environment nationally, on a long-term, sustainable basis.
- You lend me (or my business, organisation, etc) money and instead of receiving interest on the loan → you agree to me (or my company or organisation) carrying out a small, regular Social Action for a fixed period of time that benefits a particular group of people in our neighbourhood and which has a form of value to you which is greater than the interest you forego (I may also give you a financial return as well if I want to).
Multiple, Cascading Social Impacts
Social Actions are carried out either: Directly → I will carry out my Social Action just by myself, or Outsourced → I will engage (and pay) someone else (a person or a business) to do this for me.
Outsourcing Social Actions has many multiple, cascading layers of beneficial outcomes and social impacts to it – including job retention and creation, new and existing businesses getting more work, stimulus of the local economy at the grass roots level → leading to a ripple effect that invigorates, energises and swells the national economy on a long-term, sustainable basis → making it more effective, resulting in people living better lives.
Transformation → On a Global Scale
Social Actions are not a panacea for everything, but when, in the course of time, millions of organised, transactional Social Actions (of all types, sizes and dimensions) are carried out all over the world every moment, every day, every year as the by-effects of millions of normal transactions between people, companies and organisations → they have the capacity to nudge the world, its environment, its climate and its people a step towards better.
If these steps become more pronounced, more widespread, ever more frequent, more substantial in scale, scope and reach → then perhaps a major positive transformation of the global economy and ecosystem is realistically possible.
Source – Re-Give: https://regive.org/content/2016/05/social-action
ADDENDUM | Exploration of themes from the above article
The New Economics of Social Actions
Any person, business or organisation from anywhere in the world can use Social Actions as part of their normal transactions to achieve their objectives, whilst at the same time, enriching society:
► Freeing Students from Debt
Financial Contributions (non-charitable donations)
Suppose a student says “give me a financial contribution so that I can pay-off my student debt and in return, I will teach disadvantaged kids for a few hours every week for a year”. If the education of disadvantaged kids is something you care about, you might give some money to this student.
If many people care about the same thing as you, this and other such students would most probably raise what they need to pay-off their student loans and be free to get on with their lives instead of being burdened by debt for many years to come. Their Social Action can be something related to their studies – e.g. if they study maths, they can teach that, or it can be totally unrelated (e.g. medical student, but opts to mow the grass of the local community centre, etc).
Personal Social Bond (akin to a Loan)
If a student is unable to raise sufficient money though financial contributions, they have the option to issue a personal Social Bond through Re-Give, which (at default state) is akin to an unsecured, Interest Free Loan.
To attract backers, along with fortifying it with an inspiring Social Action, a Social Bond can also be secured by its issuer (whoever they may be) either with verified collateral or guarantees from third parties (e.g. for students, perhaps from parents) – and rewards and/or financial returns can also be offered as well.
For Social Bond issuers with existing interest charging loans, the financial upshot may be that they can refinance these loans to an interest free or a low cost one. The other outcome is that once they establish a good reputation on Re-Give, they can attempt to raise funds through financial contributions, thereby freeing themselves of debt. For those who have no existing debt, it’s a way to get capital quickly to meet their personal or commercial objectives.
For Social Bond holders – it’s primarily about generating great social impact and, if offered, also receiving a reward and/or a financial return as well at the same time. If it’s secured, then all of this without any additional risks either. In essence – it would be the same as a normal lending (or bond investment) transaction, but with the added attractiveness of the Social Action being offered by the issuer.
Students can also seek sponsorship from companies in their area of study in return for a Social Action. Example: a student studies law and asks a law firm to make a financial contribution or to back the student’s Social Bond in return for a Social Action which the firm really likes.
The Power of Reciprocity
Why would anyone help someone they may not know of (e.g. a student, a businessperson, a company, a school – anyone at all for that matter) to pay-off or reduce their debts or to fund something?
Along with perhaps being inspired by their personal or corporate story and with what they are currently doing or will do (for students, also perhaps with what they are studying or will study) – it would primarily be to fund the Social Action that the student, person, company, etc will carry out and also, if offered, receiving a reward and/or a financial return as well at the same time.
It boils down to this → you help me, I help you…..but the difference here being: you help me, I help you and together, we also help society and the environment → times this by millions of instances across the world.
Here are other areas (this list is by no means exhaustive) where people, businesses and organisations can carry out a great Social Action in return for various type of support/backing from others (assume all other relevant factors such as any rewards and/or a financial returns being offered, collateral if relevant, due diligence, etc are also taken into account by the parties involved).
► Fuelling Businesses
Entrepreneurs, established businesspersons, start-ups, existing businesses (small to multinational conglomerates), micro-businesses in developing countries, etc can raise money through personal or corporate Social Bonds, financial contributions – and equity. Along with the merits of the business or commercial project itself, another driver of interest from potential backers would be the associated Social Action being offered.
► Private | Personal
An individual person can raise money for any private or personal purpose through personal Social Bonds and financial contributions. Why would anyone fund someone else’s personal purpose? Along with perhaps being inspired by the person’s personal story, it would primarily be to fund the Social Action that the person will carry out.
Charities, NGO, Microfinance, Social, Religious and Educational Organisations, etc can raise money through corporate Social Bonds, financial contributions and, if registered as a charity, tax-efficient donations. What the non-profit stands for and the Social Action it will carry out in return for support would be the reasons why it gets support.
Local, regional or national Government departments can raise money for any public purpose (either for new projects or programmes or to reinforce existing ones) through sovereign Social Bonds and financial contributions. Why would anyone fund a Government project or programme? Perhaps there are funding shortages that is preventing a particular project or programme that the public wants or needs, from making progress and thus, voluntary funding from the public might galvanise things, especially if the pubic really likes the associated Social Action being offered.
Social Actions → Unleashed
Social Actions work exceptionally well when combined with loans (on Re-Give, it’s Social Bonds).
First – the ability to replace or reduce interest/cost with Social Actions frees the borrower from extra financial burdens and engenders Social Actions, leading to greater social impact. Although borrowers can pay a financial return to lenders as well as carrying out a Social Action, they would not, ordinarily, commit to paying market-rate interest and also carry out a major Social Action. The absence or diminishment of one, increases the other.
→ For borrowers: Social Actions may not have the same financial burden as interest payments and, along with positive social outcomes, could also result in beneficial commercial outcomes as well, in terms of access to other opportunities via the very act of carrying out the Social Actions, etc.
→ For lenders: the interest income from a single loan (assuming it’s not usurious) would not be significant. For ad hoc, occasional lenders whose income is not derived mainly from interest earned from money lent out, it would make more sense, from a social impact perspective, to forego interest in return for a great Social Action. Professional lenders could, as part of their CSR strategy, have some of their loans portfolio consisting of Social Action loans that pay zero or little interest but have great social impact.
► The Boomerang Effect
Second – assume you’re a lender and that a borrower who carried out an agreed Social Action instead of paying you interest, pays back your original capital in full, on time. You now have the original capital back and feel gratified about the social impact you achieved with it, so you look for a similar lending + Social Action opportunity.
If again successful (agreed Social Action carried out + borrowed money returned in full, on time), you decide to repeat this cycle again and again → seeking Social Actions that are more impactful (and perhaps carried out elsewhere in the world). Assuming you suffer no real capital loss by protecting yourself from defaults (Re-Give can help you to do this) then, the combined total social impact from your original capital – due to it coming back to you and you then redeploying it – could be exponentially greater than you could have ordinarily achieved on your own with the same amount of capital plus the interest you would have earned from it.
Modus Operandi | Anatomy of a Social Action based commercial transaction
LOAN → Jane, an established businesswoman growing her property company
Jane borrows $1m for a year from a group of 100 lenders ($10,000 from each), who ask for 10% interest (assume default risk is mitigated by Jane through adequate collateral). Jane asks what she can do as a Social Action instead of paying the monetary interest. The lenders care about homelessness and ask Jane to provide one of her existing properties to be a shelter for the homeless for a year. Jane agrees.
► Analysis from Jane’s side
Janes needs $1m to grow her business and would like to spend all of her money on this, rather than giving $100,000 of monetary interest to the lenders. If only she could do something else (e.g. as a Social Action) that the group of lenders would accept, other than her paying the monetary interest to them…
She does the calculation: she has a property that she already owns which she can use to provide a shelter for the homeless. This property is fit for purpose, but isn’t perhaps generating a great deal of income at the moment. Jane calculates that the overall loss of income from this property plus running the shelter would be less than $100,000 pa (and Jane’s accountant advises her that if structured properly, she may be able to deduct the cost of running the shelter from her tax bill as a charitable donation, further reducing the overall costs).
From the social perspective: Jane gets to do something good for society and her neighbourhood, while further progressing her business commercially and, after a year, perhaps she may even decide to keep the shelter for good, because by then, after a year of helping the homeless and seeing the difference she made, Jane might also start caring about homelessness. All of this is a clear positive outcome for Jane.
► Analysis from the lenders side
As an individual lender within the group, you would have lent Jane $10,000 on the expectation of receiving a monetary interest of $1,000. You have a cause (e.g. homelessness) that’s dear to you and for which you are happy to spend more than $1,000.
However, you ordinarily would not be able to provide a new shelter + running cost for the homeless with just $1,000. In fact, this would be difficult even if everyone in your group of lenders pooled their $100,000 monetary interest because of the costs of acquiring/securing an adequate property. However, Jane already has a property that she can provide as a shelter and is ready to do this, in lieu of paying the $100,000 monetary interest.
Your group of lenders do the calculation: you each forego monetary interest of $1,000 but in return, you get a new shelter for the homeless for at least a year, which you would not be able to get even if you pooled all of your expected monetary interest. The total effective financial value of this particular Social Action is, therefore, exponentially greater than your individual expected monetary interest of $1,000 (the same goes for each of the other lenders).
Thus, in effect, by agreeing to Jane’s Social Action (as a group), you have amplified your own respective, individual social impact by many orders of magnitude greater than your forego amount (which you would have happily given to your cause anyway). This a clear positive outcome for you and your fellow group of lenders.
Add to this the possibility of Jane continuing to operate the shelter for many years to come – and your original (interest income) ‘loss’ of $1,000 now pales into insignificance in the face of the accumulation of many years of valuable social impacts that you helped to generate. Moreover, these social impacts are amplified by many orders of magnitude when, after Jane repays you in full, you redeploy your original capital to another Social Action based transaction → repeatedly.
→ Financial Returns
As an expression of her gratitude for your support, Jane may also voluntarily opt to give you (and the other lenders) a reasonable financial return as well. This would foster a stronger relationship between you and Jane for the future and also means that this transaction makes commercial sense to you as well.
► Analysis from the beneficiaries side
The homeless who get to stay in Jane’s shelter get some reprieve from the streets, get food, medical attention, etc and the space and time to help them to progress onwards and upwards.
For the local community and its people, and for society in general – it’s a small change for the better. A small step forward for all – even for those who have nothing to do with this whole Social Action arrangement between Jane and the lenders, because the net result is that there are fewer homeless people on the streets – thus making the neighbourhood a much better place.
► Other brief examples
EQUITY → Ravi, an inventor looking to manufacture his invention for the mass market
Ravi invents a commercial product and offers 20% of his company’s equity for 1 crore INR so that he can manufacture it and as a Social Action, he will have the local river cleaned of pollution and make it safe for the local community of more than 5,000 people. If the commercials stack-up, it’s an opportunity for Ravi’s backers to financially benefit from an innovative commercial product and also to generate substantial positive health and environmental impacts for the long-term.
FINANCIAL CONTRIBUTION → Li, a micro-financed farmer expanding her enterprise
Li borrowed money at high interest from a micro finance organisation to cultivate her land. She wants to expand her farming activities but does not wish to increase her debt burden and wants to fully repay her existing loans. She is asking for 500,000 ¥ CNY as a non-charitable donation (i.e. as a financial contribution) and as a Social Action, she will give seeds of high-yield crops for free to small farmers all over the country. Funders aren’t expecting a financial return but will help Li to be debt free and to expand her farm at the same time, and also enable small farms all over the country to flourish.
RESOURCE → Ali, a new author looking to publish his book on his own
Ali, an aspiring author, is unable to get a major publishing contract for his book because he is relatively unknown. He wants to publish his book himself and is seeking a commercial book printer and distributor to provide these services to him at cost price. As a Social Action, he will give lectures to highly disadvantaged, small schools all across the country. Book printer and distributor may not profit from this, but costs are covered by Ali so there won’t be a financial loss. Moreover, Ali’s Social Action will help to increase exposure and good will for all involved, and at the same time, generate a substantial positive educational impact for the long-term.
PARTNER → Filip, starting a mobile catering business
Filip wants to start a mobile catering business supplying exotic, healthy food at parties and events all over the county. He is looking for someone to join him as a partner and as a Social Action, he will hold a class every week (at whatever location he is at) to teach people from all walks of life how to cook healthy food. If the commercials stack-up, it’s an opportunity for the partner to financially benefit from this, and at the same time, to generate a substantial positive health impact for the long-term.
ONLINE SHOP → Layla & Co, a family business selling high-end jewellery reaching new markets
A very old, reputable family business, Layla & Co is seeking new markets for their products. They wish to sell online but are wary of paying high transaction fees. They open an online shop with no fees and to attract PR and customers, as a Social Action, they offer to provide winter clothing to 1,000 disadvantaged families in a poor country across the world that suffers from severe cold spells. They were doing this already anyway, but doing it now as a specific Social Action adds measurable economic and PR value. Customers get to see and buy high-end jewellery and also to help those who are suffering due to extreme weather.
DONATIONS → Asmara Community Centre, raising funds to provide more services
A major regional community centre and a registered charity – it needs substantial donations to grow its range of services and is seeking £5m in charitable donations. As a Social Action, it will export high quality dates (which it grows in one of its projects) at cost price to food charities all over the world. Donors see a multitude of long term social impacts, from local to global.
Source – Re-Give: https://regive.org/content/2016/05/social-action