If your money isn’t buying you happiness, then you are spending it in the wrong way.
It’s the season of giving – and spending. While the common adage is that money can’t buy happiness, others have suggested that if your money isn’t buying you happiness, then you are spending it in the wrong way.
Research is showing that the money you would usually spend on presents can become part of a social movement and address problems in our society. Here are five global trends that are creating change for good and enable you to take action.
1. Civic crowdfunding
Action: Get rewarded for donating to online campaigns
Many online platforms have emerged that enable citizens to raise awareness about causes, post and manage campaigns, and raise donations. These include StartSomeGood and Chuffed. The volume of the overall global crowdfunding market is estimated at US$34 billion, with reward and donation-based crowdfunding worth around US$5.5 billion of that total market.
The volume of the overall global crowdfunding market is estimated at US$34 billion…
Reports indicate that a growing number of campaigns offer perks or rewards in return for donations. What this means is that instead of just donating to, say, a refugee rooftop garden in the inner city, you receive in return the experience of having dinner in that garden using its produce. Or your donation to rescue chickens provides you with a monthly carton of eggs.
Now some may say that this is to the detriment of altruism – only giving if you get something in return. This may be true, but another way of viewing this trend is seeing how this shift from donations to value-exchange (reward) transactions begins to disrupt models of giving. This shift enables access to the retail spending market – a much bigger funding opportunity than donations.
2. Social enterprise and social entrepreneurship
Action: Buy your gift baskets, with goods from social enterprises
This includes: finding the correct legal structure, financing, tensions between serving customers and beneficiaries (if they are not the same group) and employees that understand this model. Debate still continues as to whether Australia needs a new legal structure for social enterprises or not.
WhoGivesACrap.com is an example of a social enterprise generating stakeholder value (as opposed to only shareholder value).
WhoGivesACrap is an example of a social enterprise generating stakeholder value (as opposed to only shareholder value). It’s a for-profit firm where 50% of profit from selling toilet paper and paper towels goes to building toilets and other projects in developing countries.
Another is Thankyou.co, which sells bottled water, body care and food products and has raised over A$3.7 million for safe water, hygiene and sanitation, and food security programs. It donates 100% of its profits and consumers can track their individual impact through impact trackers on each product.
These business models have become increasingly attractive to consumers, creating a competitive advantage for firms. But it’s also also putting these organisations under increased scrutiny with demands to be transparent about their onward donations.
3. BCorporation certification
Action: Purchase gifts and services from certified BCorporations
Nearly 10 years ago, BLab was created – a non-profit organisation that certifies companies as a BCorporation. This means the company is achieving certain levels of social and environmental performance, checked and certified by the organisation.
It’s based on the premise the businesses have a responsibility not only to shareholders but to the community and planet. In “using business as a force for good”, there are now over 1,900 certified BCorporations in 50 countries, across 130 industries from food and homewares to manufacturing and services.
BCorporation certification is described as the business equivalent of a Fairtrade certification on coffee.
Increasingly, BCorporation firms are networking with each other, building a global community of products and services. As with other certification systems, a BCorporation stamp holds companies to account for their financial and social performance. For example, online craft platform and BCorp-certified Etsy was recently questioned about its tax practices.
Certification (and re-certification every two years) requires submission of supporting documents, disclosure statements and background checks of applicants.
Action: Make a micro loan to a very small business
It might be the season of giving by lending too. Microfinance has been around for over 30 years, with early proponents now having won Nobel prizes for their efforts.
Microfinance refers to lending small amounts of money (say $25) to individuals or groups that mainstream banking often neglects. For example, Grameen Bank was established to provide micro loans to rural women of Bangladesh. Some of these women use the loans to buy a cow, to then produce and sell milk in their village, and are then able to repay their loan.
Despite becoming more mainstream and global, microfinance still has its issues. One concern is that many loans are now being used for consumption rather than to start or grow an enterprise (resulting in borrowers struggling to repay loans). Author Hugh Sinclair and others argue that the sector needs more regulation and transparency.
Despite these concerns, microfinance plays an important role in social enterprise development, especially where other financial services are difficult to access.
Kiva is one of the more successful platforms in this space, connecting entrepreneurs and NGOs with lenders anywhere in the world.
Kiva is one of the more successful platforms in this space, connecting individual entrepreneurs (micropreneurs) or groups of entrepreneurs and NGOs with lenders anywhere in the world. Similar to other platforms, it uses an online payment system to transfer money as loans (minimum US$25) to entrepreneurs in developing and developed countries.
Since it began in 2005, Kiva has lent over US$936 million from 1.6 million lenders to over 2 million entrepreneurs across 82 countries. It relies on ratings and transparency to make the platform work and to provide lenders in particular with a sense of security.
Amazingly, Kiva has 97.1% repayment rate. So it is highly likely that your loan of US$25 or more comes back to you, enabling you to lend it out again.
5. Impact investing
Action: Consider superannuation funds or investment managers who invest ethically and for social impact
Impact investing seeks a social and financial return. It is not an asset class, but rather a lens through which to make investment decisions.
Consumers and their investment managers are offering more strategies that achieve social impact. The global and growing impact investment market is estimated to be worth $650 billion by 2030. This coincides with the fossil fuels divestment movement.
The global and growing impact investment market is estimated to be worth $650 billion by 2030.
This is also supported by shifts in philanthropy towards impact investing. For example, groups such as The Impact, led by Rockerfeller’s grandchildren, are redirecting family wealth into impact investing opportunities.
Market infrastructure (such as rules, ratings, platforms, assessors) is also emerging, such as the Global Impact Investing Rating System and even social stock exchanges (platforms that connect investors and enterprises) to help direct funds into impact investment opportunities.
So, disrupting the retail spending market for good can start with individual purchasing power and transform into a bigger movement for social change. The business and organisational models are already there to increase opportunities for spending and investing – not just to avoid harm but to do good.