LESSON 40Seek Double-Bottom-Line Returns

Social entrepreneurship is on the rise. Companies that pursue socially relevant goals as part of their mission (no matter where their owners find themselves on the political spectrum or the social divide) offer investors the potential to generate double-bottom-line results, by which I mean a financial return and also a social benefit. The standard explanation for the recent growth in social entrepreneurship is twofold. First, foundations are eager to use their investments to attract capital from private investors, and second, millennials are taking their social values into the marketplace. I would add a third reason, which is that the markets are the best source of the massive amounts of capital that are needed to address the mounting global challenges of poverty, education, malaria, food security, and more.

All our philanthropies combined don’t have enough money to make a dent in these problems. Total annual philanthropic giving in the United States is around $320 billion. That’s a lot of money. But when you take out funds used for education and religion, that $320 billion gets a whole lot smaller. Meanwhile, institutional investors in the United States, Canada, and Europe—pension funds, insurance companies, banks, sovereign wealth funds, investment funds, hedge funds, private equity funds—have $75 trillion in assets under management.

We need to leverage as much of that capital as possible. I have been doing my part by investing in ...

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