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We have learned to create the small exceptions that can change the lives of hundreds. But we have not learned how to make the exceptions the rule to change the lives of millions.
— Lisbeth Schorr, Social Analyst
Despite all the important work accomplished by nonprofits over the last hundred years, significant growth or scaled impact has remained an elusive goal for most of them. The inability to achieve scale – that is, to make a meaningful and sustainable impact by serving large numbers of those in need of assistance – makes it all but impossible to address our most difficult social problems, which are overwhelming even our best solutions.
If our society is unable to consistently scale its best social solutions to reach millions of people, it is hard to imagine how we will achieve major social progress. Failing public schools, entrenched poverty, and the lack of accessible, affordable, high-quality health care are all indications of our unmet social goals.
A primary cause of the failure to scale effective social solutions remains a lack of accessible growth capital. To consistently scale up solutions, requires the allocation of billions of dollars annually to support them, far too much for any one funder to provide. To generate this level of funding, a system is needed in which large amounts of capital can be easily aggregated from multiple co-funders (public and private) to finance well-vetted scaling initiatives.
For businesses in the for-profit sector there exists a mature system to vet, select and support growth of promising mid-sized companies. Yet, no such capital market system exists in the social sector that enables the efficient aggregation of large amounts of capital required to finance expansions. As a result, effective policies, services, practices and programs remain isolated and the promise of social progress they hold is unfulfilled.
What is required is a collaborative funding system that consistently brings together capital providers to co-fund major expansions of proven initiatives, i.e., a growth capital marketplace. Establishing a growth capital marketplace will transform the social sector. It will give us the capability to solve our most difficult problems by enabling breakthrough solutions to ramp-up and change the lives of millions.
A growth capital marketplace has a number of integrated elements: (1) a large, diverse set of scale-ready nonprofits in a variety of issues, (2) a large universe of funders who can provide the capital for local, regional, and national scaling efforts (including grants and loans), (3) investment standards and transparent information about investments, and (4) channels and mechanisms that can distribute scaling initiatives to thousands of funders who might be interested in them.
A broadly used marketplace is also comprised of multiple sub-markets in different sub-sectors (e.g. education, health, poverty) and geographies so that funders - whatever their varying interests might be - can find high-impact opportunities to support.
Through a collaborative, sector-driven process, Social Impact Exchange members engage in a number of ways.