Social Capital for Social Ventures FAQ

#SC4SV is a global network investing time and specialized skills into enabling new projects when capital is scarce.

What is it?

The SC4SE fund is the EdgeRyders network acting as a capital fund. By putting time and specialized skills (like language or design skills) at the disposal of new small enterprises, we take what we have (skills, time and talent) and use it to fill in the gaps left by what we don’t have: access to investments of financial capital. This is self-help into employment for a largely unfunded generation. We can help each other to help ourselves.

Why is it innovative?

Time banks encourage members to exchange labour. In these systems, participants’  time is used as “cash” - as an alternative to currency for small transactions. To the best of our knowledge, the transformative steps to turn participant commitments into a capital resource have never been taken.

We ask our participants to commit a few days per year to the SC4SE fund. This time is pre-committed to the fund; That means the fund can value the assets given to it, and assure the enterprises it grants support to that they will get the help they need to get off the ground, unlike time banks which require continual fundraising efforts.

A SC4SE Grant consists of a given number working hours. Participants from our network collaborate to self-organize this support in the form most useful to the enterprise. Typical uses might be design, translation or project communications review. It could also be used for remote jobs like scouting locations or giving presentations in a faraway city when funding is too scarce to travel there yourself.

How will it have an impact? How could we measure impact?

Please explain how your idea will have an impact on helping target people/groups move towards work or into new types of work. What is it about your idea that will achieve this? Please also explain how you will measure the impact?

Please provide your definition of your target group.

Our measurable impact is creating jobs and projects which provide social benefit and employment. We can measure three things easily.

  1. The total number of hours committed to the SC4SE fund (the size of the fund)

  2. The number of hours of labour performed in support of our supported projects (the total of grants made)

  3. The number of jobs created (and other metrics as measured by these projects) by projects we choose to fund (the outcomes)

How much contribution the SC4SE fund makes to the success of a project it invests in is harder to measure. If a project had 10000 EUR of financial capital and 20 person-days of time donated, is a fair representation 1 person-day is worth 200 EUR so 4000 EUR of labour is 40% of the enterprise’s initial capital?

For some classes of participant work (for example, translation) it might make sense to value the time relative to equivalent commercial services in this way. In other areas, where specialized resources like access to networks and deep knowledge of a local area are invested, the value might be harder to assess accurately. In those cases we could estimate of the financial value required to replicate the work done by our participants.

Our target group is entrepreneurs, particularly social entrepreneurs, within Europe who cannot fund their new enterprises because of capital scarcity driven by the ongoing financial crisis. We would expect many of these entrepreneurs to be young. We would also expect many potential entrepreneurs to become active once the SC4SE fund allows them to prototype their ideas without too much reliance on banking credit.

The successful ones will, of course, tend to employ additional staff as their enterprises grow, yielding a second-order impact.

At what scale will the idea operate initially and what are our aspirations for the idea in the longer term?

The idea operates on a pan-European basis as the EdgeRyders network has active participants in most EU member states. However, the decentralized nature of that network means that the majority of work we can undertake for enterprises we support must be performed remotely: translation, proposal writing, graphic design, software development, accounting etc.

As the EdgeRyders SC4SE Fund grows in size, it will become increasingly possible to pair entrepreneurs with help in their area.

We think it is very clear that the substitution of social capital for financial capital is going to be a trend long into the future. The “crowdfunding” efforts like KickStarter have shown what a little financial support from a lot of people can achieve, but many of the most active young people don’t have enough capital to support all the projects they would like to.

With 20% youth unemployment in many areas, one resource we do have is time. Turning time into employment is something of an alchemical miracle: we take what we have (young people with skills) into what we need (self-supporting projects.)

Different kinds of co-support networks could easily grow up on the EdgeRyders SC4SE model, in specific geographies, or around specific kinds of support.

How could sc4sv be sustained over the next five years?

Please explain how you think your proposal can be sustained over a period of time. We are not expecting you to have a full plan for this yet. We are interested in what type of ideas you have to make sure that your idea continues to have big impact on helping people/groups moving towards work or into new types of work.

The SC4SV is inherently sustainable because it does not need a lot of money to run if the social contracts which haromise expectations and govern interactions between participants are solid. It really only needs means to exist for people to be able to invest in each other. As well as training and communication materials for member-driven outreach work.

  1. Decentralised structure in which operations mainly sustained and driven by community members for whom interests of the community are aligned with their personal intersts

  2. Fixed costs are tied to maintaining the online platform, social media presence and low-budget physical community events.

  3. Our network analytics data from year 1 of running Edgeryders indicate that fixed costs of managing the community do not scale with community growth.

In order to cover fixed costs we have been selling services of the distributed think tank of citizen experts and we can do more of same. Our idea is to fund the existence of a website and some community animaton with that revenue. The community currently consists of 1300 members (250 active): We intend on growing the community by an order of magnitude over the next three years.

What are the most important things we need to have in place to make the idea happen?

  1. A functional, streamlined online platform. The EdgeRyders community has so far interacted through a platform deployed by the Council of Europe. With the end of the project (end 2012) it is transitioning onto a decentralised community-run space.

  2. A sustainable, fair, social contract. Great caution has to be exercised to make sure that unpaid volunteers coexist easily with paid staff members; that participants can move effortlessly from one role to the other; and that the resulting tidal pull does not break the community apart.

  3. A (small) amount of cash resources to seed outreach and propitiate interaction. Edgeryders has grown through steady work on social media: community members reshared website content, thereby driving website traffic and new signups. Two events (example: have played a key role in cementing the community, driving buzz and harvesting ideas for social innovation initiatives (we know of at least three applications to this prize conceived at one of them). The cash prize would be treated as a seed grant to be matched with other sources of start-up funds. Given the distributed nature of Edgeryders and the social media traction of many of its members, crowdfunding is being considered.