When shoeshine boys start giving stock tips, then you know something is wrong, goes an old Wall Street dictum.
When this aphorism begins to resonate in the field of impact investing and social enterprises endeavouring to address some of the most intractable societal challenges of today, then it is indeed worrying. Last month, at the annual industry conclave of hedge funds in the US, Reuters reported that there was much talk about impact investing and philanthropy. This, coming from a $2.4 trillion industry category that epitomises greed and profiteering—even if it claims ‘excesses of the past is past’— is a dire indicator of the frightening hype that pervades the space that social entrepreneurs now operate in.
It has ramifications for India as the country is still recovering from the microfinance bubble that burst, debilitating an entire industry that worked for the poor. India is believed to be a crucible for innovative social entrepreneurship and any sway of interlopers can be disastrous.
“The hype around impact investing far outweighs reality,” warns Vineet Rai, founder and chairman of Intellecap, with over a decade’s experience in funding and handholding social entrepreneurs through the Aavishkaar funds. “The expectations being raised are just beyond the capability of the system to deliver.” Ashwin Naik of Vaatsalya, a network of low-cost hospitals in tier-II and tier-III towns, agrees. An onrush of investor interest, of all hues and motivation, is fuelling the sector and, at the same time, expectations of social entrepreneurs are reaching sky high. “We are expected to sort out deeprooted societal problems overnight,” he laments, and also apportions some blame on social entrepreneurs who, for various reasons, throw up impact targets and numbers of beneficiaries, whether in education, healthcare or water and sanitation, that are highly unrealistic.
The fact is ushering change and outcomes at a systemic level in these difficult arenas would require years or decades of work. Short-termism is incongruent to this sector. “It is about time we set our own expectations right,” says Naik, who however is not as alarmed as Rai. The latter insists that many social entrepreneurs don’t want to be described as ‘social’ anymore, given the scary hype and circumstances.
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