Tuesday, September 29, 2009

The DNA of Social Finance






The DNA of Social Finance

The course of social finance is enlivened by transparency and trust. These essential elements of agreements between people are central to the value of financial transactions—and are in many ways inseparable from each other. What I mean by this is that transparency leads naturally to trust and vice-versa in a constant dance through time. I would add that the healthy circulatory system of money, even on a global scale, is built or carried by the dynamic present in transparency and trust. Consider the opposite where they are not present—circulation stops, economies falter, wealth is extracted, self-interest reigns, poverty results. This may seem a stark contrast, but a poignant one given the current state of the economy in which unemployment and foreclosures are rising increasing while investment houses continue to post impenetrable values.

Transparency and trust emanate from human experience, and are therefore quite individualized in their practice or find expression in the behavioral patterns of a particular culture. They are also deeply connected to the need for accountability and dependability. Most people want to know that whatever motivated a transaction in the first place will be recognized and respected by the other party to it. For example, if I agree to lend money to you, I need to know that the money will be used as expected and returned as per the understanding. I also need to know that if the scenario does not play out as planned and there is significant change, you would come back to renegotiate the agreement or return the funds. This epitomizes the tandem connection of trust and transparency, and is a measure of a healthy financial transaction—one that frees the lender to focus on other activities and the borrower to progress with the planned project while remaining connected through the lender-borrower partnership. If you cannot find out where the money you loaned went to, or the borrower feels no responsibility to the lender, something is broken in the flow of both money and human relationships. Accountability has both a human aspect in the context of relationship, and a financial one in the context of tracking and measuring the movement of the money itself.

The salient characteristic of social finance is that these two threads, the human and the financial, are recognized and worked with as inextricably linked. Every financial transaction has an effect on human beings, and every human being affects the quality of the world through how he or she works with money. This is a fully rounded concept of interdependence as it includes the perceptual and behavioral dynamic along with the more traditional economic one of interchange and efficiencies in the production and consumption of goods and services.

If trust and transparency are central to the vitality of financial circulation, serve a bridging function between the social and the financial, then what actually is the deeper motivating force that begins, sustains or augments that circulation? What if we could consider that social finance has the double helical structure of DNA, with the major strand being human actions and needs, and the secondary strand, the creation of money in its many forms. That they come into a dynamic relationship is inevitable in economic life and is epitomized by the tension between self-interest and community-interest. Add to this, movement through time and place. In this imagination, the pulsing dance between transparency and trust bridges the two strands and naturally gives rise to a vortex-like spiraling movement. But what of the motivating force? I would argue that the prime mover is human intention. It is the element that moves with the currency, the flow of money. It represents the energetic investment of people into the circulation, the rhythmic movement of value as it is generated, destroyed, and recreated anew within the whole economic process. Of course, one can make the case for the shadow side, the adverse effect of bad intentions or unethical practice. But, if we can understand social finance from the perspective of the elegant architecture of DNA with its life-building capacity, we might also see how social finance can serve as a restorative and healing force in economic life.

John Bloom © 2009

From Prime Mover to Freedom: Spirit Matters in Giving


From Prime Mover to Freedom: Spirit Matters in Giving

If I could accomplish one change in the field of economics in this lifetime, it would be that gifts and philanthropy are understood as essential to a healthy economy, and even more so as the prime mover of all economic activity. I think I can make the case for this with two examples.

First, each of us is born into a gift economy; that is, our physical needs for nourishment and care are met through the gifts bestowed by parents without expectation of recompense. So we begin life in gift which we then develop, through education and other life experience, into capacities to serve others and meet our own needs. From a spiritual perspective this means that what we absorb as gift, we able to give back to the world through our own intentions and work. Of course, this is a reductivist picture, but pare away all we are conditioned to think about work and vocation, what, why, and how we get paid, the disintegration of experience that results from the division of labor. The result is a mega-bundle of gifts and needs waiting to be orchestrated into economic circulation through capacities, needs, and relationships.

The second argument for gift as the prime mover is its necessary role in cultivating all those human gift-capacities up to point where they have value in the world of exchange and transactions. The function of the intimate parental gift so essential to early life is taken up more broadly by a culture (it takes a village) in how it transfers wisdom across generations. Culture would become stultified if there were no research and development, no evolving story, no place for experimentation and failure, and no avenue for new ideas to percolate and find their way into daily life. Since such experimentation is pre-production, it naturally absorbs money rather than producing it. Education, defined through this laboratory function, will never generate profit. Quite the opposite is true. It depends upon gift to fulfill its mission of fostering human capacities and fomenting new ideas and insights.

In the real economy, the one that includes both spiritual and material dimensions, there is circulation of human and material gifts. Clearly both have value in economic terms—if you accept my argument—and they also have an interesting relationship brought into sharp focus in the field of philanthropy. Consider the following from Lewis Hyde’s seminal book The Gift: Imagination and the Erotic Life of Property:

Gift exchange is connected to faith because both are disinterested. Faith does not look out. No one by himself controls the cycle of gifts he participates in; each, instead, surrenders to the spirit of the gift in order for it to move. Therefore the person who gives is a person willing to abandon control. If this were not so, if the donor calculated his return, the gift would be pulled out of the whole and into the personal ego, where it loses its power. We say that a man gives faithfully when he participates disinterestedly in a circulation he does not control but which nonetheless supports his life.

Understanding the full dimension of this release of control is vital to the human part of gift circulation. Of course, there are the legal and tax issues that condition the circulation. Donors can only take a tax deduction if they have given up control to a qualified charity and have received no goods or services in return. That is one level of exchange, and relevant only to donors that can take advantage of the tax code. But, what about gift intention? Is that something that can really be given up or given over, even if the gift is truly released? Is this something of what Hyde refers to in the element of faith? And, what exactly might he mean by disinterested since most donors are anything but disinterested? Can one be disinterested and interested at the same time? The answer is—of course—if one looks at the spiritual dimension as one in which the gift actually carries the giver and receiver into a deeper destiny relationship (this is the interested part), and at the same time is given over for charitable purposes as determined by the receiver (this is the disinterested part).

So what arises for the donor by truly giving up control of a gift? When the donor gives up control, he, she, or they are at the same time released from the gift, freed by it. Sometime this is expressed as a kind of relief, a feeling of well being or buoyancy, and sometimes a kind of grief. These are all transformative moments, moments in which, as the whirling dervishes practice in the moments of halting stillness, new insights and consciousness can happen. The deep inner knowledge and process that led up to the moment of the gift giving, up to the moment of willing release of control, is also a moment of a renewed spiritual freedom.

One metamorphic aspect of money is that when a financial gift is made to a charitable entity, that gift money is transformed very quickly into purchase money. That which was “surplus” for the giver is given new life in the rapid economic circulation of the day-to-day economy. It supports the development of human capacities and a kind of spiritual freedom that is essential to the purposes of education, research, the arts, and other cultural endeavors in a free society. What a change it would be for philanthropy if it were to be practiced as an integral part of daily transactions rather than as something one does after accumulating “enough” to give away. In cultures where there is no such wealth accumulation, gift is essential to survival. Without gift, life withers; without gift, culture stagnates; without gift, economy languishes. The analysis is simple. The solution, the release of stored up wisdom and wealth—surrendering to the spirit of gift, is one critical way to recognize and engage what is desperately needed for the future.

John Bloom
© 2009