A background in finance is sure to lead to money, but what if you want more than money? If you believe that finance can be used to engineer more than just profits, then a career in social finance may be right for you.
What Is Social Finance?
Social finance is the application of finance to achieve a social objective. Long the focus of governments and charities, social finance has now become a specialized field of finance and an area of focus for profit-seeking corporations.
Many different kinds of organizations seek better methods to reach and serve those in the lowest socio-economic groups. Banks, consumer finance companies, retailers, non-profit organizations and even telecom companies are just a few examples. Although their embrace of the world's lower income population may appear similar, organizations often differ in their intentions. Some seek the elimination of poverty as a social good, others seek to create new pools of consumers for their products. Some seek to do both.
Types of Social Finance Careers
As the world integrates, globalizes and becomes more interdependent, financial capital is moving into previously untapped geographic regions - such as emerging markets and pre-emerging markets. As a result, money is flowing into the hands of more people around the globe.
As a result of this increased globalization, new combinations of skills are in demand in the financial marketplace, and careers in social finance have expanded to become more varied to meet that demand. Some examples of careers in social finance include:
- Community Investor - A community investor gathers, oversees and directs capital to investments in communities that have been historically underserved by other financial services. Community investors generally report to a board of directors and, ultimately, the shareholders of the company. Examples of community investors include community bankers and community development venture capitalists.
- Micro-Financier - A micro-financier is a community investor who seeks to provide people in poverty with the means to invest or borrow money by creating financial transactions that eliminate the need for collateral, and that have smaller-than-average minimum investment requirements. Micro-financiers may be self employed or may work for companies as diverse as community banks, non-governmental organizations (NGOs), traditional commercial banks, consumer finance companies or consumer retailers.
- Nonprofit or Foundation Executive - One of the more traditional careers in social finance is the nonprofit or foundation executive. This individual works for a nonprofit organization or private foundation and generally reports to a board of directors or board of trustees, depending on the organization's legal structure. Areas served by nonprofits and foundations include, but are not limited to, the arts, science, the environment, child welfare, animal protection, and civic and political interests.
- Social Entrepreneur - Social entrepreneurs create organizations that provide innovative solutions to difficult social problems. These organizations can include for-profit businesses that have positive social externalities. Enterprises created by social entrepreneurs can also completely eliminate the distinction between non-profit and for-profit through hybrid enterprises that have features of both.
Benefits of a Career in Social Finance
Why do people choose a career in social finance? They do because these careers are:
- Interdisciplinary - Individuals in these careers generally draw upon two or more academic disciplines, combining finance with other fields of expertise such as philosophy, sociology, anthropology, political science, technology or other fields of study. Individuals who desire a global or big-picture view of the world may be attracted to work that combines finance with many different areas of expertise. Financial purists might prefer other, more traditional, financial careers or a career in social finance that involves being part of a collaborative team.
- Leading Edge - People in social finance are often pioneers building new ways to solve problems that a government or business alone has not been able to satisfy. Individuals attracted to these careers tend to be creative leaders who can identify resources and put them together in innovative ways. Although fundraising is generally a part of these careers, money is considered only one of many resources. Individuals who prefer following tried-and-true methods for success might not appreciate the challenges of social finance.
- Hands-On - People in social finance tend to be highly hands-on people with varied talents. Traveling, meeting with people of diverse backgrounds and solving practical problems are features of these careers. Those who prefer theoretical or academic work alone might not like the degree of flexibility required by this type of job.
- Meaningful - In the final analysis, these jobs are well-suited to people who appreciate seeing money being put to use for social change. Those who prefer to leave their philosophy at home, or individuals who expect a career to pay off in monetary gains alone, may not find these careers to be a good fit.
Advice for Aspiring Social Financiers
For those interested in exploring a career in social finance, here are some suggestions:
- Begin Where You Are: If you have a desire to connect your financial skills to a social cause, you may wish to look first in your local community. Volunteer work leads to new contacts, new experiences and, often, a new job or career. If you are looking for volunteer, consulting or other work in your region, you might find what you're looking for at Idealist.org, an online community that seeks to link people, consultants, volunteers and organizations.
- Link up with Like-Minded People: Business-leaders, policymakers, academics, students and social entrepreneurs are linking up via online communities, such as Social Edge and Changemakers.net. Networks like these put resources together and provide a platform for solving problems together online.
- Consider SpecializedSchools and Programs - If you haven't yet completed your formal education, you may wish to specialize in disciplines that complement your studies in finance. Languages, especially, can be helpful for those seeking to work in the global world of social finance. If you're looking for an advanced degree, you might wish to consider one of the many specialized programs of study, such as The Center for the Advancement of Social Entrepreneurship at DukeUniversity's Fuqua School of Business or Stanford Graduate School of Business's Center for Social Innovation.
The Bottom Line
Historically, social objectives have been viewed as the domain of governments and charities. That is no longer the case, as viable economic solutions are emerging for previously intractable social problems. A career in social finance allows an individual to apply financial skills to complex social problems. Social finance careers can be a good fit for those who seek interdisciplinary, leading-edge, hands-on and meaningful work.