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Altruistic Capital: Year Zero 23 octobre 2008

Par Thierry Klein dans : Altruistic Capital - in english, Posts in english.
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Altruistic Capital has now been launched.

In this article I’ll try and provide a concise summary of our “mission” (part of our articles of registration) as well as answer the most frequently asked questions.

If you have any comments, op-eds, questions or suggestions… get in touch with me.

From this day forward I’m looking for supporters, Jacques Attali finds the project terrific and for various reasons related to my own background, micro-finance’s history and his latest book I appreciate the compliment.

(For those of you who wish to learn more about this concept, its background, our goals you’ll find a list of related articles here).

What is Altruistic Capital?

Altruistic Capital bolsters the development of humanitarian causes by providing them with more substantial financial tools through access to private companies capital: altruistic enterprises.

Altruistic enterprises are perfectly normal companies from a financial point of view. They have the same economic goals as conventional businesses (performance, profitability,…). However upon at some point of their development – often at their inception – shareholders decided donate a share of the Capital to a humanitarian cause. They have even picked the said cause.

Our goal is to spur the creation of as many altruistic companies as possible, assist them in their development and through profits thus generated provide as much support as possible to the humanitarian causes that are part of it.

Why such an initiative?

To put a cap to the direst side effects of globalization, from destruction of natural resources to the unavoidable tipping towards conflicts, nothing is possible without financial power. The economic interests at stake are too high.
One has to fight money with money in order to impact on pre-existing economic, political and industrial actors.

NGOs have always been financed through donations. Why is it important to introduce them to Capital?

Access to Capital provides them with an unrivalled financial lever. The value of a company in the stock market is made of the accumulated profits of several years and even decades.
Except some rare exceptions so far the financial lever provided by capital only benefited the development of private investors, leaving humanitarian causes out.
This has led to a growing discrepancy between the impact of the accumulated economic mankind activity and global individual good deeds.
Altruistic Capital is a new type of human economic development that strives to reduce that gap as much as possible.

Which companies are called to adopt the altruistic capital concept?

Since it only requires a simple capital reshaping, any company can at some point of its development convert to it.
This said, we have identified two specific cases perfectly suited for this transition:

- The creation of new businesses (startups)

Upon the inception of a new company, the founder(s) may wish to engrave in marble their will to play an altruistic part in our society.
They may therefore when creating their business decide to donate a percentage of its capital to one of several causes that they wish to support. Some of those companies will flourish, others will fail, but slowly the financial means provided to humanitarian causes will be huge: over 80% of Nasdaq’s capital gains derives from companies les than 30 years old.
For any entrepreneur, knowing that through your daily management of your company he/she is also impacting on society is a powerful source of motivation – very often the entrepreneur can’t afford the time to act otherwise. It can also become a motivational and inspirational source for customers and employees.

Millions of citizens ask themselves how to act, how to make a difference but they have no available solution at hand. At the end of the day a great deal of financial means is required to support a humanitarian cause full-time. Such altruistic companies would allow anyone with a ‘normal’ job to also have a real mission, quite different from the companies other more conventional goals.
Alternatively members of any NGO may also decide to broaden their action by creating their own altruistic business.
By increasing both the visibility and public awareness of Altruistic Enterprises, we try and support their development in a way that the initial capital donation may also economically benefit the founders as much as possible.
We should see Altruistic Capital as a new means to develop a company – Altruistic Capital is at the end of the day the other side of the Capital risk coin.

- Converting Open Source projects into companies

Launched in 1984 the Open Source movement favors the free exchange of knowledge and software (as opposed to private ventures such as Microsoft’s), support the cooperation between engineers and make available to them the full results of their work.
Open Source projects are Altruistic by nature.
[In the Open Source movement you can see in action all of the power of cooperative projects, Internet and globalization around which the 21st century will revolve. Open Source today is a glimpse of what collective action could become tomorrow – it’s already an inspiration for companies composed of programmers who mainly telecommute.]
No one can deny the great impact Open Source has had on society since it’s the founding stone of the Internet itself, however we can criticize the concept’s lack of ambition: freedom of distribution and no-charge software are empty words if you don’t give them a meaning.
The fathers of the open source license concept main idea was to get rid of any downsides related to proprietary software, however no further positive impact for the world derives from it. It’s mind bogging that there should be no large humanitarian group based on the positive use of proprietary licenses. It’s unsettling how programmers spend their time developing software with no other goal than free distribution, rather than programming for a positive cause no matter which one.
Altruistic Capital provides both an economic and legal frame available to all those who wish to develop technologies within a cooperative structure with an altruistic intent and would rather do it in an Altruistic Company structure rather than through Open Source.
It’s perfectly feasible to go from Open Source projects and create “entirely altruistic” businesses devoting all of their capital to some humanitarian cause.
Generally speaking Open source projects cannot be directly transposed to a business plan since they are only composed of programmers. Economic experts should be brought into the game so as to create a business model. Broadcasting these projects to a wider audience is one of our goals.

Can Altruistic Enterprises be profitable? Won’t they be less competitive than others?

Altruistic companies are identical to any other regular company, except that their capital (or a share of it) is held by an NGO.
No other additional obligation is made concerning their management or ethics.
Go any further by attempting to moralize a company’s actions would take a toll on the efficiency of the altruistic action itself, by decreasing the profits generated by the said companies and thus the financial means of the causes they support.
It would also be the beginning of some form of political correctness inquisition we strive to avoid at all costs.
Much on the contrary, opening a company’s capital is a very important means of development:

- By giving a commonwealth meaning to the employees work, we attract the best among them and make them more performant. It knits work teams closer together.
- It also is a very positive point for customers. There already are ethical companies.

There are even ethical investment funds.

Altruistic enterprises are nothing alike ethical funds or ethical companies we see nowadays. Ethical funds are supposed to check on the ethical nature of any companies in their stock portfolio, however and additionally to doubts one may raise on the quality of such verifications since at the end of the day the fund’s main goal is to return a profit, no positive action per say derives directly from it and often the ethical nature of the fund is nothing but a marketing stunt to attract capital or clients.

The same thing could be said about most of altruist sponsoring events led by companies (you may have noticed that most all of energy companies finance campaigns for a cleaner planet)?
On the other hand the percentage of capital in a company that belongs to a cause, unquestionably validates both structurally and quantitively the nature and strength of its commitment.

Don’t you think some ethical companies may also be hypocrite in their approach and acquire such a status only to derive benefits from it?

It’s perfectly plausible, however we don’t try and analyze the inner motivations driving companies – or rather their shareholders, since the mechanism behind capital donation guarantees that whatever their initial reasons may be the end result will generate a profit for the humanitarian causes commensurate with their share of capital.
We provide certifications based on the portion of altruistic capital donated by the company. The granting of such a label certifies of the reality of the donation as well as the humanitarian nature of the chosen cause.

What are the philosophical implications of the Altruistic Capital?

Marx is dead. Attempted alternatives to Capitalism (communism, alter-globalization…) are no longer credible.

Altruistic Capital makes humanitarian causes wealthier: it provides a limitless structure to allow them to take a part in companies’ capital.

Much as micro-credit, it develops alongside globalization and not against it. And as in micro-finance this is its main strength.

In a world that is and will remain mercantile, Altruistic capital corrects the abuses of the Invisible Hand by adding an altruistic level into economy.
It provides altruistic actors with a more important economic lever and allows them to tip the economy balance in a direction that will better serve humankind’s interests.

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