From not-for-profit to ‘social profit’

Celso Grecco

On 15 June 2004, an unusual crowd gathered on the trading floor of BOVESPA, the Brazilian Stock Exchange in São Paulo. For the first time in its history, the centre of the capital market was transformed into a meeting place for investors and high-ranking officials of BOVESPA, representatives of NGOs, and children and youth from poor communities.

They were there to mark the first anniversary of the Social Stock Exchange (SSE) and to celebrate the early success of its operations. Their meeting was symbolic of the bridges that the SSE is building between investors and NGOs, between rich and poor. It also provided a glimpse of the important role that capital markets can play in the creation of just and sustainable societies.

The SSE was created when Atitude Marketing Social was invited to present a long-term social marketing strategy to BOVESPA. BOVESPA had had a long-standing involvement with the third sector, mainly through supporting NGOs in São Paulo. When debate about corporate social responsibility and corporate governance became current, they became aware of the need to apply the same sort of standards – impact measurement, transparency and so on – to their giving programmes. In other words, they needed to be sure their support to NGOs really was producing a social impact. Hence the invitation to Atitude.

Our view was that the stock market was essentially a ‘value creation environment’ with benefits for both corporations and investors. Corporations grow by means of investment and return the investor’s capital with profit and dividends. So we created the SSE with the same objective: to bring together NGOs that require funds and social investors (donors) willing to support their programmes and projects.

As with the stock market, NGOs would develop, thanks to the investment, and return it in the form of a more just society in which thousands of children and youth from poor communities enjoy greater opportunity in their lives. In other words, the return would be in the form of ‘social profit’.

The SSE project, the first of its kind anywhere in the world, is innovative not only in terms of the channels through which NGOs can raise funds but also in creating the concepts of ‘social investor’ and ‘social profit’. In creating value for the NGOs and value for the investor’s money, BOVESPA aims to redesignate ‘Not-For-Profit Organizations’ as ‘Social Profit Organizations’.

How SEE works

Non-profit organizations can put forward their project to the Social Stock Exchange, stipulating how much money they need to raise and for what purpose. The SSE programme focuses on education projects that benefit children and youth aged 7-25 living in poor communities.

Once projects have been approved,[1] BOVESPA and its 120 brokerage firms all over the country present the portfolio of programmes and projects to investors with the aim of selling ‘social shares’ in those organizations, just as they do in the stock market. Through the SSE website, individuals and organizations make ‘social investments’, either buying shares in one of the listed projects or assembling a portfolio of ‘social shares’. Investors can keep track of their social investments through the site and see how the projects are progressing. With a value of R$1 (around US$0.33) per social share and a minimum investment of R$10 (about US$3), an investment in the SSE is very affordable.

Through its partnership agreements with Visa and the Brazilian bank Banco Nossa Caixa, BOVESPA guarantees that all funds raised are transferred to the NGOs without deductions for commissions or other fees. BOVESPA maintains the SSE website and does the back-office work of processing the social investment transactions. It absorbs all costs related to the operation of the SSE, such as paying the technical staff, advertising expenses, consulting fees, and taxes.

The number of projects listed in the SSE is kept relatively small on purpose (30 at any one time). That way, incoming funds are not spread too thin. This heightens the chances that all listed NGOs will benefit, and early successes can be shown. The eight NGOs that sold all their social shares in the first year made way for eight new projects, which meant that SSE assisted a total number of 38 organizations in its first year of operation.

The impact of SSE

Nearly a year and a half after its launch, 25 per cent of SSE’s original portfolio of social shares is sold, and eight of the 30 projects are fully funded. These results may look humble, but we believe that the social impact of the initiative is much larger than a first glance at the relatively small trade in social shares indicates. The initiative marks the first time that stock market concern about social issues has become institutionalized and visible. The UN has taken up the idea and is encouraging other stock exchanges to consider similar programmes. Likewise, Brazilian President Lula also wants to propose the SSE as a model to France, Spain and Chile, with whom Brazil has formed a pan-national group to devise solutions to hunger and poverty. At the time of writing, I am about to embark on a series of meetings with stock exchanges and foreign affairs ministers in these countries. The results of our discussions will be presented to a meeting with the UN in September. In short, though the SSE has so far borne only modest fruit, its seeds are being widely sown and its potential for growth is great.

Meanwhile, at the basic level more is needed to motivate people to buy social stocks. We believe that the real challenge for the SSE is to help create a culture of social inclusion. This would mean the privileged abandoning a habit of charity and getting actively involved in the development of a just society. Bringing about such a profound change will take time and effort.

We also believe that the SSE can serve as a conduit for dialogue between investors and NGOs, business and community, rich and poor. It can bridge the divide between those groups because it offers an environment in which people who normally don’t speak to one another start to communicate.

A new vocabulary

What’s more, the SSE offers them a vocabulary in which to do so. The use of terms such as ‘social investment’, ‘social shares’ and ‘social profit’ is not merely a play on words, nor is it just an analogy with the stock exchange idiom. The application of investor’s language to the social sector can have a profound effect on the creation of an inclusive society. UNESCO, for instance, applauds this innovative use of language, because it helps them show the governments of Brazil and other countries that money paid for education is not an expense but an investment. The idea of a social profit connects those with dreams of a better future with others who are interested in concrete projects with measurable outcomes.

So it matters when not-for profit organizations become social profit organizations. Instead of apologizing for what they are not, social profit organizations affirm their significant role in the creation of a sustainable society. The invention of a ‘social investment’ vocabulary helps to pave the way for more participative approaches to social development.

Next steps and future aspirations

We realize that the creation of a social investment culture is a slow process. We ourselves are learning about the meaning and scope of the intended changes. And we know that, when it comes to achieving social justice, more than words will be needed. But we are optimistic about the potential of the SSE, and committed to realizing that potential.

Based on our experience of the first year of operations, we’re currently making plans to improve on the early successes. The focus of these plans is threefold:

  • to attract more investors;
  • to create a network of participating NGOs through which they can exchange experiences and ideas; this does not usually happen in Brazil (as one of the preliminary steps, we have a meeting of the 38 NGOs scheduled for March);
  • in conjunction with NGOs, to further develop measurements of their social impact. One of BOVESPA’s aims is to develop a ‘social profit index’ that will provide a reliable way of showing how a specific project is evolving.


Is the idea of an SSE replicable in other countries? We think it is. So do UNESCO and the UN, who promote the initiative to other stock exchanges through their offices worldwide. We believe there is potential for a similar programme in very different societies and we invite others to share our growing expertise.

In countries with a well-established stock exchange, it provides a convenient and trustworthy channel for people who want to make socially responsible investments. In societies like Brazil, with a developing capital market, a social stock exchange and an ordinary stock exchange may be mutually supporting enterprises. BOVESPA is making great efforts to popularize the stock market and the SSE can help by giving a positive example of how it works.

At the same time, the success of the SSE is dependent on the attractiveness of the general stock exchange. For instance, when it becomes easier for BOVESPA’s brokerage firms to trade regular stocks, they can become bolder in their marketing of social shares. Thus there is a clear synergy between BOVESPA and its SSE. The initiative may bring new investors to the stock exchange, and listed NGOs may obtain funds from people they previously couldn’t convince to support their work.

In all instances, a SSE can democratize access to philanthropic resources and give further credibility to the work of NGOs.

1 A team of specialists in education and in the third sector, plus members of Atitude’s staff, analyses all entries and recommends the best projects to the SEE Board of Governors for approval.

Celso Grecco is president of Atitude Marketing Social, a Brazilian cause related marketing agency. He can be contacted at


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