Social capital

Financial capital is money. Human capital is skill. Social capital is different. It is the value locked up in relationships, trust and shared rules that let people work together.

The workbook gives two definitions, one from each of two global institutions. The OECD defines social capital as "networks together with shared norms, values and understandings that facilitate cooperation within or among groups." The World Bank calls it "the institutions, relationships, and norms that shape the quality and quantity of a society's social interactions."

Both definitions point at the same thing. People who trust each other, and who share some understanding of how to behave, get more done together than the same people acting alone.

For a social enterprise, building social capital is not a side effect. The workbook lists it as one of four things an organisation does when it "has a social intent": it serves a social good, has a social mission, creates social value through social change, and builds social capital.

The workbook names social capital as one part of a wider four-part test for "social intent" (Chapter 1, section 1.4.1): an organisation has social intent when it serves a social good, has a social mission, creates social value through social change, builds social capital, and has a social bottom line.

Two institutional definitions sit side by side, and the workbook does not pick one over the other:

The workbook notes there are "numerous definitions of social capital," but says the common factor across them is an emphasis on social relations formed for productive benefits — relationships matter because they help people produce something together, not just because they feel good.

An illustrative self-help group; figures are made up.

12 women in a Vidarbha village form a self-help group (SHG) to save small amounts weekly. In year one, each member saves Rs 100 a week, so the group pools Rs 1,200 a week — Rs 62,400 over a year.

The money matters, but the workbook's point is that something else builds up alongside it: trust. Members learn who repays on time, who shows up to meetings, and who can be relied on to vouch for a neighbour applying for a loan.

By year three, that trust — the group's social capital — lets the SHG negotiate a bulk loan from a bank on the strength of its own repayment record, without every member needing separate collateral. The bank is lending against the group's shared norms and relationships, not just against the Rs 62,400 saved in that first year.

Chapter 1 (Introduction to Social Sector Ecosystem), section 1.5.1 ("Concepts and Terms in Social Sector Interventions"), lists social capital among core social-sector concepts, alongside poverty, social development, stakeholders and sustainability, giving both the OECD and World Bank definitions. Section 1.4.1 also names social capital as one of four markers of "social intent." Expect a question asking which institution gave a particular definition, or asking which four things an organisation with social intent must show.

• Two institutions, two definitions. The workbook gives both the OECD and World Bank wording and does not say one replaces the other — a question may quote either one.
• Social capital is about relationships and norms, not money. Do not confuse it with financial capital raised on the Social Stock Exchange.
• Social capital is one of four markers of social intent (social good, social mission, social value through social change, social capital, and a social bottom line) — a question naming only one or two is testing the full list.