The problem is exemplified in this post from Kevin Jones, over at Xigi:

The worst news from the Skoll World Forum was from another investor. They were trying to co-invest with a venture philanthropy fund, but found two significant barriers; one that fund does not co-invest, nor release its due diligence reports to even other like-minded institutional funders.

Worse was that this fund had made the social enterprise sign an exclusive deal; they would not take funding from another fund. The reason, it seems, is metrics run amok; they only way to make sure they can measure their impact is to try to restrict other impacts on the enterprises.

What’s the nuance? In this discussions, it’s all nuance.

I just spent an afternoon with Jed Emerson (more on Jed coming soon), one of the top thought leaders in social capital markets, and we talked about this measurement issue at great length.

The leading firms in (choose your term) social venture, venture philanthropy and social capital markets, are still feeling their way along the metrics road, (unintentionally?) spreading uncertainty and market inefficencies in their wake. What appears to be a combination of fear and ego on behalf of the 800-pound gorillas is, to put it in Suessian terms, “making Gluppity Glup, also Schloppity-Schlopp.” You’ll remember the Lorax warned, “you’re glumping the pond where the humming fish hummed. No more can they hum, for their gills are all gummed.” Will the Lorax send socially entrepreneurial humming fish and barbaloots away from these funds? Not yet, I don’t think…

The big-picture strategy, as I see it, is to have millions of social entrepreneurs thriving around the world, creating a highly distributed network of change agents.

It’s clear to me, and to Kevin and Jed, as well as many other people who have privately shared their experiences in the inner circles of this funding community, that these funds have got to become more transparent in their metrics, so entrepreneurs can make good decisions about investing their time in fund-raising activities.

“…There’s not enough Truffula fruit to go round.

And my poor Barbaloots are all getting the crummies,

because they have gas, and no food, in their tummies.”

This situation illustrates the core of my commitment to the Entrepreneurial Standards Forum. We’ve got the logic worked out for the first bottom line (profit / financial), and are beginning our work on the second (people / social) and the third (planet / resources). As demonstrated by the challenges at the top of the heap, finding clear ways to measure these other forms of capital is proving more challenging than people had expected.

Which is why Jed’s Blended Values work needs more and more attention. And why everyone needs to strive to work more closely together out in the messy, chaordic community space, rather than retreat to their Ivory Towers and rusting silos in the pursuit of an algorithm so precious it could never be shared.

“Because Truffula trees are what everyone needs.”