Suppose you have a $100 investment that made $10 a year (i.e., 10% APY). If it suddenly started making $5 a year instead, you can think of it in two ways

• As an immediate loss of $50, followed by the same APY
• As a fall in the APY from 10% to 5%

Given the choice between donating $50 and investing to get half the prevailing rate of return on $100 instead, I feel like many people are more willing to do the latter -- hence social entrepreneurship.

Although the two options may look identical NPV-wise, in actuality investing $100 and getting half the prevailing rate of return is more flexible, as it allows someone to recall the money in the future if they feel like they need it. This flexibility implies that the social entrepreneurship initiative has to have liquidity management capabilities...

Good things can be sold for expensive prices. Expensive things, however, aren't necessarily good.

Good average return can cause investors to tolerate high variances in return. High variances in return do not guarantee a good average return.

1. Candle goes out
2. Paper used to carry fire from neighboring candle
3. Paper fails to light wick, but falls to side of glass holder and becomes a new wick
4. After 10 minutes, side of glass holder heats unevenly enough to crack