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Blended Value,
Capital Investing and
the Pursuit of Multiple Returns
Transforming Philanthropy Forum
Cartagena, Colombia
Jed Emerson
ImpactAssets
May 11, 2011
Overview
A Notion of Value
2. Capital and Corporate
Considerations
3. Appendix:
Tracking
Integrated Performance
1.
Perspectives on A Notion of Value
 Senior Advisor, The Sterling Group, Hong Kong (Family Office)
 Executive Vice-President, ImpactAssets, (Nonprofit Financial Services)
 Managing Director, Integrated Performance
 Uhuru Capital Management (Fund of Hedge Funds)
 Senior Fellow, Generation Investment Management Foundation, London/New York
(Global Public Equity)
 Strategic Advisor, Sustainable Private Equity Funds (PE, Sustainability-Focused)
 Founding Board, Pacific Community Ventures (VC, Community Development-Focused)
 Founding Director, REDF/HEDF (Venture Philanthropy)
 Advisor, Strategic/Venture Philanthropy Funds/Foundations (Philanthropy)
 Founding Director, Larkin Street Services (Social Enterprise/Social Entrepreneurship)
 Faculty Appointments (Thought Leader, Academic Researcher)
 Harvard/Stanford Business Schools
 Visiting Research Fellow, Oxford University
 CSI-Heidelberg University
At the Beginning and End of the Day,
there are really only 2 questions:
 Are you and your assets maximizing
your full, potential value?
 Are all your assets strategically
aligned to achieve your 10 year goals
and attain your 30+ year vision?
What does it mean to be a Fiduciary?
 Definition of Fiduciary Responsibility has evolved over time
 Fiduciaries may consider not only financial return, but how extra-
financial factors could effect that return over time
 Fiduciaries often also involved in defining mission and intent of
foundations, investment funds, family offices and so on…
 Trustee vs Professional vs Advisory Fiduciary Responsibilities, in
various related roles with differing incentives and motivations
 The Future of Millennial Fiduciaries and Disgruntled Boomers
Beyond the Zero-Sum Dissonance:
The Investment Plane and Capital Continuum
Quad A
Economic Value
+1
Financial
Investments &
Numeric Returns
Quad B
Blended Value
Investments w/Multiple Returns
FROI & SROI
+1
+1 Social Value
-1
Philanthropic
Investments
& Social Returns
-1
Quad C
A Value Maximizing Equation
The Power of Social and
Environmental Factors to
Impact Financial
Performance
The Power of Financial
Assets to Generate
Social and Environmental
Impact
Total Portfolio and
Corporate Performance:
Multiple Returns and
Blended Value Creation
Capital Considerations
A Winning Philanthropic Business Model?
“For every dollar you donate, 95 cents is invested in the pursuit of financial
return and a nickel is invested in our business…
(Insert your business here: Small Business Development, Education, Social
Change, Environment, Economic Development…)
95% of your assets are, at best, neutral to your
institution’s mission….
….while 5% of your assets drive
100% of your mission.
What Percent of Your Capital is Advancing Your Mission?
The New Golden Rule
Portfolio or company size does not define the breadth
of one’s vision nor determine the tools you may use
to create the future you desire
Wealth Management and Fiduciary Translation:
Your family’s financial AUM and/or
Family Firm Corporate Philanthropy Payout
are not your current value nor your future potential!
360-Degrees for Mission
Mistra Foundation
A Unified Investment Portfolio
Traditional Diversified Investment Portfolio
FROI Risk Boundary
Available
Capital
Risk
Free Rate
Grant
(Program)
PRIs and
Recoverable
Grants
Treasury
Notes,
Community
CDs, Impact
Investment
Bonds
Grant
(Infrastructure)
SROI Risk Boundary
(Impact Investing Vehicles)
Private
and
Public
Equity Investing
Grant
(Research and
Development,
Seed Funding)
VC Fund
Or Angel
Investing
Socially
Responsible
Angel and
Social
Venture
Capital
Fund
Investing
Solutions for Impact Investors
Rockefeller Philanthropy Advisors
Sustainable Finance as Risk Mitigation
 Sustainable Finance integrates financial, social, and environmental considerations into
decision making, facilitating improved risk management and higher return on
investment.
 Financial institutions can potentially be affected by social and environmental issues
through the operations of their clients. Social and environmental issues within a financial
institution's portfolio may translate into business risks for the financial institution.
 There are three types of risk a financial institution could be exposed to arising from the
social and environmental issues of their clients: credit risk, liability risk and reputational
risk.
 IFC Web Site for reference
Corporate Considerations of Value Creation
“Nike, P&G, The Home Depot, and Nissan North America are
better at balancing social/environmental and financial objectives
than other companies because they don’t see them as competing
objectives.
They are able to hold on to both perspectives simultaneously
because they are using the sustainability tensions as a source of
new ideas, creativity, and innovation. They expect more
innovation and entrepreneurship from their employees and
more sensitivity to sustainability issues by innovation and R&D,
business unit, and functional leaders.”
Foundation for Applied Research, Association for Accountants and Financial Professionals, 2009
From Capital Market Catalysts to Collaborative Innovators
Tracking Integrated Performance
Why Are We Here?
Where you sit determines…
….where you stand:
Social Entrepreneur…
Asset Owner…
Public Funder…
Public Policy Activist…
Foundation Executive…
Business Owner…
Social Enterprise Manager…
Fund Manager…
Social Worker…
Researcher/Academic…
Concerned Other!
…but there is only one question:
Are we maximizing total performance
while generating real impact for our
multiple investments?
Visible vs. Invisible Value
Enhanced Analytics and Research Frameworks to Assess /Track
Financial and Extra-Financial Aspects of Firm Performance and Capital Returns
Evolution of Metrics
 Compliance
 Management
 Value Maximization?
Acumen Fund Pulse
Manage to ImpactSM Toolkit
SM
IMPACT CALCULATOR
Project T itle
Project X
Produced By
SVT Group
Total Dollar Investment in Project
Project/Tactic
Description
Attempting to rectify the situation
of severe poverty in Oakland
$67,500
Analysis Date
8/10/09
Project Date Range
Project/Calculatio
n Assumptions
5/10/2008 - 8/20/2010
PERFORMANCE SUMMARY
1 hour of work = $90
750
Total T ime Invested in Project (HRS)
WEIGHT ED ACTUALS (0-10)
vs. GOAL
WEIGHT ING (%)
SOCIAL
8.6
-0.4
33%
ENVIRONMENTAL
8.4
3.4
33%
ECONOMIC
4.5
-1.5
33%
FINANCIAL
4.2
-2.0
N/A
Category Score
10.0
8.0
6.0
4.0
2.0
0.0
SOCIAL
CATEGORY
ENVIRONMENTAL
CURRENT
IMPACT
ECONOMIC
IMPACT PER $10,000
INVEST ED
SOCIAL
# of Jobs Created
22.0
3.3
300.0
44.4
# of Educational Materials Provided
490.0
72.6
ENVIRONMENTAL
100.0
14.8
W aste Reductions Achieved
123.0
18.2
80.0
11.9
ECONOMIC
$ Value of Community Service Donations
88%
75%
96%
ENVIRONMENTAL
MW hs of Energy From Renewable
Sources
$ of Income to Community
% COMPLETION OF GOAL
SOCIAL
# of People with Access to Clean W ater
# of Trees Planted
FINANCIAL
100%
62%
53%
ECONOMIC
19.0
2.8
2000.0
296.3
40%
83%
0%
Discover
Measure
Manage
Communicate
Impact Reporting and Investment System (IRIS)
Evolving SROI Methodology
 REDF
 1996
 2000
 2009
 NEF SROI Framework
 European SROI Network
 Regional SROI Networks
 On-Line/Off the Shelf Tools
 LBS SROI Primer, Social E-Valuator,
REDF Templates, Social Solutions
SROI
 Center for Social Investing, University
of Heidelberg, SROI Version 2.0
Yahoo
Google