In my last post “Measuring The Impact of Social Investing”, I talked a lot about the history of PULSE, the software designed to help track the impact of social investments. Since Acumen Fund first introduced it in 2006, we have seen a constant and increasing need for support, services and even entire organizations to help the impact investing community operate more efficiently and achieve greater success.

Thanks to organizations like the Global Impact Investing Network (GIIN), we now have a taxonomy and structure in place to help improve the transparency and reporting of social investing returns. The implementation of the Impact Reporting and Investment Standards (IRIS) has arguably done more to increase the credibility of the social benefits of impact investing than anything the industry has seen to date. 

On April 12, the Global Impact Investing Rating System (GIIRS) released its first-ever impact investing analytics report [PDF], which provides comprehensive and verified data on the social and environmental impact of a broad range of investments on a global scale. The release of this report – which the organization now plans to release quarterly – further demonstrates the increasing attention being paid to measuring the impact of social investments.

Increased adoption of PULSE software is yet another indication of the growing importance of metrics among impact investors. With the formation of organizations like GIIN and the adoption of processes like IRIS and GIIRS, we’ve seen a continually increasing demand for software that is compatible with the new taxonomy and impact investing ratings system. In fact, PULSE has been adopted by organizations representing the six major continents, which we attribute largely to the overall increased awareness of measuring the impact of social investments and a universally standard taxonomy.

For example:

• The Opportunity for the Majority (OMJ) window within the Inter-American Development Bank (IDB) has implemented PULSE and the IRIS taxonomy to track metrics around individual investments across its entire portfolio. OMJ supports efforts to reduce poverty and inequality specifically focusing on the Base of the Pyramid (BOP) in Latin American and Caribbean countries. The IDB team is using its up-to-date information about investment performance as well as performance across sectors and regions to be more selective about the investments they choose. The automated system for gathering and analyzing data also means employees who were previously tasked with data entry can now focus more of their efforts on what they’re good at – finding deals and serving clients. Beyond increasing proficiency, the OMJ team was able to collaborate and meet every deadline. They achieved this level of performance by establishing milestones and tasks which lead to weekly meetings. These activities lead to higher results, better communication, and strong management support. To find more details about OMJ’s use of PULSE, download the full case study from our website.
• Inveneo, a non-profit social enterprise based in San Francisco, California, works to provide technology such as computers, telephone and Internet access to rural communities in underdeveloped parts of the world. In 2011 alone, the organization reached 126 communities and served approximately 250,000 end users, the impact of which is all tracked, recorded and analyzed using PULSE software.
• MicroVest Capital Management has implemented PULSE software to help track and benchmark financial, operational, environmental and social data to better demonstrate the impact of its microfinance funds. By replacing its spreadsheet-driven data analytics processes with an automated reporting system that works with Salesforce.com, the fund manager is digging deeper into its numbers and more easily comparing them to external benchmarks. Like IDB, MicroVest employees are able to use time they previously spent validating and crosschecking data on deal structuring and analysis.

We fully expect to see the gap between philanthropy and capitalism continue to shrink over the coming months and years, as both corporations face pressure to provide social benefit and social organizations are encouraged to demonstrate measurable results. Together with organizations like GIIN and tools like IRIS and GIIRS, we’re optimistic that our PULSE software puts us all one step closer to solving the world’s problems.

Charlie Kuhn is responsible for PULSE business development at Application Experts (www.app-x.com). He can be reached at 720-240-9168 or charlie@app-x.com.

Photo credit: http://www.flickr.com/photos/gkirk/5506244773/

The capital for communities and opportunities for people = 25 years, US$1.3 billion, 46 states and 47,000 jobs.

This past week, I had the pleasure of meeting with Frank Altman, president and CEO of the Community Reinvestment Fund (CRF), USA. Since 1988, the CRF has injected $1.3 billion into mostly low-income neighbourhoods across the United States, helping to retain or create 47,000 jobs. The impact has been sustained economic development within the urban and rural communities that need it the most. The CRF works through Community Development Finance Institutions to provide loans for businesses, affordable housing and community facilities such as daycares.

Altman, who founded and leads the CRF, has transformed the community development finance system by accessing capital markets on behalf of local development lenders to enable them to increase their impact.

The CRF created a secondary market for community development nationally. It is the first not-for-profit to:

• become a Standard & Poor’s–rated servicer;
• issue rated affordable housing debt offerings;
• provide small business loans using the New Markets Tax Credit; and
• rate community development debt offerings.

Another amazing tool in the CRF’s pocket is a non-bank lending license from the U.S. Small Business Administration, called an SBA 7(a). The CRF owns one of only 14 licenses available allowing for a 75% loan guarantee.

At this point, I’m increasingly curious – and a bit jealous – and find myself asking: “How can we get this infrastructure available in Canada?”

The big question I had for Altman was about how the CRF is capitalized. Around 2% of the CRF’s revenues are charitable donations, with another 18% being program-related investments and social investments. The remaining 80% of revenues are made up of market-rate investments into the fund.

The CRF has developed a standardized flow through a product that allows them to buy loans from organizations that they know, and then sell the loans at a profit. Sound familiar? Well, the CRF keeps a close eye on the loans that flow through this product, and it has proven to be a successful mechanism for the organization. There is obviously much to learn from Altman and the work of CRF.

It was Professor Marguerite Mendell, the vice-principal of Concordia University’s School of Community and Public Affairs and a global leader within the social economy, who invited a group of us to meet with Altman.

In terms of financial infrastructure in Canada, we can look to Quebec for a successful legacy of community investment. For instance, on this trip, I met with members of the Desjardins Caisse d’économie solidaire, whose mission is to support the development of the social and solidarity economy focusing on not-for-profit and co-operative organizations. The caisse had a business model volume of more that $1.2 billion across Quebec with over 14,000 members in 2011.

I also met with members of the Finance and Sustainability Initiative (FSI), which represent a cross-section of finance and sustainability professionals who are focused on transforming the traditional business model. The Caisse d’économie solidaire and the FSI are only two of many actors in the Quebec landscape.

I encourage those in the world of social finance to take the time to learn from our neighbours, as their experience and progress can help shape this field across the country.

Note: Here is a 2010 presentation by Dr. Mendell on social finance in Quebec:

Note: Originally posted at www.jocelynling.com

There is a systemic issue in impact investing that constantly resurfaces, from research papers to goals of foundations in the realm of impact investing: lack of infrastructure to help people identify and function as a part of the impact industry.

To solve this issue, we have to seriously start looking to expand the space beyond those who care about the impact value of capital, we have to create a movement of impact investing – as a sustainable and scalable platform. We have to look closely on how we can create pull-factors needed for a successful impact movement. Now, I do not think that the world of philanthropy and for-profit investing should cease to exist. What I am suggesting is that the movement's aim is to help the general public and those in the investing world to have a third way to think about capital: a blended value of capital and impact.

So, this is my attempt to build this movement's basic framework and my vision of what the core elements of an impact investing movement would look like.

Defining the Movement's Core

Education is the key to the movement, and a first step is shifting people's perspective to a third way of thinking about capital. I would like people to think of their portfolios as follows (note: the pie charts below are based on a hypothetical way to think about capital - the main point is to illustrate the inclusion of impact investments when an individual thinks of capital):

I believe the core of an impact investing movement should be two-fold:

1. The choice between impact and profit should not be a binary one.
2. Close the mental disconnects and isolation between the different components of the Impact chain of capital: (Input --> Output --> Impact)

Distinction of Target Groups

Just like the 'real' investing world, in the impact investing world, there are two distinct investors to target: Institutional and Retail. By the nature of the way that capital flows into the space, influence on the retail end is bottom heavy and personal; on the institutional side, it is top heavy and full of barriers to entry. (Sidenote: Here's a great report to read to understand the policy-institution relationship in impact investing, written by Pacific Community Ventures & Harvard's Initiative for Responsible Investing. See SocialFinance.ca's in-depth interview of lead author Ben Thornley).

Another target group (and this is admittedly a harder group to penetrate than the former) would be both institutional and retail investment advisors. Straight away, the inherent challenge to create this movement is: how to create a simultaneous pressure on both ends, and in each respective group?

Five Strategies

Since capital flows through an impact chain, the platform should act a 'pull' platform and simultaneously become the mechanism by which 'push' platforms engage. The graphic below illustrates this point using Morgan Stanley's recently announced Investing with Impact platform. The idea is that on Morgan Stanley's end, they can only get so far by engaging their current clients. However, if they look beyond their Investing with Impact platform, and engage in a middle 'pull' platform that educates the masses, their message and reach could easily double.

I believe that a successful impact investing 'pull' movement would contain the following practices:

1. Radically lower knowledge barriers

The landscape of impact investing is slowly coming to light. There is great research and data that heavily supports the sector. However, bite-size pieces of information are few and far in between. Investors and advisors need to understand the reason for impact investing, proof of concept, and how it would affect an institution's or individual's portfolio. The knowledge barrier should also include a way to disseminate authentic and real stories about impact investing and the results of the investment - a form of curated 'entertainment'.

2. Uncover and disrupt offline analogies

Most forms of human interaction surround a pre-existing way of thinking; for example, before email, people would send letters. In the case of thinking about capital, the tipping points of where someone starts to think about money include the education system, with a focus on universities and college (typically an individual's first experience in managing a substantial amount of money).

3. Empower key community leaders

I'm a big fan of Seth Godin's practice of building tribes. People are more passionate about combining money and meaning than we think they are. A great organization that organically (and perhaps unexpectedly) tapped into the power of tribes is Acumen Fund. (Full disclosure: I currently volunteer with them, and this is by no means a representation of their perspective on the matter. Just my own). Acumen Fund currently has 10 volunteer-led chapters around the world that support and spread their cause. These chapters are going into local communities with a depth and reach that Acumen would not have been able to achieve just by themselves.

4. Reduce friction

Thinking about capital can be an overwhelming experience, especially on the retail side. The movement needs to create a frictionless and simple experience that catalyzes 'pull' for transactional activities. A great example of this practice is by LearnVest, a budgeting and advisory platform to help individuals achieve their goals. Simple and clear. I envision a successful impact investing platform to embrace a similar frictionless user experience.

5. Getting started

No single agenda or strategy is equally relevant to all target groups. I see two main engagement strategies embedded in the movement, which in some cases can be executed separately or combined.

One is a online-mass led proposition with multiple knowledge engagement pieces. The other is a high-touch with direct channel distribution. The latter would fit in more with the advisory/'push' platform engagement target group whereas the former would fit into a engaging retail investors. The high-touch component is definitely more of a challenge as we would be looking at a target group of banks, corporations, and venture capitalists that have systems in place in order to successfully execute their business models.

***

There are multiple ways to continue to build out this framework. The points above are merely a starting point in the basic wireframe of this impact investing movement. All ideas are welcome. If you want to contribute, feel free to add your thoughts in the comments below or get in touch!

Note: Last week, Jonathan attended SOCAP: Designing the Future in Malmö, Sweden. Armed with a passion for a world beyond mere 'sustainability', he attended the sessions on the biosphere economy and efforts by impact investors to work with environmentalists to restore ecosystems.

The biosphere needs more than just making an impact.

Two years ago, the Economics of Ecosystems and Biodiversity (TEEB) report [PDF] mapped out a portion of the immense value the ecosystem services hold. With that, a discussion about the biosphere economy also got started. From the discussions held at SoCap in Malmö, it is clear that impact investing needs to up the game and take into account how different forms of capital interact with each other, and provide a resilient system. The next step of impact investing is resilient investing, an expression coined for the very purpose of drawing attention to ecological and resource limits as a way making a lasting impact.

The talk about the biosphere economy and utilizing the services provided by ecosystems are sometimes too abstract. Alejandro Litovsky, who runs the Earth Security Initiative, concludes that the real challenge is to keep track of how much resources there are left that can provide for these ecosystem services. Rather than keeping track of absolute metrics, relative ones are used, such as efficiency per unit. But when production increases, total use still increases. The focus thus needs to be firmly grounded in scarcities, to avoid depletion. Only then can the ecosystems provide abundance.

This in itself opens up a discussion on metrics and scientists from the Stockholm Environmental Institute are currently providing a rough sketch as to which issues to focus on. These metrics come in play as planetary boundaries. They indicate that biodiversity, climate change and the nitrogen cycle are currently transgressed. To investors this may still seem somewhat abstract, but when it comes to building a portfolio, it boils down to focusing on two main areas - the first being real estate.

Viewing real estate through the lens of resilience means that you specifically look into how the real estate is stewarded. One of the indicators is forests - what are the amount of standing forests? In Brazil, for instance, they have decreased the legal requirement of standing forests for landowners. This in turn will severely hamper the ecosystem services that these forests provide and make the system prone to collapse. The TEEB report referenced above estimates that halving deforestation rates by 2030 would reduce global greenhouse gas emissions and avoid damages of approximately $3.7 trillion - and this does not account for the many multiplier benefits that would accrue.

The second area is eco-agriculture or ecological agroforestry. This type of agriculture increases the soil fertility and thus the resilience of one of the most crucical ecosystems that humans depend on. Focusing on eco-agriculture is also an opportunity to work with local farmers in a way that helps them get access to markets. It can make farmers 'agglutinated' and give them a capacity to organize. In time, they can become their own asset owners and steward their land.

The 2011 report Land Security Agenda [PDF] delves a bit deeper into these issues. But the focus on resilience and keeping track of scarcities also open up deeper questions on how to assess these new situation. There are no definite metrics yet.

However, the story of how scientists keep track of an endangered coral reef may help. The shrinking or growth of the coral reef does not provide a particularly good metric of how healthy the coral reef is. Instead, it is the population of a herbivore fish that grazes the coral reef of algae that prevents the coral reef to be overcome by algae mush when the coral is under stress. 

The question is, what are the equivalent of the herbivore fish in the different social innovation systems. Have you encountered this kind of resilience indicator in the social sphere?

Photo credit: Azote Images/Stockholm Resilience Centre

Note: Adam Spence contributed to this post as well.

The Canadian Housing and Renewal Association (CHRA) held its annual Congress in St. John’s last week, where colleagues from a sector with some of the highest potential in terms of uptake and success of social finance in Canada, connected and shared their experiences. Pre-Congress sessions included Finding the Money, Renewing the Mission: Social Finance, Social Enterprise & Affordable Housing, kicking off a week of workshops in the lovely, foggy capital of Newfoundland and Labrador.

As participants at this Congress, we wanted to take the opportunity to provide an overview of the sector and its predisposition to social finance, and share what we learned last week.

Canada’s social housing sector is faced with dwindling public resources and an increasing number of individuals and families in need of support. Those of us working to ensure that all Canadians (including the most vulnerable) have safe, affordable, and decent homes are looking at ways we can be more creative around financing. Social finance presents a tremendous opportunity.

For decades, social housing has been a pillar of social finance in Canada and around the world. As a sector, it delivers proven impact and return. By providing safe and affordable homes for our neighbours living on the margins of society, those with supportive needs, and those unable to meet monthly housing costs, there is a clear social impact. Employing mortgage and debt financing provides a modest financial return on significant bricks and mortar investment for government financing, alternative lenders, or mainstream financial institutions.

A Clear Need for Social Finance

There is a clear need for more financial resources to support the construction and repair of social housing in Canada:

There are long and growing wait lists for housing. In Ontario, over 150,000 households are on the social housing wait-list – up 7.4% in one year according to Ontario Non-Profit Housing Association.

Much of the social housing stock is in need of significant repair and ongoing maintenance to keep up aging properties. A large portion of Canada’s public housing was built in the mid-20th century. It is clearly in need of updating. The essential maintenance and capital replacement shortfall is estimated at $1.2 billion in Ontario alone.

The sector as a whole requires significant financing to support the growth and development of new stock to meet demand and to retrofit existing buildings to upgrade and improve facilities in order to meet basic standards, address environmental impacts and energy efficiency needs, and improve access for an aging population.

Fortunately, there is an alignment in the demand for financing with the potential supply of capital.

An Alignment with Impact Investors’ Interests

There are several factors that could drive impact investors’ interest in housing:

Track record. The social housing sector has a strong track record of success with decades of service to Canadians, aligned with a proven ability to effectively manage funds and take on debt financing.

Market size. The social housing market is very large: there are approximately 257,000 social housing units in Ontario alone, and the outstanding mortgage balance was $7.2 billion. Individual deals in housing would be, on average, larger than other impact investment deals for nonprofits or for-profit impact ventures.

Risk-return profile. Social housing has an attractive risk-return profile for impact investors. Although the returns can be relatively modest (even though 3-5% per annum is quite strong), they are generally bricks and mortar real estate investments with ongoing revenue streams. (Although it should be noted that many providers are seeking for more stable revenue streams.)

There is great potential to tap into impact investors on the supply-side of the market that are interested in housing. Few other non-profits have the capacity or interest in financing in the millions of dollars, whereas the housing sector requires these levels of investment to continue to produce homes that are safe and affordable. A Canadian investor study conducted by the MaRS Centre for Impact Investing demonstrated a high level of interest in housing. Over 70% of investors surveyed were interested in public housing investments.

Looking at Examples of Social Finance in Social Housing

There are a number of interesting examples of social finance and social housing that were outlined in discussions and presentations at the CHRA Pre-Congress.

There was a primer presentation on Social Finance for Social Housing looking at examples in the US and Canada, including the $450 million TCHC Regent Park Bond, $1 million YWCA community housing bond, the NYC Acquisition Fund, and affordable housing bonds in the US.

A presentation from Seth Asimakos at the St. John Community Loan Fund showed the potential of mixed-use space for nonprofits that includes affordable housing, and the potential for community loan funds to engage in financing for smaller scale affordable housing developments. It was also quite exciting to learn about the proposed nonprofit hub and incubation space, the St. John ‘Thinkubator’.

There were some very interesting developments highlighted from Quebec. We already know that Quebec’s social economy is well developed and housing remains a key pillar to its inclusionary approach to social and economic justice. From Quebec, Francois Vermette of Réseau québécois des OSBL d'habitation and Charles Guindon of le Chantier de l’Economie Sociale spoke about recent advancements in the 2012 Quebec Budget. This included a three (3) year, 1,200 unit pilot project which will help leverage private funding alongside social housing subsidy and mortgage loans through credit enhancements provided by government. Their approach provides necessary capital for operations or development, ensures ongoing control of housing is maintained by non-profit housing providers, and makes the investment more attractive for investors. When paired with straight grant dollars, this will provide funding for the construction of 3,000 social housing units in 2012/13.

So what kind of opportunity is there in affordable housing?

The kind of capital required for housing is lower risk and potentially appealing to a wide range of investors (as seen from the TCHC $450M bond to the $1 million community housing bond issued by the YWCA Toronto). We have also seen an increased interest in the ideas of patient capital and impact investing with relative instability in the mainstream markets. However, the dollars now flocking to social finance are here to stay and people are talking about a more human capitalism on a more local level.

There are risks, of course, in a move toward alternative financing in the social housing sector. Research is required to assess the real potential of these opportunities but in the meantime, conversations happening at forums such as CHRA are helping develop both the opportunity and share successes on the impact of social finance in the housing space.

MaRS Centre for Impact Investing - Social Finance & Social Housing

Photo credit: http://www.flickr.com/photos/jorgeestevez/4395832977/

SocialFinance.ca produces a weekly round up featuring social finance related news, insights, job openings, and events. We source the content for these round ups from Twitter, an RSS reader, and directly from our community of social finance practitioners. Below is our round up for the week of May 14, 2012.

Last Week on SocialFinance.ca

Nabeel Ahmed posted SOCAP: Designing the Future on SocialFinance.ca on May 9, 2012.

Tina Crouse posted Community Bonds and Social Enterprise: Where No One Loses on May 9, 2012.

Ryan MacLean posted Reporting from the NYU Series on Impact Investing on May 10, 2012.

Canadian and International News

Last week, SOCAP went to Europe, with Designing the Future in Malmo, Sweden. Watch the main stage sessions from the conference or view photos and sketches from the event here.

The Obama administration opens the door on Program Related Investments - allowing more foundations to put more of their resources to work to advance their charitable mission through means such as equity investments.

The Intellecap Impact Investment Network ('I3N'), India's first network of angel investors focused on investments with high social impact announced the signing of a new partnership agreement with global impact investor network Toniic.

Accion International launches $10 million investment vehicle, Venture Lab

Low interest in U.S bond program backing green energy - as of May 3, only about 20 percent of the bonds had been issued.

The World Bank and the MasterCard Foundation commit US $37.4 million to boosting small loans in Africa over 5 years.

As the UK government announces green bank legislation, investors and environmentalists call for clarity around how it will be funded.

Environmental Finance reports that a new Brazilian environmental exchange has opened its doors to potential buyers and sellers of ‘Forest Reserve Credits’.

MicroRate, with the support of LuxFLAG and the Grand Duchy of Luxembourg, has announced the launch of Luminis(TM) the first web-based, analytical platform on microfinance funds.

Social Finance Learning and Best Practices

Paula Goldman investigates the Distortion Risk in Impact Investing - making sure that grants and investments are distributed appropriately to support instead of stifle market growth.

Ben Thornley of Pacific Community Ventures weighs in on the truly transformative potential of impact investing.

"Poverty impact is not what this new financial inclusion agenda is all about. Instead, there are at least three core ideologically driven reasons why financial inclusion has been artificially hatched and given huge publicity..." - Milford Bateman criticizes microfinance in the Poverty Matters Blog by the Guardian.

Jacqueline Urquizo posts on the Centre for Financial Inclusion blog about understanding the financial lives of rural communities and exploring product innovations to meet their needs.

Accion’s Michael Schlein, David Roodman and more at Friday’s Chicago Microfinance Conference discuss the evolution of the sector and, more controversially, the reasons why group lending is destined to fail.

How much interest is too much - the first of a three part series by CGAP looking at Russia's microfinance industry.

A healthy debate about the value of social entrepreneurs was sparked on April 12 by NYT columnist David Books - Echoing Green recently responded with the reasons why social entrepreneurs will succeeed - and fail.

Addressing the roles, responsibilities, and limitations for both government agencies and external organizations in Social Impact Bond arrangements.

The 'Financing Social Impact' report, released by Social Innovation Europe, lays a path for the social innovation field in the next 10 years to overcome key barriers: "The field combines commitment, experience and energy. But it lacks the systematic and sophisticated infrastructures of support available to other fields – in particular, access to appropriate finance and funding.”

Back to the basics in exploring what exactly is crowdfunding?

Decoding the myriad of tools available for measuring social investment impact.

Spring is exploring the state of tech-enabled philanthropy in the UK and providing practical insight into how digital technology can support giving through a new report. Download report [pdf].

Publish What You Fund and aidinfo have released a new study on aid transparency and climate finance. Download study [PDF].

Will Oulton, editor of Investment Opportunities for a Low-Carbon World, reflects on opportunities for investors in environmental businesses and the need for more ‘patient capital’.

Job Opportunities

Samasource is seeking an Accounting/Finance Manager.

NeighborWorks America is hiring a Social Enterprise Manager - Success Measures

World Business Council for Sustainable Development (WBCSD)is hiring a Program Manager.

FINCA is hiring for a number of Africa-based program and operations roles.

Upcoming Events

2012 BALLE Business Conference: Real Prosperity Starts Here
May 15-19, Grand Rapids, MI

Let's Talk About Risk. Conversations for Investing with our Values
May 22, Rogue Kitchen, Vancouver

Environmental Bonds Conference
May 23, New York

DC Net Impact (DCNI) Impact Investing Series: Building an "Impact Investing" Career - Advice From the Trenches
Thursday, May 24, Washington, DC

BALLE Accelerating Community Capital Webinar Series
June 12, Online (Webinar)

Canada’s Socially Responsible Investment Conference
June 18 - 20, Montreal, Quebec

Igniting Capital Markets for Social Good
June 25-26, Singapore

Cracking the Nut 2012 Conference
June 25-26, 2012, Enrique V. Iglesias Conference Center, Washington, DC

Charities' Next Top Model: Can Social Franchising work?
June 26, 2012, Sadler’s Wells Theatre, London, UK

Partnering for Global Impact
July 9-10, Lugano, Switzerland

PRI-CBERN Academic Conference 2012
October 1-3, York University, Toronto, Canada

The Social Enterprise World Forum (SEWF) - Fórum Mundial de Negócios Sociais 2012
October 16-18, 2012, Rio de Janeiro, Brazil

Seattle's Social Innovation Fast Pitch (SIFP) 2012
October 18, 2012, Seattle, WA

Photo credit: http://www.flickr.com/photos/benimoto/603815615/

The NYU School of Law organized a Series on Impact Investing during the Spring Semester 2012. This Series offered "a forum for students, scholars and practitioners interested in the field of impact investing to exchange perspectives, develop ideas, and dialogue with thought leaders and experts in the field."

The Series was a student initiative, led by Nyasha Pasipanodya (NYU Law 2011 graduate and 2011-2012 NYU Law Kauffman Fellow) and joined by student members of the Law and Social Entrepreneurship Association (School of Law), the Society of International Business and Development (Center for Global Affairs) and the African Law Association (School of Law), as well as students from the Stern School of Business.

The first event was moderated by Kevin Davis, Beller Family Professor of Business Law, and brought together a group of leading practitioners including: Zoravar Dhaliwal, director at Osaka Capital; Amy Bell, vice president in J.P. Morgan's social finance unit; Laurie Lane-Zucker, CEO and co-founder of Hotfrog LLC; and Birju Pandya, managing director at Armonia LLC.

The first panelists of the series shared everyday examples of impact investing, as well as descriptions about the distinctiveness of impact investing compared with traditional investing. The discussion expanded to the panelists' thoughts on the philosophical aspects of the emergence of impact investing, which appears to be part of a new paradigm whereby it is increasingly believed that social good can be pursued through the market, and public and private value creation can be concomitant.

The second event in the series was about Measuring Impact. Moderated by Steven Godeke, Adjunct Professor of Finance at NYU Stern School of Business, the panel was focused on the participant's experiences with the unique challenges for establishing consistent definitions, criteria, metrics, and reporting that is necessary in order to develop impact investments. The panelists included Mark Berryman, Senior Member with Deutsche Bank's Global Social Investment Group; Flory Wilson, Director of International Standards for GIIRS, B Lab; Justina Lai, Associate, Impact Investing and PRIs at the Rockefeller Foundation; and Kelly McCarthy, Manager for IRIS, Global Impact Investing Network.

Moderator Steven Godeke explained that measurement is complex, as it involves pulling ideas about 'impact' from the social sciences into the realm of 'risk and return' from investment. From the outset, using consistent definitions is important for developing the field of impact investing. The panelists spoke about how their organizations define impact, and measure and report it. Generally organizations use GIIRS or IRIS, or some combination of the two, while some organizations develop their own systems. All participants agreed that it is important for the field to arrive at commonly agreed definitions at this early stage of development. Systems like Impact Reporting and Investment Standards (IRIS) attempt to resolve the difficulties of inconsistent definitions. IRIS incorporates multiple existing standards, involving well over 100 metrics, and can be used by organizations to develop their own metric. It is customizable to your needs, for example, by sector or issue. IRIS is intended to be used as common language for the field of impact investing.

For those organizations taking the more ad-hoc approach, they created a report card. Their report card consists of indicators and ratios for investments, for which certain benchmarks are established at due diligence, as well as certain "reach targets" which are tracked regularly. This information is collected and monitored, and reported to investors as often as possible, typically annually. Quarterly reporting is more difficult due to the geographical remoteness of many projects and the longer period it usually takes for social investments to appreciate in value.

A panelist shared their experience with a fairly standard CDO fixed-income product designed with social and development goals. The results were actually better rates of return than comparable non-social products, even though investors are generally willing to accept lower rates of return for the goal of social impact. Many investors are wary about impact investing because it is fairly new and unfamiliar. There was agreement among the panelists that addressing investors' wariness will be a matter of time and education.

The overall sentiment of the panel was best expressed by several of the concluding remarks. The field of impact investing is quite young, so, in order to convert hype to reality, it is very important to develop track records, data, measures, rating systems, and connectivity systems. A panelist commented, to everyone's agreement, that there are exciting prospects for the tracking and development that can be done with all of the data that will be available in a few years.

The series finished with the third and fourth panels held in April. The third panel was about Legal and Policy Issues that affect impact investments. The fourth (and final) panel was on Lessons in Collaboration, about partnering across sectors and featuring panelists from diverse institutions. The panelists for the 3rd and 4th (final) panels are listed below, along with several resources from the series.

Panel 3: Legal and Policy Issues

Moderated by Jonathan Ng. Global Legal Director, Ashoka.

Panelists

• Deborah Burand. Professor of Impact Investment Lawyering at University of Michigan Law School, Director and Co-founder of the International Transactions Clinic, and former General Counsel to Overseas Private Investment Corporation (OPIC).
• Lynn Roland. Deputy General Counsel at Acumen Fund, overseeing portfolio investments, grants and license arrangements, and monitoring compliance matters and other day to day legal matters.
• Howard Finkelstein. Law Offices of Howard J. Finkelstein, a private practice that focuses on the structuring of capital markets instruments to bring Western capital to microfinance institutions worldwide.
• Donald Crane. Vice President and General Counsel of FINCA International, a microfinance institution that provides financial services to the world's lowest-income entrepreneurs.

This link from Panel 3 has an audio recording of the event, as well as many documents referred to throughout the discussion.

Panel 4: Lessons in Collaboration

Moderated by Timothy Ogden Interim Director, Financial Access Initiative

Panelists

• Mitchell Strauss, Special Advisor to SRI Finance at Overseas Private Investment Corporation
• Lubna Maria Elia, Director of Legal Resources and Compliance at Root Capital
• Brinda Ganguly, Associate Director of the Rockefeller Foundation
• Mark Berryman, Senior Member, Global Social Investments Group at Deutsche Bank
• Jason Spindler, Managing Director and Founding Partner of I-DEV International

Photo credit: http://www.flickr.com/photos/stevendepolo/7174312982/

There is an increasing interest in the use of community bonds to help nonprofits achieve their financial goals. Community bonds can be used to finance a range of projects, from program development to capital expansion projects where the 'first-in' dollars are hard to find. For people in the nonprofit sector, they are a form of investment that clearly shows what the investor is interested in - you.

The history of community bonds shows they are not a recent invention, but rather one that is being used more broadly than before. Perhaps it is the donor fatigue that nonprofits are experiencing or just the fact that there is less 'free money' around for donations. Whatever the case, community bonds offer an alternative that moderate income donors favour and this has captured the attention of nonprofits and social enterprises looking for funds.

The construction of community bonds can be as individual as the organization itself, but creating a bond requires careful financial analysis. A nonprofit must understand itself and its 'business' in order to be successful. To help with that, the Centre for Social Innovation (CSI) - a recent community bond success story - will be holding a ‘How-to’ workshop on community bonds in Toronto on Friday, May 11th. If you’re interested, you can register at the ONN website.

Smaller groups, such as co-ops, also have long histories and rich stories of achieving their organizational goals through community bonds. As 2012 is the UN International Year of Cooperatives, you can find great information from all over the world. Closer to home, we have the West End Food Coop. West End Food Coop sold out their first issue in 2009 and have created a new bond which is also selling well in the west end of Toronto. Their local community support has created the opportunity to start new programs, expand their farmer's market, and, more importantly, open a community store.

Considering the resources available and the success stories to date, all nonprofits should give themselves and their 'investors' the chance to expand and succeed with no loss to anyone. A community bond brings together ‘community’ and ‘dollars’ to make the world we want to see - a fine example of the new world of social finance.

Photo credit: http://www.flickr.com/photos/gammaman/6242457085/

Today, SOCAP returned to Europe - this time with no less ambitious a goal than designing the future itself. The speaker list and schedule have been out for several weeks now, and over 400 people will be thronging Malmo University, Sweden, enjoying the event live. Here at SocialFinance.ca, we'll be covering the event both online and in person through Jonathan Sundqvist, whose expertise lies in covering CSR issues. Watch out for his posts over the next few days.

SOCAP has been around for several years now, playing a critical role in connecting players in emerging social impact markets - as well as those who have been espousing and practicing related values for many years, but were isolated from one another.

However, the organizers are clearly not resting on their laurels - they've taken the event to another level. While there is the usual mix of debates, sharing research and hands-on practical sessions, this is 'a high concept SOCAP' as convenor Kevin Jones puts it, tackling systemic issues that require deep thought and analysis.

With austerity settling in everywhere, public-private partnerships are a natural theme to explore, as are inclusion and social cohesiveness - often the greatest victim of spending cuts. At the same time, the climate remains one of the greatest challenges of the current era. We don't, and may never, have all the answers to these problems. But we do know that scaling social enterprises will be a part of the solution.

The focus on the biosphere economy is especially intriguing for us, as Canada increases its reliance on exploiting natural resources to drive the economy. It's important to understand how we can reach a 'safe operating space' for humanity and learn how to invest with the whole planet in mind.

Many of our readers are probably not in Malmo today - but never fear, you can follow events through the hashtag #SOCAPdtf on Twitter.

Don't like following lots of small text updates and prefer video? Never fear - SOCAP has set up a livestream as well - all sessions in the main plenary hall (D138 on the schedule) will be streamed live and made available on the SOCAP channel. While you're watching SOCAP from your desk across the world, you can flip through the program book as well.

Excited? So are we. So here's a nice little video to get you started:

SOCAP - SST12 from OurCommonGoal on Vimeo.

Photo credit: SOCAPMarkets on Twitter.