Where's the Impact Investing Beef?

The NYT's Wealth Matters column touched on impact investing recently to describe how the asset class is expanding.  It was great to hear more about Paul Herman's HIP Investor rating system, but I am a bit tired of the large financial institutions getting quoted on the bright future of impact investing even though they do not have lots of options for their clients today.

http://nyti.ms/1lFwvkU

Is the Peterborough SIB a Success or a Failure or Too Early to Tell?

While the initial results of the Peterborough SIB did not trigger payments to the investors, the many factors driving this first SIB's success or failure are still up in the air.  This report from NPQ outlines the various positions and opinions.  Perhaps most telling is that the UK government has decided not to continue the program as a SIB but rather to revert to a more standard pay for performance contract without outside investors.

I think the role/need for investors in SIB structures remains unclear.

First Social Impact Bond Fails to Meet Halfway Mark Performance Target - NPQ - Nonprofit Quarterly

Motivating Corporations to Do Good???

Eduardo Porter provides a nice summary of the history of what we now call corporate social responsibility.  He chronicles the increasing power of shareholders and equity-compensated managers over the last 50 years and calls on government to make sure corporations are good citizens.

Unfortunately, government does not exist in a vacuum and has increasingly lost power and resources versus corporations.  Shareholders (but primarily the senior corporate managers who control them) have used their additional power and money to fight government, labor , communities and all of the other stakeholders in our society.  We are now seeing the fruits of this 50 year transition.  

http://nyti.ms/1qdiQ6H

Modest Expectations and Consistent Followthrough

This Upshot piece in today's NYT offers the hope that maybe we can focus on social programs that actually work as a good middle ground between the "all government is bad" ideology of the right and the "more money will solve all problems" from the left.

While this approach can attract bipartisan support, it also requires reasonable expectations and consistency over long periods of time - not typical characteristics of our political process.

http://nyti.ms/1rcQNUl

Data and Knowing

David Brooks' recent op-ed on how data points are not knowledge - especially when looking at human behavior - made me appreciate the immense challenges we face when seeking to shift human behavior through interventions and programs.

http://nyti.ms/1g9XnXz

Tilting at Fossil Fuel Windmills?? Maybe Not. Complete Divestment is Now an Option

Complete divestment from fossil fuels has always been viewed as a somewhat naive socially-responsible investment approach.  But it appears that several environmental foundations are in fact pursuing this goal.  What was unthinkable a couple of years ago has moved to center stage in the climate change risk debate due largely to Bill McKibbon's grassroots organization 350.org.

 Bill McKibben, president and co-founder of 350.org, said he had been encouraged by the spread of the argument “that fossil fuel companies as they’re currently incarnated are essentially rogue companies, that they have in their reserves far more carbon than any scientist thinks it’s safe to burn.”

http://nyti.ms/1a2DRcD

Scaling Up Year Up


I was able to attend the graduation ceremony of Year Up in New York two weeks ago and saw what these students can do.  Year Up is at the forefront of how young people can be viewed by corporate American as valuable resources rather than cost burdens.   How can we get Year Up to work with all of the disconnected youth in our country as soon as possible?  60 Minutes had a great segment on Year Up.  http://www.cbsnews.com/videos/jobs-program-benefits-fortune-500-and-underprivileged-youth/

100,000 Homes Campaign on 60 Minutes

It is great to finally see the 100,000 Homes Campaign that puts long-term homeless people into housing presented as a cost-effective and socially beneficial approach on 60 Minutes.  Rosanne Haggerty has taken the supportive housing model and in now amplifying it around the country.  It draws on existing resources in communities to take on this major social issue.

http://www.cbsnews.com/videos/100000-homes-housing-the-homeless-can-save-money/

Year-End New York State SIB attracts more commercial capital

The recent Merrill Lynch and U.S. Trust-led $13.5 million social impact bond attracted over 30 HNWs like former Harvard President Larry Summers and family offices.  With only a 10% philanthropic credit enhancement from the Rockefeller Foundation, this prison recidivism SIB should be more replicable than previous U.S. SIBs.

http://www.csmonitor.com/World/Making-a-difference/Change-Agent/2014/0107/Pay-for-success-social-impact-bonds-help-train-ex-convicts

Magical Thinking at Intersection of Commerce and Positive Social Change

Laura Callanan, currently of the Institute of Business and Social Impact at Berkeley, and one of the most thoughtful and experienced folks working in the impact investing field, has crafted a great piece warning of the magical thinking that so many people use when working at the intersection of commerce and positive social change.

https://businesssocialimpact.wordpress.com/2013/11/25/social-innovation-with-our-eyes-wide-open/

We all know the shortcomings of public and corporate silos and intuitively understand that weaving together the best elements of each in the form of "innovative hybrids" like social impact bonds and impact investing is necessary to address some of the complex problems facing the world.

But I agree with Laura that we need to create structures that really work rather than just assuming that somehow magic will happen when we pull together commerce and social change.


Gucci to the rescue: Has philanthropy become just another luxury product?

I typically read the FT's "How To Spend It" weekend supplement as a naughty voyeuristic pleasure - a chance to look at the lives of the watch-wearing, jewelry-toting caste through the ironic yet somehow respectful tone that the FT brings to such topics.  

 I was then very surprised to read an intriguing article this weekend by the FT's Fashion writer, Vanessa Friedman, outlining Gucci's launch of Chime for Change, a "global campaign to raise funds and awareness for girls' and women's empowerment." 

 http://howtospendit.ft.com/philanthropy/42573-cause-for-thought

 Gucci created Chime for Change to bring its consumers to a crowdsourcing platform called Catapult where they can select pre-vetted NGOs - all of this occurs in a highly branded setting.   Chime for Change is a trademark of Gucci.  This is not your aunt's CSR initiative.  

 Friedman succinctly summed up the challenges facing Chime for Change and Gucci as "the contemporary conundrum of how to navigate between an industry based on indulgence, the imperative to demonstrate commitment beyond the creative, and the concerns about profiteering do-goodism that may follow."

 Chime for Change has raised $4 million from a high-profile concert (Madonna, Gloria Steinem, etc.) in the UK this summer.  The concert was underwritten by Gucci and attendees could donate the cost of their ticket to an NGO of their choice on Catapult.  Chime is also raising money for specific projects on its site.  

 My fellow impact investment colleague Margot Brandenburg, a fellow at the Nathan Cummings Foundation, was quoted on the challenges of branded movements: “The truth is, for the price of one luxury handbag, you can easily give food and water to a family in a challenged area for a year.  A ‘branded’ movement makes facing that reality unavoidable – which can create a lot of discomfort for a consumer. On the other hand, it also lays bare the contradictions we all live with every day.” 

 I'm not sure what I should think about this:  

 Is philanthropy becoming just another luxury product manufactured for those who already have to feel better about getting more?  

 OR

 Can corporate brands serve as powerful vehicles for positive change in the world when other institutions are not?

 I guess time will tell.