Archive for September, 2009

So as promised in our earlier post, we wanted to share an update on the Global Impact Investing Network which President Clinton announced at the last plenary of the Clinton Global Initiative.  The new network will create:

• The GIIN Investors Council:  this multi-stakeholder council will provide leadership, disseminate the latest research and support the creation of an industry infrastructure.
• Impact Reporting and Investment Standards (IRIS):  This set of standards will address the lack of transparency and credibility that keeps the industry from growing by creating common metrics for social and environmental impacts.

President Clinton spoke about it off the cuff, endorsing it in his drawl, giving it a uniquely Clintonesque vote of confidence: “This is one of those deals where nobody knows if it will work, but if it does it will change the future.  I feel the same way about this network as I do about climate change, if we can make this economically viable it will change everything.  This is of enormous significance and I really like it.”

The announcement is a model of the partners CGI can inspire to sit around one table:

• Rockefeller Foundation committed $2.5 million
• J.P. Morgan added $750,000 to encourage other investors to join in
• USAID committed $1 million towards the IRIS initiative

The list of founding members reads like a ‘who’s who’ of venture philanthropy, including:

Acumen Fund, The Annie E. Casey Foundation, The Bill and Melinda Gates Foundation, Calvert Foundation, Capricorn Investment Group, Citigroup, Deutsche Bank, Equilibrium Capital, Generation Investment Management, Gray Ghost Ventures, IGNIA, J.P. Morgan, Lundin for Africa, Lunt Family Office, Omidyar Network, Prudential, The Rockefeller Foundation, Root Capital, Shorebank/NCIF, Trans-Century, Triodos Investment Management, and Wolfensohn & Company.

Emily Davila, our Beyond Profit Guest Blogger, reports from the Clinton Global Initiative.

Part of the fun of being a part of a cutting edge sector is defining the terms for what we are doing as we do it!  This morning’s CGI session on “deepening financial inclusion” created some new terms and deleted some common ones:

Ones you can delete from your vocabulary:

Fortune at the Bottom of the Pyramid –  Sorry guys, there is no fortune here.  Building up services for the bottom billion will take a lot of work over a long time and subsidies will be necessary.   We need to be honest about the work ahead of us.  We need to name the partners that need to work together.  For instance, the government’s

social ministry needs to talk to its financial ministry when they are doing cash transfers to the ultra poor.  And the NGOs who can implement financial literacy programs need to talk to the banks that can invest in them.  By the way– this fortune will be measured by more than the money in the bank.

Small and Medium Enterprises (SME) – There is a big difference between a small micro-entrepreneur – say a food stand employing three people in rural Kenya — and medium enterprise like a factory employing 200 people in a peri-urban area.   While both need greater access to capitol, lumping them together isn’t helping anyone.  However: “community banking is ideal place to make funding available to both,” said Mary Houghton, President, Shore Bank Corporation.

Social Entrepreneurship —  “We need to erase dichotomy between where we make our money and where we do good. There is going to come a day is where every business entrepreneur should be social entrepreneur…” ironically this was said by Sally Osberg, President of the Skoll Foundation,  a funder of social entrepreneurs.

Here’s a word combo to add:

Pathological Collaboration:  This one is about getting everyone to work together – banks to fund organizations that can do the deep hard work of reaching the bottom billion, governments who can reinforce
with policies.   It was coined by my new favorite public speaker William Foote, the CEO of Root Capital. “We need to create a social movement for finance like the civil rights movement that has the vision to unlock financial for one billion people.  We need to think seriously about legislation that reinvents foreign assistant, not dead aid but vitally live aid.  We need pathological collaboration.” President Clinton repeated the phrase in his closing remarks, so I think its safe to say we just coined a new term!

Zara Khan, the Beyond Profit DC representative, reports from Leadership for a Better World.

With the recession still looming in the background, many recent graduates are looking towards “socially responsible” businesses rather than Wall Street. If job security is widespread across industries, then why not do something “good?” But what happens when everybody wants to do something good?

Socially responsible businesses are receiving record applications from often times overly-qualified individuals. It is becoming more difficult to land the less risky job with an established, socially responsible blue-chip firm. And thus the opportunity cost social entrepreneurship has decreased. But does that mean that there will be more social entrepreneurs? Not necessarily, because it is not willingness to take risk is that separates a social entrepreneur from an overachiever, but rather optimism according to Professor Paul C. Light, Paulette Goddard Professor of Public Servie, Wagner School at NYU.

He defines social entrepreneurship as “innovative activity designed to solve an intractable problem.” So is one born with this entrepreneurial ethic, or does it develop over time? “Sometimes you just know it when you see it. Sometimes it comes from being oppressed within an organization,” says Light. Regardless of where it comes from, social entrepreneurship is a continuing battle. “The trick isn’t to innovate once, but twice, three times and continue onward adapting and changing.”

Zara Khan, the Beyond Profit DC representative, reports from Leadership for a Better World.

In a world of SuperCorps and Honest Teas, it is clear that greed is no longer good on Wall Street. This trend is no recent phenomena – the Body Shop in the mid-seventies was a pioneer in establishing and adhering to core social values. And the socially-conscious consumer is increasingly becoming a major force in business and capitalism as we know it. Did we reach the tipping point because of the technological innovations like the internet which have increased our awareness of the other half that lives on less than $2/day? Or was it because of the need to find more meaning in life while facing the worst recession in modern history? Regardless of the source, social entrepreneurship is here to stay.

Consumers are willing to pay a premium for organic, but how do you know that you get what you pay for? How organic is organic? Is “free-range” just a euphemism for Alice-in-Wonderland-esque miniature cage doors? Our current market system allows us to quantify the bottom-line, but not the higher purpose. Our economic system has not adapted yet to quantify the value of social entrepreneurship. How do we know which companies are really doing “good?” The infamous dolphin-safe tuna fish example illustrates a commonly occurring dilemma – we cannot measure the success of social entrepreneurship.

However, despite these shortcomings, consumers and corporations are still willing to pay a premium for a higher purpose. Are we moving towards a more formal system of recognizing the value of social entrepreneurship – towards a social stock exchange?

Emily Davila, our Beyond Profit Guest Blogger, reports from the Clinton Global Initiative.

By choosing ‘investing in women and girls’ as the topic for his opening plenary, President Clinton sent a message that women were at the center of his agenda.

The panel embodied the CGI spirit of broad and innovative coalitions, with speakers from the government, private sector, and women’s organizations.

Two CEOs sat on the stage: Rex Tillerson of Exxon Mobile and Lloyd Blankfein of Goldman Sachs.  They were joined by Melanne Verveer, the US ambassador for global women’s issues, Zainab Salbi, Women for Women International and Edna Adan, the founder of a maternity hospital in Somaliland.  Twelve new commitments for women in girls were announced at the session including training in entrepreneurship and financial literacy and access to low-cost technology.

On one hand, the unprecedented high-level private sector participation means that the women’s agenda has gone mainstream; real change will not happen if only women are talking to each other. On the other hand, the panel would not have succeeded if it hadn’t had two women from the trenches who could keep the discussion grounded in the life and death realities many women face.

But when the discussion turned to his corporate philosophy for focusing on women, Tillerson said that for empowering women, “money is not the issue”.  Easy for him to say as CEO of the world’s second largest company.

Zainab Salbi was quick to disagree, arguing that it is absolutely about increasing resources and  political commitments for women and girls.

Tillerson tried to backtrack, clarifying his remarks by saying it was about education, training, and staff capacity, not just pouring money into a problem.

Still, it was a reminder that even though they may be sitting on the same stage, the reality of a woman’s organization and Exxon Mobile are quite far apart.  While it is “not about the money” for Exxon, it is all about the money for thousands of women’s organizations like Salbi’s and Adan’s that are struggling to help women every day survive childbirth and rebuild their lives from war.

But the question seemed to open a door, and Lloyd Blankfein, CEO of Goldman Sachs reframed the question, asking: are we making all the investments that we can make in women and girls? are we at capacity?

I think the answer is a resounding no.   Stay tuned for more updates from CGI.

Emily Davila, our Beyond Profit Guest Blogger, reports from the Clinton Global Initiative.

Is it possible to be an expert in innovation?

If so, Ashoka, the leading organization for social entrepreneurs, is an expert. Founder Bill Drayton defines innovation as a combination of change making, empathy, teamwork, and leadership.

Drayton believes that the world is currently going through a breakthrough – from being run by just a few people, to a world that is being run by teams of teams.

John Kao, the founder of the Institute for Large Scale Innovation, believes that innovation cannot be learned, instead it is a
combination of factors that all have to be woven together. He thinks of innovation as a ”property of society, as a set of muscles or capabilities to drive progress.”

It seems the discussion becomes, not what is innovation, but how can we build infrastructures of innovation?   Here’s the criteria I heard from various speakers at Clinton Global Initiative:

• technology
• globalization & interconnectedness
• universities, research, subsidies and venture capitol,
• rotating leadership and teams,
• multi-disciplinary and horizontal approaches,
• policies that support for small and medium businesses,
• coalitions of private sectors, NGOs, government
• crowd-sourcing, user-generated and design thinking

As we mentioned, September has been a busy and exciting month for us at Beyond Profit! On the immediate horizon, as in tomorrow, is Leadership for a Better World, and we couldn’t be more pleased to participate. Make sure to find Zara Khan (zarakhan10 (at) gmail (dot) com), our newest team member and our Washington DC representative, at the venue. She’ll be blogging, tweeting, and generally adding to the conversation. » Continue reading “Gathering Business Leaders for Good”

We, at Beyond Profit, have an exciting few weeks lined up!

We’re neck-deep in the production of our second issue. We have been working out of the Bombay Hub this week as part of their Taster Week. Lindsay, our Managing Editor, is at the Clinton Global Initiative. She will then be attending the Africa Social Enterprise Forum on September 26 and The Feast on October 1, both in New York.

Then, it’s off to Mexico for Opportunity Collaboration from October 17- 20. Anyone in New York should definitely get in contact with her – (lindsay (at) intellecap (dot) com) — she’s in North America until October 20!

Zara Khan, who is the newest addition to our team and our Washington DC representative, will be at Leadership for a Better World in Washington, DC on September 25 and at the Global Youth Enterprise Conference, also in Washington, DC on September 29-30. Make sure to find her at both these events! Or better yet, shoot her an email at zarakhan10 (at) gmail (dot) com.

We are excited to welcome Jerryanne Heath as our new Beyond Profit Guest Blogger focused on social enterprise in Africa!

Jerryanne is the CEO and Founder of ConceptLink Consulting, a firm which helps US and international social-mission organizations connect with their stakeholders through various event management and communications strategies.  She is the co-chair of the Africa Social Enterprise Forum, an initiative of AngelAfrica, a New York based non-profit which promotes economic development and entrepreneurship in Africa.

Beyond Profit is very pleased to be a media partner with AngelAfrica and the Africa Social Enterprise Forum.

About four years ago I fell in love with Africa, specifically South Africa, after volunteering in a township called Umgababa, outside of Durban.  I traveled there with Habitat For Humanity’s Global Village Program to build homes for families living in poverty.  I can still remember the warmth with which we were received and the pride of the family whose home we helped build from the ground up.  I was amazed that a small group of volunteers was able to transform a family’s life in such a short period of time with a few simple hand tools, bricks, and mortar.

Since then Africa has been emblazoned on my mind.  The continent is truly the final frontier of the developing world, ripe with opportunities for innovation and investment.  The chance to blaze a trail and make a difference there is seductive.  As I have learned through this volunteer trip and subsequent experiences on the continent, a little goes a very long way.

Over the past few years I have developed a strong interest in the positive stories of entrepreneurs who are making a difference across the African continent.  I became involved with AngelAfrica because of its commitment to the positive development of Africa through business, private sector investment, and entrepreneurship.  We are changing the conversation about Africa and positioning economic and social challenges as opportunities for action.  As Linda Rottenberg, CEO of Endeavor noted in one of her recent blog posts, in emerging markets “entrepreneurs with the best ideas face significant barriers to scale their business: a lack of mentors, a lack of trust, a lack of networks, a lack of good management, and a lack of smart capital.”  These barriers are even more pronounced on the African continent, and these are the needs AngelAfrica seeks to address.

Based in New York City, AngelAfrica has developed a broad network of approximately 400 young professionals, entrepreneurs, and investors who are committed to positive change across the continent.  Our goal is to leverage this network to benefit entrepreneurs in Africa and help bridge the information gap between potential investors in the US and businesses on the continent.

AngelAfrica is hosting a conference which will bring together over 200 people from all over the world on September 25 & 26, 2009 to showcase leadership and innovation in Africa’s private and social sectors.  We know that in order to achieve sustainable economic development and long lasting prosperity, Africa needs a thriving, vibrant business environment coupled with a commitment to positive social change.

On September 26, we are featuring the inaugural Africa Social Enterprise Forum.  With 200 participants, 30 speakers, and $4 billion in social investment capital, ASEF is the leading event for innovators in the African development space.  As the only event of this scale focusing exclusively on social entrepreneurship in Africa, ASEF will be an opportunity for these trailblazers to have their stories heard, share best practices, and network with potential funders.  Knowing that a little goes a long way in Africa, we hope the partnerships, ideas, and investment generated from the event will cause a ripple effect across the continent.

We would like to welcome Emily Davila as our Beyond Profit Guest Blogger from the Clinton Global Initiative. This is her first post of many.

At Beyond Profit, we have had our eye on the Global Impact Investing Network.  Though the idea for the network was conceived in 2007, the GIIN has been laying low, quietly building its bank of investors.  But expect to see the network in the news during the upcoming Clinton Global Initiative, where it will announce the members of its founding Investors’ Council.

GIIN has been given an initial grant by the Rockefeller Foundation, as part of their $30 million Harnessing the Power of Impact Investing Initiative, a not-for-profit initiative dedicated to increasing the effectiveness of impact investing, which it defines as investments aiming to solve social or environmental challenges while generating financial profit. While Rockefeller has given an initial grant to the GIIN, there are other funders involved who will eclipse Rockefeller’s funding. Intellecap’s own Sankalp Forum received support from this initiative as well.

The Rockefeller Foundation believes that the following challenges must be addressed for impact investing to reach mainstream investors:

• Lack of coordination hampers collaboration necessary for the industry to mature.
• Intermediation—the placement of money between investors and the businesses and projects that can use it productively—is generally sub-scale and specifically embryonic in sub-sectors such as public health and agriculture.
• Basic market infrastructure and the investment ecosystem necessary to identify, vet, and monitor investments efficiently is missing or fragmented.

The network has strong ties to Monitor Group and Intellecap (the company that publishes Beyond Profit), the latter of which recently hosted a stakeholder meeting to discuss the opportunities and challenges for global impact investing in India.

Social business blogger Rodney Schwartz, a self-proclaimed skeptic, has faith in the initiative.  Smith applauds its international approach, and thinks it has struck the right balance between action and reflection, consultation and decision.

At Beyond Profit we plan to stay tuned – and we’ll try to deliver some fresh insight when we hear from GIIN first-hand at the Clinton Global Initiative where we’ll be blogging live.

For more information on impact investing, see the article we published in the first issue of Beyond Profit by Antony Bugg-Levine.  Also of interest: the Monitor Institute report, “Investing for Impact, Social & Environmental.”