Social Finance - Blog

NYC Pipeline Fellows: So, you want to be an angel investor?

Jocelyn Ling - Portfolio Restrictions Analyst — 2012-02-24T17:03

Let’s play a word association game.

I say: Angel Investor - what’s the first word that comes to mind?

Money? Investment opportunities? Startups?

On February 10th, at the conference and official launch of the New York Pipeline Fellows, the words that came to mind instead were: Women, Diversity and Impact.

The Pipeline Fellowship trains women philanthropists to become angel investors through education, mentoring and practice. The fellowship aims to start changing the ratio of the angel conversations by diversifying the investor pool and investing in women-led for-profit social ventures.

“At present, women are seriously under-represented in angel investing. Women own about half of this country’s wealth but, by various estimates, make up no more than 8 percent of angel investors.” - Kauffman Foundation

The 2nd Pipeline Fellowship Conference, organized by Founder & CEO, Natalia Oberti Noguera, and COO, Lauren Abele, covered several key angel investing skills: Portfolio Strategy, Due Diligence, Deal Structuring, Valuation Methodologies and Post Investment Strategies. The conference kicked off by providing the audience with an overview of the angel investing sector.

Susan Preston, lead instructor at the Angel Resource Institute, addressed the funding gap that angels fill as well as the motivational factor of investing. Preston highlighted the fact that at the heart of angel investing, the relationships that you build with the entrepreneurs is what really matters, as opposed to looking at the exchange as a transactional one.

As the conference progressed and attendees dove deeper into the angel investing world, several key takeaways emerged:

1) Patience is required: Angel investing is a long-term commitment, with expectations for exits within five years, but one may have to wait seven years or more to enjoy positive returns on investment. A 1x return typically takes 2.5 to 3 years; a 10x return is expected to take 4-5 years.

2) Women-centered investing: Women need to take more risks and ask for more money. This key takeaway was especially prevalent in the valuation simulation session where groups were asked to value a company and negotiate from the point of view of an investor or investee. Women tend to undervalue their skills and should be bolder in a negotiation situation.

3) Diversity is needed: When we approach investing, diversity is not usually one of the criteria investors look for in deals. Opportunities are broken down by industry, stage and amount rather than the diversity that the entrepreneurs themselves bring to the table. What we need to do as investors is to recognize that in order to truly create a supportive environment, we need to consider a broader definition of what a diverse portfolio means. Are we taking into account minorities, gender and the impact of the investment? At the Pipeline Conference, this theme was thoroughly emphasized by panelists and their commitment to supporting women-led for-profit enterprises.

“The mission the Pipeline Fellowship has of empowering women to become angel investors [...] fills an extraordinary gap in the marketplace. There are women starting companies, we'd like to see more, but there certainly are some. But, the notion of having a track devoted to encouraging women to help other women by being investors...we thought [that] was novel and that the time was right for it.” - Bill Schnoor, Partner at Goodwin Procter LLP.

The Pipeline Conference was truly an eye-opening experience on the different perspectives in approaching angel investing. Congratulations to the New York Pipeline Fellows Class. Here’s towards a step to changing the ratio in the angel investing world and creating an impact.

Ed: Jocelyn also published an excellent post with more reflections on the Pipeline Fellowship Conference in SocialEarth this week.

Photo credit: Erica Torres

Learning from the B(enefit) Corp Assessment

Tim Masson - Executive VP, Ian Martin Group — 2012-02-22T21:56

By Tim Masson

The Ian Martin Group, a 50-year old, family-owned recruitment services firm, recently became one of Canada’s Founding B Corporations. In this post, Executive Vice President Tim Masson describes the first steps on Ian Martin Group’s journey to becoming a B Corp, and the lessons learned along the way.

B Corps describe themselves as “a new type of corporation which uses the power of business to solve social and environmental problems.”

So where does The Ian Martin Group fit into this strange new world? I found the following chart helpful in thinking about the kinds of organizations populating this brave new economy. Traditionally, Ian Martin would sit in the 2nd category on the right. By becoming a B Corp, we are moving toward becoming a “Socially Responsible Business.” In other words, ‘social responsibility’ will become part of our operating DNA, not just a description of how our economic outputs are distributed.

Given that we’re an old company, just beginning to move along the spectrum, I thought it would be interesting to look at our initial score on the B Impact Assessment to see what we could learn. I found some of the questions incredibly insightful and challenging. Even companies that are not considering certification could learn a lot by taking the free two-hour assessment. The B Corp guys appear to have done some heavy research putting this together. Quick disclaimer: there is more to becoming B certified than scoring a minimum of 80/200 on the assessment. You have to have your results verified by supporting documentation, make a change to your Articles of Incorporation, among other things.

Below is our initial result from the online assessment:

Phew, we passed. It would have been nice to have more breathing room, but “you can’t manage what you can’t measure” – that’s the beauty of B Corp’s scoring system. I’m actually pretty proud that, after 50 years in business, we qualify as a “Certified B Corp” without changing a thing. However, a score of 88.2/200 presents an opportunity: nowhere to go but up!

Unlike in grade school, a score over 60% on any section of the B Impact Assessment is considered an “area of excellence”. The “Governance” section looks at pretty basic issues like your mission statement, board structure, financial controls and auditing. However, one question I found particularly challenging was: “What portion of your management is evaluated in writing on their performance with regard to corporate social and environmental targets?” I guess any company claiming to be a B Corp should answer 100%. For now, we answered 0%. This is just stuff that most 50-year-old companies haven’t thought about yet. But how valuable is it that someone is now thinking to ask?

The “Transparency” category is interesting. We’ve been making strides in this area but as you can see, scored only 46.2%. I’ve been talking to different stakeholders about their feelings on this topic. If you ever want to see lawyers and accountants squirm, tell them you’re thinking about adopting an “open book financial management” process when you’re a private company. It’s quite fun. The truth is, we probably won’t change our existing practice anytime soon, but I would be very interested to hear from other private companies that have considered doing so. If you happen to know any, comment below or get in touch with me on LinkedIn.

I figured that “Workers” would be one of our stronger categories. Most of the questions are HR-related items that our team has diligently addressed over the years: medical benefits, vacation/leave, performance reviews, market-rate compensation, etc. However, as a family-owned business, we didn’t score well in “Worker Ownership”. This is one rating that will likely remain static.

One of the most interesting questions in the “Workers” section is: “What multiple is the highest compensated individual paid (inclusive of bonus) as compared to the lowest paid full-time worker?” The options for this heavily-weighted question are: >20x / 16-20x /11-15x / 6-10x / 1-5x. In this era of golden parachutes and CEO bonuses, it’s cool to know that we fit into the second lowest category.

This is where the going gets tough. Honestly, I would have expected to fare better in the “Community” section than we did.The sections on “Suppliers” and “Local Involvement” deal mostly with policies around choosing local, mission-aligned suppliers wherever possible. I believe we can raise these scores significantly within a year. Again, these are issues we just haven’t thought of before – though they totally make sense.

Several of the questions in the “Diversity” section will be difficult to address quickly. The assessment focuses heavily on whether “underrepresented populations” are reflected in ownership and management of the company. Our overall employee-base is continually becoming more diverse; however, we still need to improve our management diversity over time. The “Job Creation” and “Civic Engagement” sections contain several questions that prompt insights on how companies can create opportunities and share innovations to improve the local and global community. There will be much action taken on this front, and pages of blogs to fill, so I’ll leave it short for now.

At Ian Martin, we have several environmental initiatives underway, but do not yet have a comprehensive strategy to address our footprint – hence the relatively low score. I believe this can be vastly improved within 2-3 years. As a service business, we have a lighter footprint than our manufacturing cousins and therefore more low-hanging fruit.

This B Impact Assessment is just the first step along a new journey for The Ian Martin Group. We will need ideas and action from a full range of stakeholders to continue moving forward. Please comment below if you have any thoughts or ideas. All feedback, positive and negative, (in prose or in poetry) is welcome, as it helps move the dialogue forward.

Ian Martin was officially certified in December 2011. Their B Impact report can be found on the B Corp website.

All images courtesy Ian Martin Group.

Lessons from Jonathan Greenblatt at the NYU Social Innovation Symposium

Ryan MacLean - Assistant Editor, SocialFinance.ca (Winter 2012) — 2012-02-21T22:46

By Ryan MacLean

The 2nd Annual NYU Social Innovation Symposium was held on Friday, February 10th at the NYU’s Stern School of Business. Hundreds of students and practitioners from the public, private, and nonprofit sectors convened for case studies and panel discussions about social innovation and social entrepreneurship. It made for a day of enriching candid discussion, and an atmosphere of anticipation to hear the keynote speaker, Jonathan Greenblatt, interviewed by Spencer Ante, Deputy Bureau Chief of The Wall Street Journal.

Peter Henry, Dean of NYU's Stern School of Business, remarked in his introduction that social entrepreneurs work with a broad canvas. They source opportunities to create value for businesses and society, which is something Jonathan Greenblatt has done throughout his career. Now a Special Advisor to President Obama and Director of the Office of Social Innovation and Civic Participation at the White House, Greenblatt has worked within both nonprofit and for-profit sectors. In the latter regard, Greenblatt was actually representative of many of the speakers and attendees at the symposium, which made his interview a very appropriate conclusion to the day.

The audience were mostly students of NYU's schools of law, business, and management. Towards the beginning of the interview, Greenblatt asked a question of the audience which received was a fascinating collective response: "How many of you think the sole purpose of business is to drive shareholder value?" There was silence and not a single hand was raised. Greenblatt went on to say that this demonstrates "something is afoot...the game is changing." Two main themes emerged through Greenblatt’s interview: his advice for social entrepreneurs, and the new and interesting activities of the Office.

Greenblatt frequently drew from his wide range of experiences, giving detail about his early career as well as his current job in the White House. He was quite candid about how far social entrepreneurship and social innovation has come. He recalled being met with blank stares and laughter in early days when he would explain that part of his business plan was to give away half their profit. He added that all kinds of entrepreneurs experience "rejection more than affirmation", and yet maintained it is probably more difficult to be a social entrepreneur than a regular business entrepreneur. There are simply more challenges associated with social entrepreneurship, like more complex stakeholder relations. What can social entrepreneurs do to improve? Greenblatt recommends social entrepreneurs focus on cultivating skills, which takes time and experience, and, most important in Greenblatt’s opinion, develop a good team.

It has helped, Greenblatt said, that Warren Buffet and Bill Gates have been evangelizing this kind of work. There is a whole new class of investors who are more aware about creating value that generates social return. An audience member asked how start-ups can compete with larger organizations in the sector, particularly when vying for investment. In response, Greenblatt asked of himself "what can we do to create an enabling environment for impact investing?"

One way is to standardize impact reporting, he said, because investors are more likely to care about impact than intent. New certifications, like B Corp, can help with advancing measurements. Greeblatt pointed out that B Corp is influencing many states, to the extent that there is a critical mass gathering among states to adopt new categories for business. He cited examples of companies whose corporate social responsibility efforts he finds especially impressive, including: GE, PepsiCo, Starbucks (where he was once partner, he admitted), KIND Healthy Snacks, Peeled Snacks, and Meetup. The "most remarkable" example, though, is WholeFoods, whose "values-driven value chain" is "changing the entire retail market."

Change is not only happening with larger companies, it is also evident with start-ups. "I think there is a sea change", Greenblatt said, "at business schools, in boardrooms, at job fairs." Perhaps attributable to his early days as an entrepreneur, Greenblatt did seem to suggest change largely occurs from the ground up. He reminded the audience that start-ups have always been an engine of economic growth in the United States. The Office of Social Innovation and Civic Participation sees a bright future for the country by creating conditions and rules for lots of start-ups.

Greenblatt explained that President Obama created the Office of Social Innovation and Civic Participation as part of a broad agenda of innovation. He suggested that President Obama's legacy, while this task is best left to historians, would be that he has elevated innovation as policy. This agenda is largely about technology and data, but social innovation clearly has an important place too. Greenblatt emphasized that the office is about three words: elevating community solutions. He suggested that Obama's motivations for this approach come not only from his experiences as a community organizer, but also because the President sees this as an "all-hands-on-deck" moment in the United States.

The Office of Social Innovation and Civic Participation is focused on developing federal support for ground-up solutions. The answers to development problems, Greenblatt explained, lie not in Washington but in communities, where solutions are already being enacted by the people who live and work there. The office aims to help communities in a few ways. They identify what is working and either add support to scale up operations, spotlight them when they need it, or kick-start projects with seed funding.

The Office is interested in advancing both human and financial capital to support social innovation. To develop human capital, they are expanding opportunities for national service through AmeriCorps. To attract and leverage financial capital, they created the Social Innovation Fund. Greenblatt described this as a fund of funds, that provides growth capital for high impact nonprofits using local intermediaries to allocate funding. The fund's strengths are in its ability to build local networks and match investor capital at good ratios.

An audience member also asked whether the field of impact investing is undercapitalized, to which Greenblatt answered affirmatively and added constructively with the question "How can we unlock capital?" The office can make it easier for money managers to deploy capital in new ways. One such way is by innovating sectorally-collaborative financial instruments towards public goals, such as Pay for Success Bonds, a type of Social Impact Bond. With these bonds, the return on investment can be between 10-20%, which money managers like, while governments spend less and nonprofits get the cash-flow they need to run services.

If it were possible to identify a single message to take away from the day and Greenblatt’s keynote address, it would be that there is a promising future for what can be achieved with blended-value finance and enterprise, and that much of this work is already underway.

Redefining Risk in Impact Investing

Carissa Vados - Student — 2012-02-21T00:26

By Carissa Vados

Though Bonnie Wong, former Investment Manager with Vancity’s Community Capital team discussed risk explicitly at several points in her presentation, the theme of re-defining risk in the field of impact investing resonated through all presentations and conversations at “Making an Impact through Social Finance”.

The Canadian Global Impact Investing Group (CGIIG), held this event for a mixed audience of investors, students, business and political leaders in downtown Vancouver on Wednesday, November 23rd, 2011. CGIIG (which you can read about and join here) was founded in 2011 to raise awareness around the growing field of impact investing in a Canadian context and to connect investors with social ventures. This event invited 4 speakers representing different organizations to present on their activities in the impact investing space.

Jocelyn Ling from the Vancouver chapter of Acumen Fund spoke about guiding themes of the organization: patient capital and moral leadership. Jocelyn used Acumen Fund’s investment in WaterHealth International to illustrate the innovative, risk-taking approach of the organization. Today, over 4 million people have access to WaterHealth International’s clean drinking water and the enterprise has catalyzed an industry in clean water provision.

Vancity’s Community Capital team represented the biggest impact investor at the event, with $80 million in assets under management. Vancity recently announced and publicly launched their new high impact social enterprise lending and investment program, Resilient Capital.

The Global Catalyst Initiative, a local grass roots organization that invests in emerging entrepreneurs in developing countries, was represented by its President, Sean Peters.

Sean’s organization aims to bridge the gap between early-stage entrepreneurs and social enterprises that are “Acumen-ready”, e.g. in a position to take on $250K or more in financing to fuel their growth. Sean summed up the energy of this organization when he appropriately said, “to us at GCI, risk is really exciting”.

Brady Josephson, Director of Marketing and Communications at Opportunity International Canada, explained the organization’s rural agriculture finance model. Opportunity International works towards poverty alleviation through the provision of microfinance services, training and counsel. It was interesting to learn about the organization’s “informed lending” approach, which involves crop profiling, household profiling, and land mapping, collectively aimed at making financial services accessible to the base of the pyramid, but with a conscious effort to avoid over indebtedness.

All four of these organizations were well represented through charismatic story telling and compelling business models. Following the presentations, the floor was opened for questions from the audience. Some of the themes that emerged from this and the subsequent post-event conversation included:

Failure and challenges in the field of impact investing
How can risk, return, and impact be evaluated together?
The implications of the “demand side”: as the capital available through impact investing grows, what kind of support is being provided to social entrepreneurs?
How can these ideas become more mainstream?

Overall, the evening was informative and inspiring. It was a great opportunity for impact investing supporters in Vancouver to learn and network. We are looking forward to the next CGIIG event!

Photo credit: http://www.flickr.com/photos/benandjenn/3570635394/

Video: Catherine Clark on Social Impact Assessment

Ryan MacLean - Assistant Editor, SocialFinance.ca (Winter 2012) — 2012-02-17T21:36

By Ryan MacLean

Discussions about social enterprise and not-for-profits are often dominated by the topic of measurement. Measuring output, outcomes, and impact can be useful for improving organizations and, furthermore, investors and donors increasingly demand such data.

Catherine Clark is an Adjunct Assistant Professor at the Center for the Advancement of Social Entrepreneurship (CASE) at Duke University and directs the Research Initiative on Social Entrepreneurship at (RISE) Columbia University, and discusses social impact assessment in this short video. She explains that compelling data adds value to an organization's story, and describes several kinds of data.

Output data includes information about your activity, perhaps related to your daily operations. For example, how many are involved in your programs? How many people complete your programs?

Outcome data ties your regular activities to some effect as a result of your output. This measure refers to changes your organization has made to ongoing measures of societal problems. For example, if you run a prisoner rehabilitation program, what is the effect on recidivism rates you've made?

Impact assessment, though frequently discussed, is a long-term complex measure that most organizations are not equipped to reasonably track on a regular basis. Therefore, Catherine Clark suggests impact data is less important than output and outcome data.

What do you think? Does your organization measure social impact? What measure do you use, and how do you collect your data?

Social Impact Bonds May be Coming To Ontario: Celebration and Cautions

Sara Lyons - Assistant Editor, SocialFinance.ca (Winter 2012) — 2012-02-17T05:54

By Sara Lyons

The Commission on the Reform of Ontario's Public Services, also known as the Drummond Report, has landed at Queen’s Park with a considerable thud, and not only because it is 6 cm thick. The report calls for significant cuts and changes to the Ontario government as we know it.

On the constructive side and particularly relevant to social finance, the Report recommends that the Ontario government implement social impact bonds (SIBs).

Simply put, these are contractual partnerships between government, investors and social service organizations whereby social outcome targets are set, programs are funded by new private capital, and if - and only if - targets are achieved, government pays out a return to investors, derived from cost savings due to reduced need for other social services. For example, if a senior is able to stay out of hospitals because of effective home health care services, a percentage of the cost savings to government are paid to the private investor that funded the original service.

Without a doubt, this recommendation is good news. Social impact bonds are an opportunity increase critically needed funding available to the social service sector, driving towards impact, creating social good, and providing a platform for private sector participation. As the Task Force on Social Finance report puts it “… long-term financial backing for SIBs will enable organizations with effective solutions to highly-targeted problems to scale their impact, leading to a virtuous cycle of taxpayer savings, greater private investment in prevention, and progress toward our social, health and environmental goals."

That being said, as we move forward there are a few key questions about the details and the big picture that need be resolved.

The Drummond Report is thin on specifics regarding SIBs, neglecting to make any pronouncements on some key issues: What kinds of government-provided social services is this approach appropriate for? The most famous social impact bond pilot comes from the UK where criminal recidivism is being tackled. Happily, social impact bonds lend themselves to pro-active and preventative strategies. Can the model be stretched to challenges where the benefits to government spending are harder to measure, or longer term, such as high school dropout prevention?

Related to this, is there any risk that this model skews the activities of the not for profit sector, leading them to inappropriately scale interventions that have worked in a certain context but cannot simply be done more. Further, does the importance of metrics and evaluation exclude smaller organizations and local-scale projects?

In order to attract new capital, are there any incentives the government might need to offer? In the traditional model, the private investor assumes all the risk and their investment is lost if the desired social change is not achieved. Should the Ontario government or others such as foundations or individual philanthropists, sweeten the pot by putting up some first-loss capital?

For a deeper dive, Adam Jagelewski has written an excellent paper analyzing the potential for social impact bonds in Canada [PDF] and some specifics that need to be considered.

And finally, looking at the bigger picture, while social impact bonds represent collaboration between government, capital and social service organizations, who is in charge? The increasingly squeezed not-for-profit sector has long worried about how far it sometimes goes to chase foundation grants and government funding. How can social impact bonds be implemented in a way that neither compromises the wisdom and leadership of the not-for-profit sector, nor diminishes the fundamental responsibility of government to define social policy and support residents?

This is not an argument against social impact bonds, simply a caution that in this environment of scarcity and opportunity, new capital will be powerful. We must move forward in a balanced manner - and answering the questions above is the first step.

Photo credit: http://www.flickr.com/photos/cabbit/469423718/

Financing Social Returns in Southeast Asia: Synergy Social Ventures

Jana Svedova - Co-founder, Synergy Social Ventures — 2012-02-15T20:15

By Jana Svedova

Part 1 of this blog post highlighted some difficulties faced by social entrepreneurs in Asia; Part 2 profiles Synergy Social Ventures, which supports social enterprise, and ties in lessons for the broader world of social finance.

Synergy Social Ventures is a not-for-profit organization that was created in response to the challenges we saw preventing social enterprises from accelerating in Southeast Asia and China. In our work with entrepreneurs throughout the region, we identified a number of commonalities.

Firstly, the vast majority of ventures are in their early stages, in need of support to navigate the new sector they are entering. They need access to knowledge and to learn about best practices related to building social enterprise models. Secondly, there is a lack of appropriate financing for their impact-focused ventures - financing that is aligned with their impact-focused strategies.

One particular gap we’ve identified in our region is a deficiency in capital available to impact-focused enterprises who cannot meet a hurdle financial rate of return for investors. Financial returns are a significant consideration for funders - even those that self identify as “impact” focused investors usually seek a return of 3-5% in addition to social return. There is a lot of buzz and hype about impact investing, in particular “financial-first impact investing” - the idea of achieving both a social impact and a competitive financial return through an investment.

While it is great that financial investors are looking at the effects that their investment activity has on society and the environment, the excitement about the possibility of “having it all” - solving problems while generating strong financial returns - is creating a gap, through which many social ventures with high potential to generate significant social returns are falling.

At Synergy Social Ventures, we work with small and early stage ventures tackling difficult problems in some of the poorest areas of the world. Most are addressing issues that, until recently, have only been supported through direct and ongoing grants and donations. These new entrepreneurs, however, are working toward more effective solutions that are also sustainable, in that they will not need to rely on ongoing donations in the long-term.

This step alone has had a significant effect on the social returns on a financial “investment”, even when the investment is a grant that will set in motion impact that will continue to be generated in the future. Taking this to the next level, if the venture is able to return the original grant, or even a portion of it, and the funds are used to seed another venture, the social return generated by the funds increases further.

Social finance encompasses a broad spectrum of means of using financial capital to create social impact. What’s happening in our region reminds us that to fully benefit from the opportunities afforded by different models of social finance, we must not get caught up in one aspect that happens to be the “model du jour”.

Instead, we must assess situations within their own contexts to determine how financial capital can best be used to catalyze social impact. This could be through investment capital that generates social in addition to financial returns, but it could also be through philanthropic capital that is stretched further than the traditional 100% loss. Or it could fall somewhere in between.

The question to ask is not what financial return was generated, rather, was financial capital utilized in the most effective way possible to address a particular need? Looking at social finance models from this perspective will open up a wider range of possibilities to effectively use capital to create social impact.

Financing Social Returns in Southeast Asia: Barriers

Jana Svedova - Co-founder, Synergy Social Ventures — 2012-02-14T18:41

By Jana Svedova

The concepts of social enterprise and social entrepreneurship are newer to Southeast Asia and China than to other parts of the world. If someone was asked to name the most successful social enterprises globally, it is unlikely that an individual or organization from Southeast Asia or China would be the first to come to mind.

But a closer look at the region reveals many entrepreneurial individuals and teams creating impact in innovative ways and striving to develop business models that will financially sustain and grow their organizations. Across Southeast Asia and China, impact focused enterprises are sprouting, growing and building solutions to social, economic, and environmental problems through different business models. They are creating opportunities for women who face barriers to employment, developing distribution systems designed to meet the needs of the poorest consumers and smallest retailers, and developing local economies by creating livelihood opportunities.

As these enterprises demonstrate how impact can be achieved through innovation and interaction with the market, more entrepreneurs with exciting ideas are developing new ventures and turning their ideas into impact.

Take Charles, a student from Hong Kong for whom access to a computer and the internet meant the ability to find the answer to any question. He wanted students like himself in all parts of the world, even those without internet or electricity, to have access to information that would allow them to learn and explore. To address this problem, Charles modified a modern desktop computer to run at low voltage, using solar power. The computer is equipped to hold a large digital library, and comes pre-loaded with offline educational content. Through his social enterprise, SolarLEAP, Charles has now brought computers and digital libraries to off-the-grid communities in Nepal and the Philippines, and beyond Asia to Ghana, Ethiopia and India.

Despite the impact created by entrepreneurs like Charles, new social entrepreneurs in Southeast Asia and China face many challenges. There is often a lack of local understanding of and support for their models. Language barriers prevent some would-be entrepreneurs from accessing available resources, and the sector is still fragmented, in need of strong sector networks through which entrepreneurs and their supporters can build relationships and collaborate.

One of the greatest hurdles to overcome is the lack of appropriate financing available for impact-focused ventures. Time and time again we see entrepreneurs in this region spending a disproportionate amount of time and energy looking for funding, instead of focusing on building and growing their ventures. One cause of this funding gap stems from the fact that different models of social finance that were developed in specific contexts in different parts of the world were introduced in Asia all at once, leaving new funders confused about what a social finance model should look like. What kind of financial returns should social investors seek in addition to social returns? What does the ideal social enterprise look like? Is social finance philanthropy or is it investing?

While there is no one answer to these questions, the confusion about the different models of social enterprise and social finance has resulted in a situation where few matches between funders and entrepreneurs are being made, and entrepreneurs have little access to the critical capital they need to seed their ventures.

Consequently, there is a need for an organization that can provide support to social enterprises and help them answer these tough questions. Part II of this blog post profiles just such an organization.

Photo credit: http://www.flickr.com/photos/worldworldworld/4352771740/

Social Finance Round Up: ClimateSpark Social Venture Challenge Takes Centre Stage

Becky Slater - Assistant Editor, SocialFinance.ca (Winter 2012) — 2012-02-13T22:39

By Becky Slater

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 February 13, 2012.

Last Week on SocialFinance.ca

Timothy Nash published Occupy Your Assets on February 6, 2012.

Bree Gardner published Social Finance Round Up: Environmental Finance and Green Investing Pick Up Steam on February 7, 2012.

Nabeel Ahmed published The ClimateSpark Venture Challenge: Social Ventures for Climate Change on February 8, 2012.

Allison Langille published Introducing SocialFinance.ca’s New Assistant Editors (Winter 2012) on February 9, 2012.

Nabeel Ahmed published Video: The ClimateSpark Social Venture Challenge on February 11, 2012

Canadian and International News

Israel Electric Corporation has issued a $500 million bond for institutional investors in the US to buy solar energy capacity to replace gas from Egypt.

Private equity firm Actis has introduced a tool to assess the environmental and social impacts of its investments in the energy sector. The Energy Impact Model systematically captures the key drivers that build value and helps to identify where action is required.

Essex County Council has confirmed plans to use social impact bonds to finance family and community-based work with young people on the edge of care or custody in the UK.

New Philanthropy Capital is launching a survey of the UK’s largest charities that will attempt to build a picture of how the organizations are coping with new, more complex and competitive commissioning arrangements, such as payment-by-results.

Euromoney reports that private banks are looking to help clients move away from a greed-is-good mentality. In the article, they argue that if impact investing takes off, it will be driven not by political interference but rather by the interference and assistance of the wealthiest individuals and their banks.

The Department of Energy and Climate has given £20m in funding to Salix Finance, an independent not-for-profit organization, as part of its interest-free loans scheme (SEELS). Any organization across the public sector can now apply for loans to fund energy efficient schemes that pay for themselves within five years through lower energy bills.

Climate Bonds Initiative blogs that while the solar market’s woes are unhelpful to the broader renewable energy market, many of the issues are specific to the industry and therefore should not inhibit the borrowing ability of corporations operating in other renewable energy activities.

Social Enterprise reports that social entrepreneurs around Europe will have the chance to scoop €10,000 and put their names on tubs of ice cream in a groundbreaking contest launched earlier this month by Ben & Jerry’s and Ashoka. “At a time when more questions are being asked about the attitudes of traditional businesses to social justice, the environment and communities, this is an udderly fantastic opportunity for entrepreneurs with a passion for sustainability and changing the way business is done in Europe,” the ice cream pioneers said today.

Acumen Fund has issued a $1 million USD loan to microfinance institution GUARDIAN (Gramalaya Urban And Rural Development Initiatives And Network) to finance water and sanitation needs in India. The loan will play a critical role in helping GUARDIAN build its portfolio and transition from a partially grant-funded NGO to a fully self-sustaining microfinance institution.

Based on the results of a survey of Triple Jump’s clients, Triple Jump news reports that microfinance institutions are looking to upscale their services for Small and Medium Enterprises (SMEs) and, in doing so, to close the much-debated credit gap.

Unitus Seed Fund announces that it has made an investment in Hippocampus Learning Centres (HLC) based in Bangalore. HLC is building affordable rural learning centres that serve children at the base of the economic pyramid.

Leonardo Letelier, founder and CEO of sitawi, talks about setting up the first social enterprise fund in Brazil.

StartSomeGood co-founder Tom Dawkins talks about crowdfunding for social enterprises in an interview by Rachel Signer.

Social Finance Learning and Best Practices

The Rockefeller Foundation and SocialFinanceUS released a paper on how social impact bonds can mobilize private capital to advance social good. The new publication offers a framework for both the promise and challenges of social impact bonds as state and local governments within the US begin to explore this new innovation.

Nexii’s Kelly Notcutt takes some valuable time out to discuss developments around social and environmental impact reporting with Jeremy Nicholls, Advisory Board member and CEO of the SROI Network.

Chris Prottas, MPA Candidate at NYU, provides a case study on assessing the cost-effectiveness of impact investing.

Grassroots Business Fund (GBF) shares its Impact Planning, Assessment and Learning (iPAL) framework [PDF], which enables GBF and its portfolio companies to track and analyze finance, operational, and social metrics against established goals in order to improve management decisions.

Harvard Business School Associate Professor Julie Battilana shares the results of analyzing six years’ worth of Echoing Green fellowship applicants - helping impact investors to better understand evolving opportunities in the social enterprise space.

Robert Ashton outlines the benefits of investing in community development finance institutions, including the relatively safe nature of the investments and the accompanying tax breaks.

Ndubuisi Ekekwe, founder of the not-for-profit African Institution of Technology, discusses the emerging opportunities for impact investing in Africa this decade via the Harvard Business Review.

Using the example of India, Manju Mary George, co-founder of Intellecap and part of the World Economic Forum's Global Shapers Community, discusses how big business investment in the bottom of the pyramid through partnerships with social enterprises can generate inclusive growth.

Ian Cain, a first-year MBA student at Duke University, reflects on a recent visit from Ron D. Cordes, co-chairman of Genworth Financial Wealth Management and founder of ImpactAssets, a non-profit financial services company that aims to aggregate and deploy capital in sustainable social enterprises.

Five Talents Blog interviews Lillian Mwikali about her experiences as a microfinance loan officer in Thika, Kenya.

In this Forbes’ video, Arabella Advisors’ Eric Kessler, who works with billionaires on how to change the world through philanthropy, shares the top five trends for wealthy donors in 2012, including a desire for some of the planet’s richest people to become more engaged in impact investing.

Mark Hand of the First Light India Accelerator, a seed-fund pilot and joint effort of Shell Foundation and First Light Ventures, describes how the market for seed-funding for social enterprises is heating up fast - especially in India - and what this means.

Micro-lending to the more unlikely: the Economist explores microfinance for non-traditional populations.

Recent Discoveries

GoodGuide - provides the world’s largest and most reliable source of information on the health, environmental, and social impacts of consumer products.

Upcoming Events

Latin American Impact Investment Forum: Business for Development
February 13-15, 2012, Merida, Yucatan

Environmental Bonds 2012
February 15, 2012, Eversheds’ Office, London, United Kingdom

World Bank Institute Climate Finance Workshop for the Eastern Caribbean
February 14-17, 2012, Saint Lucia

SROI Network International Conference
February 16th-17, University of Potsdam, Campus Griebnitzsee, Germany

Webinar: Growing The Outcomes Finance Market: Challenges & Routes Forward
February 16, 2012, Online.

Scaling up REDD+ Webinar Series
Webinar series to be held on four consecutive Thursdays starting February 23, 2012

Microfinance Experts Speaker Series: Ann Miles
Thursday, February 16, 2012, Rotman School of Management, University of Toronto.

Social Economy Centre Speakers' Series: Rise Asset Development
February 22, 2012, Room 3-104, OISE (University of Toronto), 252 Bloor St. West, Toronto

World Water-Tech Investment Summit 2012
February 28-29, 2012, London, United Kingdom

SOCAP: Soul
March 3, 2012, Hub SOMA, San Francisco

Social Enterprise Dragons (Enterprising Non-Profits)
March 8, 2012, Goldcorp Centre for the Arts, 149 West Hastings Street, Vancouver, BC

100WHF-Stanford PACS Conference: Alpha & Altruism - Channeling the Power of Finance for Social Change
March 23, 2012, Boston Harbor Hotel, Boston, MA

Powering deals with purpose - Partnering for Global Impact 2012
July 9-10, Lugano, Switzerland

Did we miss any news, insights, or events? Use the comment form below to add to this round up.

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

Video: The ClimateSpark Social Venture Challenge

Nabeel Ahmed - Managing Editor, SocialFinance.ca — 2012-02-11T07:21

By Nabeel Ahmed

With the ClimateSpark Launch Gala taking place this week, and the announcement of the Toronto Community Foundation Green Innovation Award, it's only natural that this week's Video is the one played at the glittering event on Wednesday night.

Missed the overview post a few days ago?* Don't worry. Jason Wagar of Toronto Community Foundation, Eli Malinsky of the Centre for Social Innovation, and Julia Langer of the Toronto Atmospheric Fund are the best people to explain what the ClimateSpark Social Venture Challenge was and what happened over the last several months. This excellent video by the folks at BroughtToYouBy.tv will help to give you a strong sense of how this process played out.

"The climate crisis really needs absolutely every brain molecule we have, and every iota of energy and enthusiasm." Jula Langer, Toronto Atmospheric Fund

*If you're interested in reading more about the event, you can start off with the Environmental Commissioner of Ontario's thoughts, as well as this overview of the Centre for Social Innovation's contribution . The ClimateSpark team was understandably happy, and the Toronto Atmospheric Fund also posted a celebratory blog post.

We invite you to share your thoughts about this video below. Have you been a part of the ClimateSpark journey over the past few months? Were you at the Gala last week? What did you think?