Jed Emerson discusses blended value at Toronto's MaRS Discovery District

Betsy Martin, Senior Advisor to Community Foundations of Canada and head of its Responsible Investment Pilot Project, listened in on Janice Stein's interview (video) of Jed Emerson, the pioneer of blended value, at MaRS Discovery District in Toronto last night.

Some initial take-aways from what was a rich interview followed by lots of good discussion with a large crowd at MaRS.

Jed has been a proponent of what he calls blended value for years.  It is looking at the return on investments as a blend of financial returns and social and/or environmental impact.  It’s not having three bottom lines.  And it's less like a soup and more like a salad in which you can still taste the individual ingredients.

Jed's personal story is really interesting.  He started out as a social worker and now works for a hedge fund in NY.  After years as a social worker and running non-profits, he ended up burnt out and cynical about the non-profit world and the fact that how most non-profit organizations get funded has nothing to do what they really accomplish.  He now works to make the case to direct capital to companies and organizations that deliver the best blended value.

Jed has a real challenge to the traditional approach to philanthropy. 

After he left his last non-profit organization, he started to work with a philantropist who, like Jed, was really bothered by the fact that there is no logic to the capital structure in the non-profit sector.  As a friend of his described it, the philanthropy funding model is to “let a thousand flowers wither” because we have no model for growing the funding for ideas and organizations that are making a difference.  Good ideas may get initial funding, but there is no structure like there is in business financing to move up the investment ladder to be able to attract greater investment as you prove that you have a successful model.

So they started to apply an impact investment model to working on homelessness and they came up with a couple of sets of indices to track whether or not they were making a difference.  One set was on the business performance and one set was on the social outcomes over time of the homeless organizations they worked with.  And they also gathered stories about the people the organizations helped find the way out of homelessness.  All of that was the blended value of the foundation’s investment in homelessness and they could tell which organizations they were funding had the greatest impact and direct further investments accordingly.  And those investments were not just grants – they included loans, mortgages and other investments that allowed successful organizations to grow, plan for the future and diversify their own funding. 

As the whole area of impact investing has grown in recent years, there are more and more metrics becoming available to track environmental and social impacts to help foundations and others figure out where their investments can make the most difference.

Which brings me to his other message to foundations:  that the grants made by foundations are just one relatively small tool in the toolbox.   As Jed described it -  If you were trying to get me to invest in your company and said that you'd use 5 cents of every dollar I invest for your business and put 95 cents in the bank, I'd think you were crazy.  But that's been the standard foundation model.  It's changing and it's fascinating to see how foundations are rethinking this model and how to use more of their assets to invest in making real impact on our social and environmental challenges.

More on how that’s changing later…

Additional Resources

• www.blendedvalue.org 
• Impact Investing - the Rockefeller Foundation
• Socialfinance.ca
  

A vibrant city needs vital information to thrive

Eva Friesen is the President & CEO of The Calgary Foundation. This piece originally appeared in The Calgary Herald on October 29, 2009

Relative to many other cities in the world, Calgary is a dynamic young city that has seen a very high rate of growth, surging to over one million in just over a century. We pride ourselves on our 'can do' attitude, high level of education, employment opportunities, increasing cultural diversity, willingness to volunteer, and access to great parks and pathways. Others think of us as an economic powerhouse and globally, we rate very high for safety and livability.

Yet, in a recent survey, Calgarians gave their quality of life a "B" grade. While not a bad grade, the question remains, how can Calgary do better?

Earlier this month the Calgary Foundation released Calgary's VitalSigns, our 2009 Citizens' Report Card. Over 1,700 citizens and community partners contributed towards developing a snapshot of quality of life in Calgary. Unlike many report cards, not only does VitalSigns provide up to date statistics covering 12 key areas of quality of life in our city, but citizens are invited to grade these areas so that we can take the pulse of our city based on both the facts and perceptions of Calgarians.

Coming as it did in the middle of the worst economic downturn in 80 years, one might be excused for thinking that Calgarians were feeling less than bullish about their city this year.

Not so. Despite the tough economic times, citizen perception of the way things are did not drop in any of the report's categories from last year's scores. While this perhaps speaks to the genuine pride most Calgarians have in their city, as well as an undeniable drive to "tough things out", it also speaks to the need to have solid information and continued citizen engagement about the results.

After all, while it is good that the grades were no worse this year, it should matter that we have seen sense of community belonging drop sharply, voter turnout continue to decline, charitable donations fall, and emergency room wait times increase.

Similarly, while Calgary's unemployment rate remains one of the lowest in the country, it has doubled over the past year, resulting in higher food bank usage, more homelessness, a rise in personal bankruptcies and more high-risk calls to Distress Centre Calgary. Of course, the bad news is tempered by many areas that merit applause--assets to build upon as we look for ways to improve our overall performance.

This year these included the curbside recycling program, which will double the volume of material diverted from landfills; water conservation efforts that are on target to meet the city's sustainable water use target by 2033; a violent crime rate that is much lower than the national average; high library usage; the highest score in the country for lifelong learning; and a 10-year plan to end homelessness that is on track to add 891 units of affordable housing by 2011.

These results speak to a pervasive need to have a different kind of conversation about what is really happening in our city. We need to ensure our actions are informed by the best information available, both factual and perceptual. Systems scientists call this feedback, and it should underpin any conversation about the real pulse of Calgary.

The power of good feedback is remarkable. For example, in a housing development in the Netherlands, electric meters were accidentally installed in the basements of some houses and in the front halls of otherwise identical houses. Electricity use in the houses where the meters were easily visible was 30 per cent more efficient than in the houses where the meters were out of sight. The only difference was the ability to effectively monitor what was going on. So, how can Calgary do better?

As we reflect on the vitality of our city--and the social, cultural, economic and environmental conditions that support or erode resilience-- one response is to continue to improve the breadth and sophistication of how we monitor and celebrate our progress and how we work together to change course when necessary. Community engagement is vital to this process.

Two good upcoming examples are Bowness VitalSigns (PDF) and Youth VitalSigns (Spring 2010). These focused reports will seed conversations and increase our city's capacity to address issues and celebrate success--and hopefully they will be role models for further innovation.

Early in the new year, The Calgary Foundation, in partnership with community partners, will be hosting Vital Conversations (PDF), dynamic community forums inviting citizen engagement around the results of the 2009 report and input toward development of the 2010 report.

Our ability to improve how we monitor our progress and measure what matters also rests on the availability of credible and relevant indicators. This can be a major barrier to telling the full story of quality of life in our city. For this reason, we are calling for opportunities to work collaboratively to identify and develop new and compelling indicators that will enhance our collective capacity to keep a keen eye on our performance.

While getting an "A" for quality of life may remain elusive for a while yet, The Calgary Foundation is committed to continuing to work with community partners to ensure we earn high marks for our combined efforts to monitor and respond to both the good news and challenges affecting quality in life in Calgary.

Our city deserves nothing less; a vital city needs vital information to thrive.