Impact Investing: Show me …the data

Over the past six months, we have worked together to better understand the important issues affecting scale in impact investing. One of the critical issues we have heard time and time again, from potential investors and from some fund managers, is the need for better data.

Okay, so it’s not quite as exciting as the “show me the money” line from Jerry McGuire. But for the emerging impact investing industry, showing the (financial return) data is an important precursor to getting shown the money.

While much of the conversation within the impact investing industry has focused on the important issue of the appropriate metrics to measure impact, far less attention has focused on metrics for evaluating financial returns. If we truly want to see the impact investing industry grow beyond today’s early pioneers to a broader set of investors, getting a better handle on the data around actual financial performance is critical.

Having spent a fair bit of time in both the impact investing community and in the more “traditional” investment world, the two who communicate often seem to be speaking completely different languages – and it’s time to get on the same page.

Returns are the lingua franca of how people invest. Investors are accustomed to seeing return data – whether it be in internal rate of return (IRR) or multiples — by asset class, and then evaluating that performance relative to broader benchmarks. Investors want to understand the risk associated with generating that return, whether in the form of loss rates on a debt portfolio or volatility in an equity portfolio. More importantly, they need a baseline from which to start.

In terms of public equities, we have a robust data set that enables us to evaluate the performance of companies that are seeking both a financial and social return, and the findings are different from the conventional wisdom. According to a recent report from UBS, an “enormous amount of academic research has been published about the financial performance of sustainable investing funds over the past decade. The literature concludes that sustainable investing strategies perform in line with market benchmarks.” The UBS report goes on to suggest that “ESG [environmental, social and governance] or socially responsible investing (SRI) funds are not consistently suffering the ‘return sacrifice’ so often heard in discussions of sustainable investing.”

However, very little data is available on impact investments in private companies. We recognize the challenges: it is harder to access data from private companies; impact investments are relatively recent; there are few funds with fully realized track records; and investments are dispersed through a broad set of investors and intermediaries.

Despite these challenges, capturing the data is important as we seek to bring the impact investing industry beyond the pioneering stage. I have personally seen the power of data in convincing skeptics. Prior to launching the Impact Investing initiative at the Small Business Administration, many questioned whether the program would have too much risk. The conventional wisdom was that investing in low and moderate income (LMI) areas was more risky and had lower returns.

So we ran the numbers – and found that the conventional wisdom was wrong. We literally ran a regression to see how financial performance correlated with the percent of a fund invested in an LMI area. We found no correlation. Investment in “low and moderate income” areas did as well as their peers.

We don’t know what the numbers will show for impact investing more broadly. Since impact investments are not one monolithic group, my guess is that in some sector/asset class combinations, they will compare favorably with “market” rates. In many cases they may be below.

But getting the numbers is an important first step. Even in cases where expected return may be “concessionary,” the data could clarify to the investor that the risk may be low (addressing the investors’ concern for capital preservation) or that the total blended return, financial and social, could be incredibly compelling. Transparency and baseline data will help the sector move from hype to scale.

The analysis will be important not just for the numbers per se, but for investors to see that the impact investing community “speaks my language”.

The Global Impact Investing Network (GIIN) has made some good progress in initial research, but there is more work to be done. We need to differentiate returns by asset class, look at loss rates, and the volatility of investment and not just returns. We need to work together to take this to the next level.

Heading to the Social Capital Markets (SOCAP13) conference next week?  We invite you to join us to continue the conversation during a session featuring with our CEO, Jean Case, and for an in-depth workshop with Sean Greene and Sonal Shah. See the full schedule of events HERE.

You’re Never too Young to Be Fearless

This post was written by Beth Pann, NSHSS Director of Development & Outreach on behalf of the Case Foundation. 

When Claes Nobel, senior member of the family that established the Nobel Prizes and co-founder of the National Society of High School Scholars (NSHSS), first learned of the Case Foundation’s Be Fearless campaign, he shared his own reflections on what we can accomplish when we overcomes our own fears, “The qualities of love, truth and compassion have been the guiding stars of my life and continue to give me courage. The World Betterment Legacy of my uncle Dr. Alfred Nobel inspired me to pursue my passion for Universal Peace and Environmental Sustainability. It is my hope that young scholars today find the inspiration to bravely fulfill their dreams.”

NSHSS scholars, whom Mr. Nobel believes will one day be the next Nobel Laureates, are pushing the envelope on changing the world for both themselves as well as for others around them. NSHSS is pleased to have been selected by the Case Foundation to team up on a program aimed at celebrating fearless role models during the Back to School season. Part of the foundation’s larger “Be Fearless” initiative, the campaign aims to honor these inspirational figures by inviting participants to share their own stories of who taught them to be fearless with Instagram video.

To participate, simply visit the Case Foundation’s Facebook page and enter.

The more than 900,000 scholars from 160 different countries who have been inducted into NSHSS since 2002 inspire us daily, and we recognize how they regularly teach us to be fearless in new and unexpected ways. These scholars embrace the core principles of the Foundation’s Be Fearless campaign by making big bets, experimenting, making failure matter, reaching beyond their bubble, and letting urgency conquer fear.

Two of our scholars wanted to share their own stories about who taught them to be fearless with you today: NSHSS Scholar Alec Urbach, CEO of Alec Urbach Productions, and founder of Giving from the Ground Up, a 501c3 public charity, knows a thing or two about taking bold risks. Reflecting on fearlessness,

Alec says: My brother taught me to be fearless when, already renowned as a violin prodigy, he began traversing the country for the sole purpose of performing Concerts for a Cure to raise money to fight pediatric neurological disease. This wasn’t something that people did, but he did it anyway because he believed it was right. My response to “fearlessness” is that there is something to be said for respecting our fears. We should respect the fear of failure; it will teach us to succeed. We should respect the fear of rejection; it will teach us to accept and bounce back. We should respect the fear of not knowing; it will teach us to learn.

For Loren A. Morris, an NSHSS Scholar from Schertz, TX, and St. Mary’s University freshman in San Antonio, being fearless was not an attribute that she experienced as a young child. Loren shared:

Each new day began with the fear of my biological mother not being home to care for me and my siblings. My young life was so full of fear and instability that I was always afraid and angry. Once taken from my biological mother, I was moved from foster home to foster home before finally ending up in a children’s shelter. I lived in a place that erased all my identity and disconnected me forever from my sisters and brothers. It was not until I was adopted into a wonderful family that my new parents, Grady and Juanita Morris, began to instill in me the will to truly “feel” again. At first, I refused to let them love me because I could not understand why they cared so much. Through them I learned to face my fears head on; to embrace new challenges with excitement; and to dare to dream. Their continuous love and support has literally dared me to be “fearless” and live again. They always say, “Loren, follow us as we follow God.” And, this is an awesome “fearless” journey.

These scholars have already found “the inspiration to bravely fulfill their dreams” as Nobel hopes all young people will one day through their fearlessness.

Inspired by the Case Foundation’s efforts to encourage changemakers to take risks, be bold and make failure matter, NSHSS is proud to announce that it is establishing the NSHSS #BeFearless Scholar Award this fall to inspire more young leaders who demonstrate outstanding leadership, scholarship, and commitment to their communities to Be Fearless. Learn more at www.nshss.org.

You’re Never too Young to Be Fearless

This post was written by Beth Pann, NSHSS Director of Development & Outreach, on behalf of the Case Foundation. 

When Claes Nobel, senior member of the family that established the Nobel Prizes and co-founder of the National Society of High School Scholars (NSHSS), first learned of the Case Foundation’s Be Fearless campaign, he shared his own reflections on what we can accomplish when we overcomes our own fears, “The qualities of love, truth and compassion have been the guiding stars of my life and continue to give me courage. The World Betterment Legacy of my uncle Dr. Alfred Nobel inspired me to pursue my passion for Universal Peace and Environmental Sustainability. It is my hope that young scholars today find the inspiration to bravely fulfill their dreams.”

NSHSS scholars, whom Mr. Nobel believes will one day be the next Nobel Laureates, are pushing the envelope on changing the world for both themselves as well as for others around them. NSHSS is pleased to have been selected by the Case Foundation to team up on a program aimed at celebrating fearless role models during the Back to School season. Part of the foundation’s larger “Be Fearless” initiative, the campaign aims to honor these inspirational figures by inviting participants to share their own stories of who taught them to be fearless with Instagram video.

To participate, simply visit the Case Foundation’s Facebook page and enter.

The more than 900,000 scholars from 160 different countries who have been inducted into NSHSS since 2002 inspire us daily, and we recognize how they regularly teach us to be fearless in new and unexpected ways. These scholars embrace the core principles of the Foundation’s Be Fearless campaign by making big bets, experimenting, making failure matter, reaching beyond their bubble, and letting urgency conquer fear.

Two of our scholars wanted to share their own stories about who taught them to be fearless with you today: NSHSS Scholar Alec Urbach, CEO of Alec Urbach Productions, and founder of Giving from the Ground Up, a 501c3 public charity, knows a thing or two about taking bold risks. Reflecting on fearlessness,

Alec says: My brother taught me to be fearless when, already renowned as a violin prodigy, he began traversing the country for the sole purpose of performing Concerts for a Cure to raise money to fight pediatric neurological disease. This wasn’t something that people did, but he did it anyway because he believed it was right. My response to “fearlessness” is that there is something to be said for respecting our fears. We should respect the fear of failure; it will teach us to succeed. We should respect the fear of rejection; it will teach us to accept and bounce back. We should respect the fear of not knowing; it will teach us to learn.

For Loren A. Morris, an NSHSS Scholar from Schertz, TX, and St. Mary’s University freshman in San Antonio, being fearless was not an attribute that she experienced as a young child. Loren shared:

Each new day began with the fear of my biological mother not being home to care for me and my siblings. My young life was so full of fear and instability that I was always afraid and angry. Once taken from my biological mother, I was moved from foster home to foster home before finally ending up in a children’s shelter. I lived in a place that erased all my identity and disconnected me forever from my sisters and brothers. It was not until I was adopted into a wonderful family that my new parents, Grady and Juanita Morris, began to instill in me the will to truly “feel” again. At first, I refused to let them love me because I could not understand why they cared so much. Through them I learned to face my fears head on; to embrace new challenges with excitement; and to dare to dream. Their continuous love and support has literally dared me to be “fearless” and live again. They always say, “Loren, follow us as we follow God.” And, this is an awesome “fearless” journey.

These scholars have already found “the inspiration to bravely fulfill their dreams” as Nobel hopes all young people will one day through their fearlessness.

Inspired by the Case Foundation’s efforts to encourage changemakers to take risks, be bold and make failure matter, NSHSS is proud to announce that it is establishing the NSHSS #BeFearless Scholar Award this fall to inspire more young leaders who demonstrate outstanding leadership, scholarship, and commitment to their communities to Be Fearless. Learn more at www.nshss.org.

Teaming up to Share Lessons on Designing Contests for Impact

Below, Case Foundation Senior Fellow Sonal Shah and Mayur Patel, Knight Foundation’s Vice President for Strategy and Assessment write about the importance of challenges and prizes as a tool for social change. This post originally appeared on the Knight Foundation blog.

In a world where technology has opened up access to a vast pool of talent and constant change has become the norm, contests offer a path to new ideas, new players and new ways of solving problems. We have seen a revival in contests as a way to discover new solutions and bold ideas across industries and sectors.

Leading companies, including Netflix, Google and Cisco, have tapped into challenges and prizes as a way to stimulate new business and technology innovations. Public agencies have also joined in, using contests as a way to make progress on a range of social issues, from reducing obesity to conserving household energy use. Last month, the U.K. government announced in grand fashion a new £1 million “Longitudinal Prize” committee to design competitions with the aim of tackling societies’ complex problems. The U.S. federal government continues to invest in its challenges and prizes platform, Challenge.gov. The platform provides opportunities for government agencies to tap into the potential of their citizens through prizes such as the NASA Centennial Challenges and public/private challenges such as Mozilla Ignite.

Despite this growing trend, many foundations have yet to use contests as a tool to advance their work and support innovation. Apprehension and uncertainty affect the willingness of many to adopt this tool. Additionally, it is not always clear where to start and how to design effective contests. Good design is key for successful contests, prizes and challenges. Sometimes even the failures can teach a lot about the effectiveness of the challenge or provide a better understanding about behaviors.

That’s why Knight and the Case Foundation, early adopters in this space, have teamed up to share experiences on contests, prizes and challenges and offer some valuable lessons learned along the way. On Aug. 8, we’re hosting a joint webinar, “Designing Contests for Impact.” The webinar, which begins at 1 p.m. EDT, will be geared towards foundations and other organizations interested in launching their own contests. We’ll share tips and practical advice on designing, setting up and running contests.

Knight and Case have been engaged in using contests to advance our missions for more than five years. These have ranged from the Knight News Challenge to Case’s America’s Giving Challenge. We’ve used contests to tap into fresh thinking, providing simple opportunities for new people to engage in problem-solving, and to generate widespread interest and attention on social causes and challenges.

The Knight Foundation has used contests across its program areas, and recently shared their experiences in a new report, “Why Contests Improve Philanthropy: Six Lessons on Designing Prizes for Public Impact”). Knight has granted more than $75 million to individuals, nonprofits and commercial enterprises through prizes and contests. They’ve supported experimental arts projects, resident-led neighborhood improvements, tech startups and data applications.

At the Case Foundation we have made similar progress in developing contests as a tool for our philanthropy.  That work also led to a report for the industry on how contests can impact our work: “How Giving Contests Can Strengthen Nonprofits and Communities.” In addition, the Case Foundation has co-hosted several cross-sector gatherings with the White House, bringing together experts in prizes and challenges from the corporate, public and foundation/nonprofit sectors to share knowledge and explore new opportunities for collaborating.

At both Knight and Case, we believe that prizes and challenges provide an opportunity to democratize ideas and are tied to a growing movement in open innovation. The social web provides unprecedented opportunities for collaboration on a mass scale. We have been experimenting and testing ways to run effective challenges for many years—but we’re not the only ones.  Other foundations and organizations have been doing great work in leveraging prizes, including the X-Prize Foundation, MacArthur Foundation, the Robert Wood Johnson Foundation and the Rockefeller Foundation.  We believe that the potential is significant and look forward to the webinar on Aug 8.  We hope you will join the conversation.