Impact Investing

Spotlight on Social Enterprises: Sevamob

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Here’s another exciting new social enterprise to start off your week! The Case Foundation and Entrepreneur.com magazine, in partnership with ImpactAlpha, highlight Sevamob for this week’s Spotlight on Social Enterprises.

Sevamob targets the lack of adequate primary healthcare in poor, rural areas of India by providing low-cost health services to low- and lower-middle income individuals. Services are packaged in bundles that can include primary care, dental checkups, prescription medications and health insurance. Sevamob’s founder and CEO, Shelley Saxena’s tech roots are apparent, given the company’s modern, online appointment scheduling systems and comprehensive patient health data repository, designed to easily connect patients and healthcare providers. With their unique approach, Sevamob is already serving more than 7,000 individuals.

You can learn more about this enterprise that successfully channels the power of technology to bridge to health services gap while focusing on high growth at Entrepreneur.com.

Spotlight on Social Enterprises: KZ Noir

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This week the Case Foundation and Entrepreneur.com magazine, in partnership with ImpactAlpha, are spotlighting KZ Noir on the Entrepreneur.com Impact Investing topic hub.

As coffee culture continues to demand high quality, exotic coffee flavors, consumers are also increasingly driven by environmental and social concerns. There is a high demand for coffee that is sustainably grown and fairly sourced. One company in particular, Rwanda-based KZ Noir, has produced positive returns on all fronts: consistent profits in a volatile industry, high quality coffee that is sold across the globe and positive social benefits that go beyond fair pay and environmental sustainability. It may come as a surprise, but if you enjoy fair trade, robust coffee, your favorite morning cup may just come from KZ Noir beans.

Learn the full story on their commitment to social impact and quality here.

Spotlight on Social Enterprises with Entrepreneur.com

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The Case Foundation and Entrepreneur.com magazine, in partnership with ImpactAlpha launched a series titled, “Profiles of Impact” in an effort to spotlight the growing number of social enterprises that deliver both financial and social returns. The proliferation of impact investing opportunities has sparked a burgeoning movement with great potential. Every Tuesday we will feature new companies and funds providing profits with a purpose in fresh and innovative ways. These entities are paving the way for a market that is more socially, environmentally and economically sustainable.

This week, Entrepreneur.com features Ecologic, whose mission is to create a more sustainable world through better packaging choices. In the face of staggering statistics, “71% of today’s plastic milk and laundry bottles are sent to landfills where they sit for centuries.” Julie Corbett, founder of Ecologic, is driven by the belief that consumers deserved a better, more ecologically sustainable option. Corbett and her team are expanding Ecologic to help diminish the amount of waste created by the production and disposal of plastic bottles and containers in communities around the world.

Visit Entrepreneur.com to read the full story and check out past posts from the series.

Profiles of Impact – Case Studies of Impact Enterprises, Funds and Investors

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Here at the Case Foundation we recognize how important it is to highlight the great work of innovative thinkers and doers. This week, in partnership with Entrepreneur.com and ImpactAlpha, we launched a new topic hub—Profiles of Impact—that will feature successful impact funds, innovative investors and social enterprises working to provide financial and social returns. Read Jean Case’s blog celebrating the launch, as well as profiles of Happy Family and Progreso Financiaro. We’ll continue to release profiles weekly, so check back often!

To continue to track what’s new in impact investing, be sure to follow us on twitter at @CaseFoundation.

Running Business as if the Future Matters

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This post was written by Barbara Dyer, President and CEO, The Hitachi Foundation, on behalf of the Case Foundation:

The Case Foundation creates powerful partnerships and vibrant networks designed to address many of today’s greatest social challenges. Read about how one of our partners, the Hitachi Foundation is sparking change within the entrepreneurial sector through its creative new programming.

The Long Now Foundation’s Interval Café is a place for conversation about long-term thinking. Nestled in a concrete warehouse at San Francisco’s historic Fort Mason, the Interval was a fitting watering hole for the nearly 2,500 participants in the recent Social Capital Markets (SOCAP) gathering. SOCAP’s annual pilgrimage to Fort Mason brought together innovators, investors, foundations and social entrepreneurs to “build a world we want to leave to future generations.”

But drive an hour south from Fort Mason to Silicon Valley and you’ll be reminded that short-termism is deeply embedded in our business culture. This epicenter of tech start-ups is defined by a business development norm of launch, scale and exit. Investors are more likely to ask, “What’s your exit strategy?” than “What’s your long-term vision?”

Today’s young business leaders came of age in the era of “short-termism” where companies enter and exit in five to ten year cycles and compete in a world where workers average 11.3 jobs during their careers. Dramatic disruption in the 1980s due to globalization, recession and technological change gave way to financial markets’ relentless push for short-term gains. Jim Collin’s 1994 book Built to Last: Successful Habits of Visionary Companies may have been a last bow to long-term business thinking.

Entrepreneurs dedicated to creating social value, and even impact investors seeking social returns are caught in the collision of short-term norms and the reality that progress requires a long-term strategy.

We’ve witnessed this tension as we’ve gotten to know early stage businesses and investors involved in our Entrepreneurship @ Work program’s new initiative – SOURCE: Solutions from Our Country’s Entrepreneurs. SOURCE, a partnership between The Hitachi Foundation, Village Capital and Investors’ Circle, connects entrepreneurs with the investment capital, mentoring, and support needed to grow their businesses. In this inaugural year, SOURCE is focused on four specific problem areas that affect low-wealth individuals – health, energy, financial inclusion and agriculture.

Through SOURCE, I’ve had the privilege of spending time with dozens of entrepreneurs and investors. One common theme from the entrepreneurs – each dedicated to creating social and economic value – is that they seem to struggle to imagine their businesses 10 to 20 years out. As impact investors push the ventures to define their scale-up and exit strategies – with less focus on social returns – it demonstrates the real challenges ventures face at the intersection of measurable financial returns and monetized social returns.

“Even with attractive margins and tackling a serious problem, an exit strategy remains critical to secure investment,” says Jason Hill, co-founder of Benevolent Technologies for Health, whose venture is part of the SOURCE health cohort. “As we work to build the next generation of prosthetic and orthotic devices, if we don’t include an exit scenario, they don’t take us seriously. We would reframe our offering and business plan if more investors were focused on our impact or job creation plans.”

There are exceptions to the “scale up and sell” norm. Our Good Companies @ Work program provides another view on the mature business economy as we’ve discovered nearly 100 businesses in manufacturing and healthcare that have maintained social and economic returns over the long-term. These companies, which we call Pioneer Employers, take a sustainable approach to their businesses, aligning the interests of customers with investments in employees and operations strategies that create strong results for shareholders, workers and entire communities.

SIPI Metals, for example, started as a scrap metal business in 1905 with a horse and buggy on Chicago’s west-side. For more than a century, SIPI Metals has endured despite the economy’s steep ups and downs. SIPI’s business is noteworthy for a number of reasons, including their strong pay and employee incentives. Production floor employees become expert in multiple tasks and machinery thanks to SIPI’s commitment to on-the-job training. SIPI is also committed to developing future leaders from within the company because as senior executives retire, their replacements likely will come from within their ranks.

The Hitachi Foundation looks across the business landscape for firms that solve social problems and compete successfully in the marketplace. We focus on both early-stage ventures and more mature companies in order to understand what it takes to run a business as if the future matters. From the start-ups we gain insights about the power of unbounded imagination dedicated to solving pervasive social problems. From the mature businesses we capture the wisdom and experience of businesses that generate long-term value at the intersection of people and profit.

It’s about building good businesses and building them to last – right from the start.

The Long Now Foundation is building a clock designed to tick for 10,000 years. How long will your business last?

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Barbara Dyer is president & CEO of The Hitachi Foundation and Senior Lecturer at MIT’s Sloan School of Management. Ms. Dyer shaped the Foundation’s focus on the role of business in society with an emphasis at the intersection of people and profit.

A New Chapter for Impact Investing

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Today marks a major milestone for impact investing. Leading corporations, banks, foundations and individuals—including Prudential, the Omidyar Network, and Capricorn Investment Group—gathered at the White House and committed to invest more than $1.5 billion in new capital into companies and funds that strive to generate positive financial and social returns.

To learn more about this groundbreaking capital commitment and how individual philanthropists, family offices, private foundations, private investment firms and venture capitalists can deploy capital through their own platforms, read the new piece by Jean Case, CEO of the Case Foundation, in The Huffington Post.

In addition to the private sector commitments, several U.S. government agencies, including the Small Business Administration, USAID, and Treasury, also announced programs to support impact investments and social enterprises today. The White House released additional details on the event and commitments on its official blog.

These commitments were complemented by the release of a new report from the U.S. National Advisory Board to the Social Impact Investment Task Force—Private Capital, Public Good: How Smart Federal Policy can Galvanize Impact Investing—and Why It’s Urgent. Since its creation in 2013, the Advisory Board has engaged with hundreds of stakeholders in the impact investing field—from policymakers to foundation leaders to institutional investors and many others—to surface the most compelling recommendations for policies that would support the increase of the amount of private capital that is committed to social change. The report serves as a tool for policy makers and provides recommendations for how federal policies can spur the growth of impact investing.

There is a growing number of investors who want their investment dollars to better represent their values and who are interested in exploring ways that they can do good not only through philanthropy, but also by mobilizing their investment capital. Together, we can forge a path through capital investments and policy changes to lift up market-based solutions for a more meaningful return.

Want to learn more about the Case Foundation’s efforts to support the impact investing ecosystem? Check out our Impact Investing page and follow the team on Twitter at @CaseFoundation.

Milken Global Conference Recap: Impact Investing Gains Steam

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Last week, the Case Foundation team, including our founders, Steve and Jean Case, had the pleasure of participating in the 17th Annual Milken Institute Global Conference with more than 3,000 investors, policymakers philanthropists, and thought leaders from around the globe.

We were particularly struck by the momentum and buzz around impact investing at the conference. Jean and Steve joined CNBC live for a short discussion on the topic, and shared their thoughts into the potential for impact investing to move from a niche concept to a mainstream investing strategy. The room was packed for the panel, “Investing for Impact: What’s in Your Portfolio?” featuring Jean Case, and moderated by Matthew Bishop from the Economist. Double bottom-line innovators, including Tracy Palandjian (Social Finance), En Lee (LGT Venture Philanthropy), and Michael Schlein (Accion), also joined the panel the growth of social capital and shared more on their efforts and early successes. Impact Investing was also the source of great conversations in a number of other forums, from hallway discussions to formal dinners, and the growing interest in the space from this important group of conference-goers was apparent.

While at the conference, we also released a draft of our Short Guide to Impact Investing, under the leadership of our Entrepreneur in Residence, Sean Greene. The guide is designed to help investors – including high-net-worth individuals, foundations, family offices and others – explore the impact investing market and help guide their decisions as they hope to move towards investing that incorporates intent, measurement and transparency when it comes to generating both financial and social returns. We’re currently accepting public comments on the draft, and we thank the many of you who have already given us tremendous feedback that will help sharpen and improve the guide before we publish the final version in the coming months.

In addition to impact investing, Jean and Steve had the opportunity to take the stage to discuss other topics they’re passionate about. Jean joined some of the world’s most innovative philanthropists for the panel discussion, “Philanthropy Now: Prizes, Purpose, and People.” Moderated by the Templeton Foundation’s Jim Pitkofsky and also featuring Australian philanthropist Andrew Forrest, Tsitsi Masiyiwa of Zimbabwe’s Higher Life Foundation, Dick Merkin of the Heritage Provider Network and Faster Cures, and George Weiss, the panelists shared their own experiences on innovating in philanthropy through a number of approaches, including prizes and challenges. The Case Foundation was an early experimenter in prizes and competitions in philanthropy, beginning with the Make It Your Own Awards, which was widely acknowledged as the first time a foundation has allowed the public to play a role in grantmaking decisions. The panel also featured a lively discussion on incorporating the principles that made one successful in business to their philanthropic endeavors.

Our chairman, Steve Case, joined Salesforce.com CEO Marc Benioff and tech entrepreneur and academic Vivek Wadhwa for a panel on “Adjusting to the Tech Revolution: Surfing the Wave or Swept Away?” moderated by Dennis Kneale. In a spirited conversation, they examined how industries and consumers navigate the tech revolution as it snowballs through all aspects of society, from our personal lives to business and banking, health, education, transportation and communication.

Steve also joined Bonin Bough (Mondelez International), Ryan Kavanaugh (Relativity Media) and Lynn Tilton (Patriarch Partners) to guest judge a fast pitch competition, hosted by Daniel Gorfine of the Milken Institute. Companies judged included Nightingale, Immudicon, VirtualU, Sension, and Skip. In this first-ever Milken Institute-Kairos Society pitch competition, student entrepreneurs from each company pitched their concepts in front of a packed, pressure-filled theater. Congratulations to Catalin Voss, selected by the audience as the winner of the competition.

Watch Jean and Steve’s panels and the pitch competition from the Milken Global Conference online at the links below. Check out more from the Milken Institute online HERE.

Weekly Roundup

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Here at the Case Foundation, we are always on the lookout for what’s disruptive in the social sector. Each week, we’ll share the latest new and information–whether it’s about a fearless organization doing great work, a breakthrough development that impacts communities or a new set of survey results—to help you keep your finger on the pulse of what is ticking across sectors. This week, the staff shares what we are reading and other inspiring stories that should be on your radar.

Have a story of your own to share? Leave us a message in the comments below or tweet at us @CaseFoundation.

Impact Investing: Show me …the data

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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.

Sean Greene joins the Case Foundation as Entrepreneur in Residence

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Since our recent recession, I have been continually reminded that there is no amount of philanthropic or civic investment that can replace a robust economy and citizens hard at work. That’s why both personally, and through the Case Foundation, we have long supported entrepreneurial initiatives that both help people find and create jobs or harnesses skilled volunteers to increase community capacity. From our investments in A Billion + Change and Give an Hour, tapping professionals to meet critical needs; to our work with the U.S.-Palestinian Partnership, expanding economic and educational opportunity in the West Bank; and most recently our support of the Startup America Partnership to develop entrepreneurial ecosystems here in the U.S., we have become firm believers in investing in efforts that help people invest in themselves and enrich the communities around them.

As a foundation that is constantly looking ahead to new ways we can support entrepreneurial efforts, and for opportunities to weave entrepreneurial principles in everything that we do, we’re thrilled today to announce the addition of a new Senior Fellow who will help us do just that – Sean Greene, who was most recently with the Small Business Administration, overseeing its innovation efforts and funds, including the $19 billion SBIC program and the $2 billion SBIR program. Sean is also no stranger to entrepreneurship, as a former CEO and investor himself having had many business wins, most notably being the founder and CEO of Away.com, an online travel company that he sold to Orbitz. Sean’s deep understanding of the opportunities that lie at the intersections of business, government and philanthropy will accelerate and enrich the strategies being tested by us and our partners.

In addition to helping us evaluate and refine our efforts to revitalize communities through entrepreneurship, Sean will join Senior Fellow, Sonal Shah, to play a key role in our new efforts to identify new approaches to inspire, educate and mobilize capital in the impact investing space. As traditional sources of capital in the social sector become harder to obtain, but needs for social services and civic innovations soar, we have to find new solutions and new sources of both capital and talent. We’re excited about the potential for impact investments and impact entrepreneurs to help fill that gap in a significant way. And, Sean’s unique experience will undoubtedly help us identify the right paths – quicker and smarter.

You can read more about Sean and his new role in today’s press release, and we hope you’ll join us in welcoming this outstanding public servant and accomplished entrepreneurs to the Case Foundation team!

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