Impact Investments

Public and Private

and everything in-between(Philanthropy & Nonprofits)

Brian OShaughnessy, Founder

Community Impact Strategies

communityimpactstrategies.com

Why Should You Listen to

Me?

Introduction & Background

What is Impact?

1. Data and measurement concept

2. Centered on financial efficiency and results

3. Being used by an expanding collection of private sector stakeholders

4. To advocate for new ways to improve population results in a fiscally responsible manner

Major challenges?

1. Define and Measure Results

2. Capture Data

3. Challenge the Status Quo (public sector)

PLUS: Everything cannot be measured

Why Do We Care

So Much

Today?

$ MONEY $Less Revenues

+More need

+

Increased Fiscal Concern Government spending 7%-45% of GDP

( Philanthrocapitalists/Tea Party Influence)

Where is Impact Being Created?

1. Social Enterprises

2. Impact and Social Investments

3. Philanthropy

4. Preventive Social Services

Social Enterprises/B Lab B Lab and Benefit Corporations

B Lab is a 501(c)3 nonprofit that serves a global movement of entrepreneurs

using the power of business to solve social and environmental problems.

Three Initiatives

1. Good Companies: Certification as a B Corporation

B Corps are certified by the nonprofit B Lab to meet rigorous standards of social

and environmental performance, accountability, and transparency.

2. Legal Infrastructure: Passing legislation (passed in 20 states, introduced in 14 more including CT)

3. Impact Investments: GIIRS (Global Impact Investment Rating System)

Impact & Social InvestmentsEvaluation Tools & Frameworks

GIIN Global Impact Investment Network(Developed IRIS)

GIIRS- Global Impact Investment Rating System (GIIRS)

SROI (developed by REDF)

Impact Funds

High Net Worth Investors

Acumen/Calvert Foundation

Impact Assets

Root Cause

Philanthropy

Philanthrocapitalists

Wealthy and/or business backgrounds eager to measure social returns. Demographic of philanthropic and nonprofit management is more business oriented (Gates, Arnold, Buffet, KL Felicitas).

Large National Philanthropic/Business Organizations Rockefeller

MacArthur

Markets for Good (Gates & Hewlett Foundations)

Calvert Foundation

New Professions & ToolsSocial Impact Analyst

Social Impact Analysts Association

http://www.siaassociation.org

Tools and Resources for Assessing Social Impact (TRASI)

http://trasi.foundationcenter.org/

Impact Investment Data Management & Software

PULSE

PULSE is a data management program developed by Acumen Fund in 2006 to help impact investors collect, manage, and report impact data from their portfolio companies. IRIS is integrated into PULSE, providing a flexible way for users to track performance for a relevant set of metrics from the IRIS catalog.

Preventive Social Services

Social Impact Bonds/PFS

Human Capital Performance Bonds

Early Childhood/Reentry/Workforce Development

Preventive Healthcare

Collective Health and Fresno Asthma

Return on Taxpayer Investment/WSIPP/Pew Results

First

Impact has profound power as a tool

It serves as a bridge for two traditionally partisan perspectives:

One liberal

One conservative

IMPACT combines

The liberal belief that we can

address root causes to combat

social issues

+

The conservative belief that this

is the most fiscally prudent

course of action.

IMPACT

Has the ability to

create a common

language for our hyper

partisan world

The exciting thing about social-impact bonds is that there is a direct linkage between making peoples lives better and financial return, and thats a powerful concept.

Social Finance Press Release

Long Term Trend

The revenue/need

crisis is a

threat to public

order.

State Budget Crisis Task ForceNY, NJ, CA, IL, VA & TX

Ravitch Report

More Need

Population Results are getting worse

National Median Income decreased 5 consecutive years

Unemployment & Underemployment

Workforce Participation % continues to decline

Generational Poverty & Lack of Economic Mobility

Health Outcomes and Healthcare Expense

Academic Achievement Gap (Domestic/International)

Government Revenues are Down and

National Median Income is Down

Less Revenues and More

Need

Question?

Are there new ways to improve

population results?(With the same or less money)

Social Impact Bonds

Also known as a Pay for Success Contracts

1. A contract with the public sector (government);

2. With a commitment of government to pay for a specifically defined improved social outcome(s)

3. That results in public sector savings.

Because the services are provided prior to any payment, financing is required and is presently contemplated as being provided by investors.

Components of Social Impact Bonds/PFS

1. Proven Preventive Service

2. Avoidance of Cost: What is being Prevented (Incarceration, special education costs, homelessness, unemployment, foster care, juvenile

justice)

3. Measurement (Did 1 cause 2)

4. Financing

Our foundation is looking for investments around

evidence-based policymaking, so the structure of the deal

was very important, Josh McGee, Arnold Foundation

Social Impact Bond Programs

UK Peterborough Prison- Reentry

New York City Rikers Island-Juvenile Reentry

Massachusetts -Juvenile Justice Roca

New York State Reentry/Workforce

Utah- Early Childhood Special Education

Fresno Asthma and Collective Health

Connecticut

Need v. Revenues

Funding of Social Services

Quality of Data

Preventive Social Services & Social Impact

Bonds

NEED Poor getting poorer: Connecticut is the only state in which the

income of the poorest 20% of families has declined since the

1980s (by 17%, compared to a national increase of 11%).

Poverty increase from approximately 6 to 11% in 10 years.

45% increase in those approaching poverty over the past 20

years (200% of the FPL).

REVENUES

Constricting GDP last 2 years (worst in the

nation), i.e., our economy is getting smaller

Habitual budget deficits

Through 2009, worst private sector jobs market

for prior 20 years

Funding of Social Services in

Connecticut

$1.3 billion annually to nonprofits (over 5%of budget).

Add agency spending and over 50% of budget is for Social Services

Urban Institute study highlights

66% of Connecticut nonprofits were

operating with salary freezes (worst

in the nation)

Percentage with reported deficits

(5th worst)

Severe problems with late payments

from the state (3rd worst)

Connecticut Issues With Data

CT21 Report /March 2013

There is no overarching health and human services strategy.

Each agency has different data collection and definitions

Population results are impossible

What is Happening in Connecticut?

Social Innovation Financing Statute

Benefit Corporation

RBA

Results First

You Cannot get Blood From A Stone

We all need to understand that if we as a social sector lean on nonprofits to provide

data they simply dont have the

infrastructure to provide, what well get is

not better data in fact, we may get data thats worse.

Laura Quinn, founder of Idealware

We Need Shared Data Standards

Shared Measurement Systems: Developing a shared measurement system is essential to collective impact. Agreement on a common agenda is illusory without agreement on the ways success will be measured and reported.

John Kania & Mark Kramer, FSG Consultants

Stanford Social Innovation Review, Winter 2011

Where is this all going?

More need, less revenue.

Growing dissatisfaction with size of

Government

Increased Expenditures and Poor Results

US Govt. Spending is larger than the GDP of

every country in the world other than China

Total Government Spending Federal and State

From 1900 through Present

Analogy to the Great Depression

Disclosure

Securities Exchange Acts of 1933 and 1934

Common Standards

Adoption of GAAP

What resulted from a lack of faith in US Capital Markets?