How to Make Employee Giving Simple with CSR Software

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By: Nita Kirby, Director of Client Solutions at CyberGrants

Whether it be child or animal welfare, medical advancements or worldwide atrocities, there is something out there that inspires action from you. Because there are so many causes to support, often a few that a majority of employees have some connection to, you would think the feeling of care would result in action. However, anyone who has been close to the creation or management of a corporate social responsibility program can agree that participation is quite often the leading challenge in success. Most of the time, the problem isn’t lack of empathy.

For example, one of the best places to discover new or donate to nonprofits is at the cash register of a grocery store. We’ve all, at least once, completed a shopping trip only to be prompted by the cashier to add a donation to the total. The presentation is simple. The process is easy, requires no more steps than the original task was going to take and can even add the bonus of exact change. Many charities collaborate with local stores to run these programs because of the simplicity, which almost always equates to great participation.

Integration with Payroll

Communication is one of the best contributions technology has made to business. That’s not just email and instant messenger either; it’s how communicative two different tools can be with each other and the new dynamic their integrations can bring to an old process. For example, your company may have been using the same payroll system for years with a little updating, but generally the same process.

CSR software takes that system and adds the dimension of easy employee giving. Similar to the grocery store, a payroll system that integrates with a CSR software will allow your workers to donate to your program as easily as they can check their pay stub. The employee will not have to learn a new program, process or remember new account information. Similar to the one tab offer of the cashier, employees have one login and all their financial and budget information is in one place. Tack on the fact that CSR software can maintain a record of all charitable donations to refer to in tax season.

One Stop Communications

A large challenge for CSR participation is communicating to employees that it’s even happening in the first place. While some employees are observant enough to notice the poster hanging in the breakroom, others would prefer to hear about company programs directly from their manager (38%). One report found 43% of surveyed employees preferred to learn about philanthropic opportunities through internal email or newsletters.

No one avenue works for all employees or all organizations. The first step is understanding your culture, but the next is covering more than one base. CSR software can make communicating a program or project in multiple ways easy while also helping management facilitate employee giving program discussion. Digital CSR tools can link to company calendars for reminders, integrate with the intranet and provide links for easy sharing via email or to be printed on tangible flyers. Employees can go from conversations with management right to the program where donations can be made with a click of a button.

On-Demand Access

Technology has also gotten a reputation for it’s never being “off,” and while that’s not always the best thing, there’s no denying its convenience. Hate them or love them, push notifications are one of the best reminders for an upcoming bill, calendar event or weather forecast. While not all are welcome, on average, people are excited to see those little pop ups that help avoid paying a late fee or missing a new deal at their favorite shop.

While it might not be the best plan to enact push notifications in your CSR communication plan, the lesson remains that people like gentle reminders with little pressure in places they feel they have the power to choose. Today’s CSR software can be accessed from any device including mobile, which grants employees the flexibility to participate wherever there is internet access. Again, the reason the consumer giving example mentioned before is so successful is it’s convenient to the patron. CSR software offers that convenience.

Technology and CSR software is responding to today’s workforce and that’s exactly why participation and opportunity has the potential to grow at amazing rates. The possibilities for better, more successful employee giving programs are only limited by a company’s understanding of its workforce’s culture and the priority the organization places on better communication and interaction.

What are some of the ways you think CSR software can improve employee giving? Share your thoughts with us in the comments below!

About Nita Kirby:

Nita Headshot

Ms. Nita Kirby serves as Director of Client Strategy and oversees CyberGrants’ strategic service management with a majority of its corporate clients. In addition, Nita is responsible for ensuring the success of philanthropic programs for many of CyberGrants’ key customers and oversees process improvements for how the company manages its client’s programs and relationships. This effort includes detailed benchmarking, employee engagement methodologies and financial modeling. Nita serves on numerous non-profit and volunteer boards and continues to stay engaged with the local non-profits community. Nita has worked for one of largest non-profits in the US, where she provided extensive support to some of the largest employee giving programs in the country.
With a BS in Business Administration and vast experience in program development and administrative protocol, this experience has allowed Nita to incorporate best practice processes in each of her client engagements and focus on deliverables and client satisfaction. In addition, Nita is a Lean Six Sigma certified Green Belt providing her with expanded insight into how processes affect outcomes.

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Healthy Leadership

49537763 - the word "pope" written in vintage ink stained wooden letterpress type in a partitioned printer's drawer.

Luxembourg, December 14, 2016  Healthy Leadership refers to a method and expresses an ambition. Health can be understood as an equilibrium, whereas sickness is telling the story of imbalances, broken ties and disruptions. If leaders are in charge of an organisation, they are responsible for the well-being of that living organism as well.

Business is not only about products, services and outputs, it’s about people, processes and production as well. Great leaders are strongly related to their workers and the production processes. They can “feel” their company and they feed it. They nurture it and care for it, not because of profit first, but because of their love for the venture they have created or operate.

The ambition of healthy leadership can be compared to the ambition of healthy people, healthy communities or a healthy environment. Health is an evolving state in our hands. Deteriorating it is easy and quick. Maintaining health is a matter of motivation often triggered by anxieties to fall ill. Reestablishing health, by contrast, is hard work. It requires  skills and outside support, most of the time for a longer period. World Health Orgainzation (WHO) and many Governments are promoting prevention as the best way to keep healthy.

There are many fitness-industries and approaches for healthy people and many workshops for healthy leadership. Whether you attend them because you feel obliged, or because you are afraid of negative shortfalls, or because training brings pleasure to you, doesn’t matter at first. Taking a second look at your motivation nevertheless changes everything you do. A successful fitness approach must fit with your personality to be effective!

Looking for new and innovative methods in the Leadership arena, brought me — as many others — to Pope Francis. He is perceived as a special Leader being the CEO of the biggest organised religion, the first international church structure and the most prominent opinion leader in social moral affairs.

Remember, when he took over from Pope Benedict XVI, the boat was in turmoils: finance scandals and priest abuses all over the place were the top news. More control and more of the same strategies stood against a new way of leadership on a ship which looks at nearly 2000 years of history.

Pope Francis first convinced because of his personality. He bowed to the faithful first and only after receiving their blessings and prayers he provided his blessing. Many observers and commentators describe at length both his humbleness and his resolve, but they overlook his method

But why is it so hard to see the method a contemporary leader uses on a daily basis? That is without any doubt because you normally do not see any methods in action. We are trained to look at people, at their input and their output. But what happens in people we do not see? What happens in leaders often remains a secret.

However, Pope Francis makes no mystery about his Leadership principles. He has even written down his four principles in his open public letters, like the Joy of The Gospel (Evangelii gaudium).

In my research and new book I condensed his public, but undetected  Formula into an octahedron for many to use in their daily leadership challenges. As everything in leadership starts with self-leadership I tested his formula for patients to find out, that it works as a tool for healthy self-leadership in critical situations.

I tested it for the healthcare workers, like physicians and nurses, to show that it also works for those at the front-end of healthy leadership. And thirdly, I applied it to the governance and management structures in healthcare, where again it worked.

But why should anybody deal with this Formula provided by a Pope? And why should one enter into a Formula tested for Healthcare, when you are not working in that field? First, because one day you might be a patient. Secondly, because Healthcare is only an example: you can replace sickness by crises and healthcare by crisis-management.

Thirdly, because you want to discover a successful method. Fourth, because as all great methods, the Pope Francis Formula, works as an open-source code without any request to your belief: you do not need to be religious to use it, because the formula is a purely pragmatic one based on reason only. Finally, because it is an open didactic instrument for many different businesses.

Eager to discuss that Formula with you!

Erny


Erny Gillen, gesund geführt im Krankenhaus, Foto Lex Kleren

Erny Gillen, gesund geführt im Krankenhaus, Foto Lex Kleren

Erny Gillen, Dr. theol, is an international expert in ethics and leadership. He just published “Healthy Leadership in Healthcare. The Pope Francis Formula”. With his “Moral Factory” he accompanies leaders and managers personally when it comes to difficult ethical dilemmas or leadership issues. He taught ethics in Luxembourg and in Germany for more than 20 years and led Caritas in Europe and internationally, Church administration as well as  businesses in Luxembourg. Until May 2015 he was President of Caritas Europa and First Vice-President of Caritas internationalis.

Summary: Pope Francis uses a concise and specific Formula when it comes to ethical leadership. His Formula fits into an octahedron and I call it “Healthy Leadership” because it’s all about us and it doesn’t exclude anyone. The Formula is an open method for people who want to achieve their goals together with others.

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Video ReferenceDiscern & act 29 11 2016 © Erny Gillen  Twitter: @ErnyGillen and @moralfactory  

Facebook: erny.gillen LinkedIn: Erny Gillen 


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ENVIRONMENTAL PROTECTION TIPS FOR EARTH DAY AND BEYOND

Act Local, Think Global: Three Ways to Ignite Positive Environmental Change

 Arlington, VA – Friday, April 22, 2016 – In observance of Earth Day, the international conservation organization Rare is offering up three easy ways you can be a catalyst for global change.

The strain on the Earth’s natural resources poses an increasing threat to the well-being of both people and nature. Though people are often the source of these pressures, they also hold the solutions – and it all starts with behavior.

Salmon_for_sale1.  Ensure your seafood is sourced sustainably.

42% of people worldwide rely on fish as an important source of protein.

Most of the world’s fisheries are unmanaged and overexploited, and are in serious decline. This puts our food supply in jeopardy and makes ecosystems less healthy and more vulnerable to climate and other changes. A compelling action a single consumer can take is purchasing local, sustainably caught seafood. Check packaging labels, diversify your selection, and seek out seafood guides that list which fish that are caught and sourced sustainably.

Helpful articles on Sustainable Seafood:

2.  Organize or join a community-led clean up near waterways to prevent contamination to rivers, lakes and other fresh water sources.

 Freshwater ecosystems cover less than 1% of the Earth’s surface, but are home to 35% of all vertebrate species.

A healthy watershed, with its forests and unique biodiversity, provides water storage, regulates and filters fresh water and is critical to flood management to surrounding areas. By removing plastics bottles, bags, and other debris along the waterway, you ensure the watershed ecosystem remains healthy and productive.

Helpful Waterways Cleanup resources: 

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3.    Join a Community Supported Agriculture (CSA) and get to know your local farmer, what they grow, and how they grow it.Agriculture is one of the leading sources of water pollution worldwide.

Small-scale farmers often overuse fertilizer, pesticides and other harmful chemicals. This pollution leaches into streams and aquifers with dangerous effects, finding ways into wetland and river ecosystems. Community Supported Agriculture Networks are an easy and delicious way to engage in your community, and encourage others to adopt more sustainable behaviors. Ensuring that your food is grown locally and pesticide-free benefits the health of both people and nature alike.

Helpful Community Supported Agriculture resources: 

“We believe that conservation’s greatest challenges are the result of human behaviors. And, so too are the solutions,” said Brett Jenks, CEO of Rare. “Rare’s signature Pride campaigns inspire pride around unique natural assets and create a clear path for local change.  By empowering communities to seek their own solutions, the change tends to stick.”

Rare has been implementing proven conservation solutions and training local leaders in communities worldwide for more than 25 years.  Rare’s hope is to inspire people to take pride in their community, not just on Earth Day but all year, and suggests these practical alternatives to environmentally destructive practices.


 

Rare-Logo-FullColorABOUT RARE

Rare is an innovative conservation organization that implements proven conservation solutions and trains local leaders in communities worldwide.  Through its signature Pride campaigns, Rare inspires people to take pride in the species and habitats that make their community unique, while also introducing practical alternatives to environmentally destructive practices. Employees of local governments or non-profit organizations receive extensive training on fisheries management, campaign planning and social marketing to communities.  They are equipped to deliver community-based solutions based on natural and social science, while leveraging policy and market forces to accelerate change through programs such as Fish Forever.  To learn more about Rare.

 

Images: Creative commons license via Wikipedia and free stock photos 

Takeaways from the 2016 Latin American Impact Investing Forum

logo_FLII_completo1-1024x340By John Kohler

The most recent Latin American Impact Investing Forum (Foro Latinoamericano de Inversión de Impacto , or FLII) gathering, held in Mérida, Mexico, highlighted both the promise and remaining challenges of impact investment and social entrepreneurship in Latin America. Here are the top three things I took away from the 2016 FLII event:

  1. Latin American impact investing is gaining traction and evolving its own identity. The FLII attendees are very professional in how they’re forming, supporting, and investing in social enterprise in Latin America. They are also taking ownership of the FLII event and creating a vibrant, solutions-oriented conference. A precursor to FLII, Sustainatopia, was held in Miami with sessions primarily in English. With its move to Mérida, Mexico, FLII now presents a majority of sessions in Spanish. This is important, because impact investing needs to be locally driven. Some in our sector like to say, hemispherically, that we want to encourage a South-to-South conversation around solutions, rather than holding the North-to-South dialog that has been the norm until recently.

It was also obvious at FLII that the idea of impact investing is gaining momentum throughout the region: About half of those attending in 2016 were new to FLII, which bodes well for the continued growth of impact investing in the region.

  1. Although the infrastructure is growing and progress is happening, FLII felt very Mexico-centric. Yes, there were people there from Guatemala, Chile, Argentina, Bolivia, Peru, and Colombia, but most of the action is from Mexico. Perhaps part of that imbalance was because the gathering was held in Mérida and because it was organized by New Ventures Mexico. But for the entire Latin American region to flourish and to benefit from social investing, the FLII message needs to have a more regional reach.

The conference organizers tried to hold a FLII event in Columbia last year, and they also tried to do one in Guatemala. Unfortunately, both were too small, and one-time events lack staying power and continuity. It’s good news that the premier Latin conference has moved from the United States (Miami) to someplace that’s more accessible to Latin Americans. But I would love to see FLII extend even further.

  1. At this year’s FLII, there were more people from countries that have been largely isolated in the past, specifically Chile and Argentina. Until now, the efforts of those countries have not melded with the rest of Latin America. The South American countries showed some nascent activity in the past, but I see bigger sparks being generated. I’m hopeful that with greater South American participation, FLII becomes truly a southern hemisphere effort for all of Latin America.

Beyond those three takeaways, I had one other observation of note, which is the flowering of new financing programs that leapfrog the whole idea of banks. One issue faced by many social enterprises in Latin America, especially agricultural or other seasonally based businesses, is that their income isn’t consistent throughout the year. As a result, it’s difficult for these enterprises to adhere to traditionally structured, monthly loan payments. The need for flexibility with repayment amounts and timing is a consistent theme across several Latin countries.

In addition, traditional bank loans are based on collateral, and many Latin American social entrepreneurs are women or farmers or others that have not had the ability to hold anything of sufficient value in their own names.

An example of an alternative approach is Variable Payment Obligation (VPO) financing, which I pioneered at Santa Clara University’s Miller Center for Entrepreneurship. Taking a page from venture debt mechanisms, and another page from microfinance aimed at very small-scale livelihood loans, the combination became VPO financing for social enterprises, in which payments are based on cash flow instead of collateral and fixed monthly payments.

At this year’s FLII, not only did a number of VPO financings take place, but there was a session where an investor and an entrepreneur talked together about their considerations as they went through the VPO financing process, as a way of teaching the rest of the investors and entrepreneurs in attendance how they might do it, too.

It’s clear that Latin Americans have quickly grasped both the opportunity and the depth of change that’s possible by embracing impact investing and by supporting social enterprises and entrepreneurship in their communities and countries. In the end, I came away from FLII feeling optimistic about the direction of impact investing and social entrepreneurship in Latin America.


John Kohler

John Kohler is executive fellow and director of impact capital, Miller Center for Social Entrepreneurship, Santa Clara University. He is the pioneer of a new impact investment vehicle – the Demand Dividend – that presents investors with a structured exit alternative to equity. Kohler will speak on a panel at the Second Vatican Conference on Impact Investing June 28 in Rome.

Entrepreneurs’ dreams of saving the planet being crushed by economic reality

Entrepreneurs _dreams of saving the planet being crushed by economic realityBy Guest Contributor Martin Boonham, Warwick Business School

(Opinion on Maximpact.com News) Environmental entrepreneurs are being forced to forgo some of their green ideals despite the historic Paris COP21 summit agreement to cut greenhouse gas emissions, new research has found.

The 1,000 largest companies alone are responsible for one-fifth of total global greenhouse gas emissions according to the United Nations Environment Programme, while a study by Duke University says the US needs to reduce emissions by 40 per cent by 2030 to reach the goal it agreed at Paris in December.

But attempts by start-ups to set up environmentally-friendly businesses are being stymied by money-backers, suppliers and customers.

The study found some environmental entrepreneurs become disillusioned after having to compromise so much to attract investors and clients.

Deniz Ucbasaran, of Warwick Business School, said: “Entrepreneurs passionate about green issues might need to be prepared for some soul searching as ‘enacting a brave new world’ through launching a new venture is unlikely to be without concession to others’ values.

“Attempts to ‘stand out’ by the entrepreneurs portraying their values and beliefs on the environmental benefits of the business are, in most part, counterproductive for gaining legitimacy from investors, suppliers and even customers or clients.

“Their ambitions to ‘break free’ and enact their ‘hopes and dreams to make a difference’ often need to be tempered by the realities of attracting investors and other stakeholders whose primary goal is making money and not environmental issues.

“This led to some entrepreneurs to question if it was all worth it as they had to compromise the scope of their ‘green’ ambitions.”

Professor Ucbasaran and Dr Isobel O’Neil, of Nottingham University Business School, examined six new ventures over four years to understand how they gain support and investment for their paper Balancing “What Matters To Me” With “What Matters To Them”: Exploring The Legitimation Process Of Environmental Entrepreneurs published in the Journal of Business Venturing.

They conducted 18 interviews with the principle entrepreneur as well as 24 interviews with individuals involved in the ventures including investors, customers, employees and suppliers and analysed company documents.

Professor Ucbasaran said: “First, the environmental entrepreneur’s own values and beliefs anchor initial decisions about how to gain support from investors, suppliers and customers: the ‘what matters to me’ stage.

“But they are then toned down as their attention shifts to gain support from investors and other stakeholders: the ‘what matters to them’ stage. Eventually, the entrepreneurs arrive at an approach that tries to balance ‘what matters to them and me’.

“Lastly, the lack of harmony, caused by this balance often leads to some feelings of demotivation, stress and even led some of the entrepreneurs to question their entrepreneurial ambitions.”

The research found the entrepreneurs were initially surprised by resistance to their vision of ‘making a difference’ and building an environmentally-friendly business, but the need to ensure the continued survival of their ventures forced them to adapt.

“They realised a compromise was needed to gain legitimacy in order to engage investors and stakeholders, attract resources, and in turn, improve the prospects of survival and longer-term success,” said Professor Ucbasaran.

“This saw the entrepreneurs shape their offering into one that was likely to be more widely accepted.”

But such a shift in perspective often conflicted with the entrepreneurs’ original ideals and led to feelings of inauthenticity and mental stress.

Coping strategies were developed to help, but Professor Ucbasaran said: “If left unresolved, these emotions might interfere with the entrepreneur’s well-being and the effective running of the business.

“We found being a successful environmental entrepreneur involves balancing both the external demands of investors, suppliers and customers while also remaining true to one’s own values and beliefs.

“However, we must offer a note of caution to entrepreneurs seeking to embed their values and beliefs into their businesses; balancing ‘what matters to me’ with ‘what matters to them’ is likely to demand less discussion of environmental or social change goals than perhaps hoped for.”


 

Deniz Ucbasaran joined Warwick Business School as Professor of Entrepreneurship in November 2010. She is also a member of the Enterprise Research Centre which was established in 2013 and seeks to act as the authority on entrepreneurship to guide policy makers.
Deniz’s research explores entrepreneurial activity (i.e., the identification and exploitation of opportunities for new value creation) at the level of the individual, the team and the firm.
Deniz has co-authored numerous books and has published widely in a range of academic and practitioner journals including Harvard Business Review, Journal of Management, Journal of Business Venturing, Entrepreneurship Theory & Practice, and Journal of Management Studiess.

 

Social Investors vs. Social Businesses: Who will win the struggle for the future of SRI investing?

little box boxer knocks out dad boxerBy Marta Maretich @maximpactdotcom

We all like to talk about how the social, responsible and impact (SRI) investing sector is growing—and current research indicates that it is flourishing, with more capital and a wider range of investors now entering the field.

All that is good—and it’s what we’ve all be working for. Yet if there’s one thing experience has taught us about deploying the new market approaches to generating social and environmental benefit, it’s that the detail matters at least as much as the big picture.

A closer look at the way the sector has developed in recent years reveals more than just growth: There’s been an important shift in the story we’re telling ourselves about SRI investing. A movement that began with an emphasis on social entrepreneurs and social businesses serving the needs of beneficiaries has become preoccupied with investors and the mechanisms of the marketplace. What caused this shift to happen? And is it necessarily a bad thing for SRI investing?

Changing the subject

As we’ve tracked the growing body of research documenting the exponential growth of the SRI marketplace, we’ve noticed something strange:

Once most of the literature in the field came from social investors, like Root Capital, and accelerators, like the Skoll Foundation, who were actively engaged in developing socially beneficial businesses.

Today the focus has shifted away from social businesses and their beneficiaries. Instead, sector bodies, like the WEF, the G8 Social Impact Investment Taskforce, UK SIF and USSIF, as well as big financial advisory firms (EY, Deloitte, Citi to name just a few), are turning their analytical lenses on investors and markets in an effort to demonstrate (and, in some cases, capitalize on) the potential of the new SRI investment approaches.

In a sector that has its deepest roots in social entrepreneurship, microfinance and microlending, this change may seem surprising, even worrying. Why has it happened?

1. Investors demand attention

First, investors are driving the market for SRI investing and this has lead financial firms and other analysts to study them, and their investment habits, more intensively.

As one example, a USSIF trend report for 2014 tells us that: “Money managers increasingly are incorporating ESG factors into their investment analysis and portfolio construction, driven by the demand for ESG investing products from institutional and individual investors and by the mission and values of their management firms. Of the managers that responded to an information request about reasons for incorporating ESG, the highest percentage, 80%, cited client demand as their motivation.”

This is one more piece in a growing body of evidence that shows personnel in financial firms finally waking up to the fact that their clients are interested in SRI investing. At the same time, they’re realizing that the ability to use these approaches is likely to be an important selling point for their businesses in the future.

This realization comes rather late in a sector that saw small, socially concerned family offices, like Omidyar, pioneering the practice of impact investing back in 2007. But with a new generation of private investors, led by wealthy young millennials and women, now asking for SRI investment options, the message is finally getting through. Mainstream financial firms are focussing more of their attention on socially-motivated investors and promoting SRI offerings to attract what they now realize is a growing client base.

2. Mainstreaming forces a market focus

The second reason for the focus on investors and markets has to do with the recent raft of mainstreaming initiatives for social investing.

In an effort to draw larger investors into the SRI marketplace, these initiatives sought to gather sector information, such as existed, into reports aimed at larger investors. The reports were designed to demonstrate that social investing is, in fact, a real market.  They presented their case in the language of the mainstream and included statistical data, graphs, tables and pie charts—the works. Everything about them was engineered to convince the heavy hitters that SRI investing was something they could engage in securely, responsibly and even profitably.

Several of the most important reports in this vein have been produced by the WEF as part of a series aimed at large institutional investors, including insurance firms and pension funds. The G8 Social Impact Investment Taskforce and its various working groups also produced material aimed at the largest investors including national governments thinking of entering the SRI market.

All this is a world away from the early literature on social investing, which emphasized its impact on social entrepreneurs and beneficiaries, often people in emerging economies and those at the bottom of the pyramid.

Yet the motives behind the mainstreaming push were good. They reflected the commitment of a few far-seeing financiers, like Sir Ronald Cohen, who realized the potential for scaling social and environmental benefit through using the powerful mechanisms of global finance. And, to judge from the buzz around ESG at Davos this year, the approach has been successful in getting mainstream finance to take SRI more seriously.

Aren’t we forgetting something?

This suggests that the shift of focus to markets and investors was needed to get bigger financial players to engage with social benefit. Yet in other ways the rush to mainstream may have been a distraction from some of the most important challenges still facing our sector.

These include fundamental questions about the role of business in society and the role capital plays in supporting the development of companies.

The mainstreaming of SRI investing, though it may be beneficial, doesn’t challenge the status quo behind the international capital markets. Rather, it works with the prevailing forces of global finance in an attempt to turn at least some of them in a more favorable direction. This approach is pragmatic—and its unthreatening nature partly accounts for its popularity at places like Davos—but for some in our sector it doesn’t go far enough toward bringing about a permanent change to the way we do business.

On a more down-to-earth level, the recent focus on investors and markets leaves out what many think is the most important element of all in this equation: Socially beneficial businesses.

We have a lot of experience in operating for-profit businesses and non-profit organizations that deliver social benefit, but socially beneficial businesses are still a relatively new kind of animal to us. Despite progress in the sector, we still have a lot to learn about how to operate companies that are financially sustainable and able to deliver extra-financial benefits at the same time.

What really matters

The commitment to pursue benefit alongside profit, when genuine, touches every aspect of a business. Leadership, governance, operations, compliance and reporting (among other things) are all affected and we need to understand much more about how this works in practice. The influence of investors, especially those that take an active role in governance, is yet another factor, still little studied or understood, in the development of social businesses.

With so much still to learn about how to “do” socially beneficial business, the recent emphasis on investors and mainstreaming markets can seem misplaced. However, it makes sense in one important way: Only by doing more socially beneficial business will we ever have a chance to find out what really works and develop effective models. And only by attracting sufficient capital will we have the opportunity to do more socially beneficial business.

Time to re-focus—again

So, should the story of our sector be one of global financial markets and canny investors, or should it be one of heroic social entrepreneurs and white-hat social businesses?

The answer is: It needs to be both.

But now that the larger markets and a more ample pool of investors are showing interest, it’s time for the sector to shift its focus back to actually making socially beneficial businesses work across a range of global contexts.

It’s emerging that one of the dangers of mainstreaming is that social businesses can find themselves forced back into the mold of regular companies with no social benefit goals. To avoid this, they need clearer roadmaps for how to manage and develop their companies, especially as they grow to scale. Investors and markets also need to find better ways to engage with socially beneficial businesses in order for the partnership to work successfully.

More research in both these areas is needed. The question is: Who will do this work and so help write the next chapter in the ongoing story of socially beneficial business? Could it be you?

Taking an Integrative Approach to Impact Investment

By guest contributor Harald Walkate, Head of Responsible Investment at Aegon Asset Management

Headshot of Harald Walkate

Harald Walkate is Head of Responsible Investing at Aegon Asset Management

In the last few years, great progress has been made in the area of impact investment. At first the exclusive domain of foundations, family offices and SRI-driven investors, it is now gaining recognition in mainstream finance as a tool that will help tackle social problems while realizing required investment returns.

This is a welcome but also necessary trend, because for this approach to have the impact (no pun intended) our community desires, much larger dollar amounts will need to be allocated. This will require the unlocking of the vast capital pools held by that mainstream sector — pension funds, insurance companies and sovereign wealth funds around the world. As Antony Bugg-Levine and Jed Emerson write in their book Impact Investing (2011), the key will be “determining where the high-potential capital pools sit, understanding how to motivate their managers to redeploy them, and supporting them do so.”

Exact numbers are hard to come by, but speaking in ballpark terms, today investment has reached the tens of billions. To seriously move the needle, we need to start thinking about how to engage the hundreds of billions, if not trillions, held by those asset owners.

For this, several things still need to happen.

Understanding the mainstream investor

First, the impact community should better understand this “mainstream” financial sector. It should recognize that, however socially-oriented and sustainable these organizations might be, or claim to be, their first priority is matching their investments to the liabilities on their balance sheet.

This is as it should be: whether for-profit or not, this is what they were created to do in order to pay out pensions and insurance claims at some point in the future. This means most mainstream investors take a hard-nosed and no-nonsense approach to asset management, where strict return requirements apply, volatility is thoroughly analyzed, difficult questions will be asked about liquidity, and regulatory requirements need to be scrupulously fulfilled.

Also, for more than a few asset owners, established asset classes such as equity (not even to speak of private equity or venture capital) are totally out of the question. The impact community needs to understand that, while this restriction often poses barriers to certain impact investments, these barriers are there for good reason and will not go away in the short to medium term.

Understanding this will help manage everyone’s expectations of what mainstream finance can do in impact investing. It will also help the impact community to become true “mainstream messengers” and to pitch their investment opportunities more effectively to institutional investors.

Looking for impact opportunities within existing portfolios

Second, asset owners should take an integrative approach to impact investment, looking for impact opportunities within existing portfolios and asset allocation processes, not in addition to them. The recent report Allocating for Impact by the Asset Allocation Working Group of the G8 Social Impact Investment Taskforce is enlightening in this respect. It provides an excellent framework for doing exactly that: “the traditional framework for portfolio construction can be used as the guide rails for making what an investor considers to be a reasonable allocation to impact investments.”

Working for a company that has applied this approach, I can vouch for its effectiveness.

It is worth pointing out that this also means the impact community should not ask asset owners to commit to a certain, separately-labeled, “impact asset allocation”. While such a commitment could have the positive short-term effects of putting the topic on the table, focusing minds with a target, and bringing additional billions into the impact pool, it will not unlock the larger amounts that are required. Separate allocation reinforces the still-common view that sustainable investments are not “real” investments but rather something for the CSR and PR people that should come out of marketing budgets. Finally, there is the risk that these asset owners, feeling they have fulfilled their “sustainability obligation”, will not look for further impact opportunities in their broader portfolios.

Getting the message to into the heart of mainstream institutions

Third, and most importantly, asset owners and asset managers need to get to work with the type of analysis described in Allocating for Impact. This is the hard part.

You’ve heard the expression “good strategy is 2% thinking, 98 % execution.” In this case, the thinking work has been done for us by the Asset Allocation Working Group, but the execution requires individuals within pension funds, insurance companies, asset management firms and sovereign wealth funds to take action.

But how do we reach them with this message? This is no mean task.

For a typical pension fund, insurance company or asset management firm, you need to imagine a very large, often somewhat bureaucratic, organization, with tens or hundreds of exceedingly specialized portfolio managers, analysts, actuaries and risk & compliance managers. They follow highly detailed and thoroughly documented investment mandates and procedures to allocate their capital through analysis and investment decision-making. Making even very minor changes to these complex systems is a significant task.

These people are inundated with information: research generated by internal research desks or external brokers, industry reports, academic papers, actuarial tables, continuously shifting regulatory demands, news nervously flashing across their dual screens. What are the chances they would find the Allocating for Impact report, let alone read it? My estimate is close to zero. The chances that they will take action based on its findings are even more remote.

No, bringing change will require positive and proactive action by the impact investment movement to approach individual CIOs, specialists on the fixed income or research desks, people responsible for asset allocation decisions, or other influential individuals within these organizations. Note here that people without the fancy title, but with an open mind and a creative bent, sometimes wield the most power to make little changes to big systems. They need to be persuaded to start discussions in their organizations about applying the Allocating for Impact analysis across their entire portfolio and to integrate it with their investment processes. Only by doing so will impact investment find its formal place within institutional portfolios.

Who will step up to this challenge?

About the author: Harald Walkate is Head of Responsible Investment at Aegon Asset Management and founder of Insurers’ Investors on Impact Investment (IIII). He has a longstanding interest in sustainability issues and has been specializing in responsible investment and ESG issues since 2009, when he joined AEGON Asset Management (AAM) as Head of the Corporate Office. Harald has worked on a in a variety of initiatives around strategy and governance, including the implementation of a Responsible Investment Framework.  A particular area of interest is engagement and ESG integration for credits. A former corporate attorney, Harald also has significant experience in international business development (M&A, joint ventures, greenfields), in particular in the Central & Eastern European region, and holds a law degree from Leiden University, the Netherlands and an MBA from the University of Chicago Booth School of Business.

What the Impact Investing Sector Needs Now

By Tom Holland, Founder and CEO of Maximpact

The impact investing sector is reaching a critical moment in its evolution.

It’s expanded hugely in the 18 months since Maximpact came on the scene, attracting attention from world leaders, governments and mainstream investors.

New funds are launching almost daily while more mature funds are developing sophisticated investment philosophies, models and methodologies.

All this is healthy; it’s what we’re all working for. But to continue this healthy growth, impact now needs several key things:

Increased collaboration:
Despite the growth in the sector, many parts of it are still working in separate silos. Activity is up, more capital is invested, but the sector is still very fragmented. Many impact organizations don’t connect with the wider impact community or take advantage of the many possibilities it offers. There’s nothing wrong with specializing in your area, but impact investors need to adopt a big umbrella approach and do more to collaborate across organizations, regions, sectors and disciplines.

Diversity:
There are lots of different impact investing models out there now. Instead of spending our time debating definitions, we need to embrace this diversity and use it to our advantage. Quality is important but we shouldn’t assume rigid standardization is the only way to achieve it. A wide range of approaches gives investors options and offers multiple ways to tackle problems using impact capital.


Greater efficiency:
For impact fund managers, sourcing impact deals is still a very time-consuming process. A fund manager may have to review 100 deals to find 2-3 that are right for him; that’s highly inefficient. At the same time, an impact entrepreneur may have to take her pitch to many, many funds before she finds finance. This is a huge amount of time and energy that could be used building the business and doing good for the planet. The sector needs to find ways to make this matching process more efficient so that more deals can be done.


More money:
The final thing the sector needs is, of course, more money. We’d all like to see increased amounts of capital invested in the right places; and by the “right places” I mean in businesses that produce results for a triple bottom line. It isn’t just large cash infusions that are needed, but a whole range of different levels and types of investment by individuals as well as institutions. Crowdfunding will play a role, making it possible to deploy very small amounts of capital for good, so will large-scale investing by governments and major financial institutions.

The points on this wish-list are interdependent. Only by making deal flow more efficient; and ensuring diversity as well as quality across the impact sector; will we be able to attract the volume and variety of capital that will really make a difference. Collaboration, the first item on my list, holds the key to resolving the issues around the others: efficiency, diversity and capitalization.

At Maximpact we try to practice what we preach when it comes to developing sector capacity and this starts with a commitment to collaboration. Our platform is designed to encourage collaboration among users and we welcome opportunities to work with other parts of the sector ourselves; in fact, we will be announcing some exciting new collaborative and innovative partnerships and alliances in the near future.

There’s still much more to do, but we are looking forward to seeing how the developing sector meets its new challenges; and to playing an active role in finding the solutions we’re all looking for.

Image: KaidiPhotography

Seven Steps to Allocating More of Your Portfolio to Impact

Guest blog by En Lee and Sam Lindsay

For many investors, impact investing has remained largely confined to private investments. For this reason, impact investments may still account for only a small proportion of many portfolios.However, with new opportunities for impact investing now emerging across different asset classes, investors are beginning to allocate more of their assets to businesses that generate social and environmental outcomes. To encourage this move, the Investor Team for the Impact Investing Exchange Asia (IIX Asia) has come up with a simple 7-step process that helps investors and advisors assess investment portfolios and begin the process of shifting the emphasis in the direction of more impact investments.Step 1: Define Core Values and Mission

  • Identify core values, mission, country and sector preferences
  • Understand the motivation (e.g. preserving family legacy or instilling values in the next generation)

Step 2: Identify Target Impact Areas and Role of Investment

  • Identify your target outcomes and objectives (improving healthcare, empowering rural women through education)
  • Define the risk/return profile of your investments (wealth preservation, commercial returns etc.)

Step 3: Integrate Impact Allocation

  • Determine allocation across asset classes: cash, fixed income, public/private equity, real estate…
  • Distinguish between philanthropic and investment capital in the portfolio

Step 4: Evaluate and Select Investment Opportunities

  • Determine which investments should be non-impact, mission-related and mission-driven
  • Direct investments (e.g. private equity, debt, hybrids etc.)
  • Indirect investments (e.g. funds, funds of funds etc.)

Step 5: Implement a Strategy

  • Identify potential impact investment opportunities (e.g. by using a impact accelerator such as Impact Partners or a deal site like Maximpact)
  • Commence due diligence, structure investment, execute and close transaction and if necessary, post-deal monitoring (specialists can assist in these areas)

Step 6: Monitor, Analyze and Report Results

  • Measure financial, social and/or environmental returns
  • Insist on impact assessment report from a reputable assessor (professionals such as Shujog Impact Assessment can help)
  • Identify a suitable impact methodology for the identified outcomes (e.g. GIIRS)

Step 7: Consider Changes in Objectives, Strategy and Managers

  • Revisit country and sector focus
  • Evaluate investment financial and social/environmental performance
  • Assess asset allocation, risk/return profile and intended social and environmental outcomes

A version of this blog was first published in the IIX Asia digital publication, Impact Quarterly.


About the Authors:
En Lee is Co-Head, Asia Pacific for LGT Venture Philanthropy, a global impact investor supporting organisations with outstanding social and environmental impact. He is the former Director and Head of Investor Team at Impact Investment Exchange Asia. Sam Lindsay is a consultant for the Aligned Network and a former Investor Team Member at IIX Asia.


About IIX Asia:
Impact Investment Exchange Asia (IIX Asia) is the world’s first public trading platform dedicated to connecting social enterprises with mission-aligned investment.


Image credit: 123RF

Impact Investing 2.0 and the Rise of Multilingual Leadership Teams: An Interview with Jed Emerson

By Marta Maretich, Chief Writer, Maximpact.com

To mark the publication of Impact Investing 2.0, a watershed study of 12 successful impact investing funds, Maximpact talks to co-author Jed Emerson about “multilingual leadership” and why he thinks the very nature of leadership in impact organizations is changing.

Maximpact: At SOCAP13 you took turns with Cathy Clark, of CASE and Ben Thornley, of Pacific Community Ventures, to introduce different findings of your joint Impact Investing 2.0 report. You presented the part about “multilingual teams”. Why are multilingual teams so important to impact investing funds and why are they so interesting to you?

Jed Emerson: This is a really critical issue, first because all organizations need leaders and I think that there have been profound changes to the concept of leadership in the last ten to 15 years. In someways the Impact Investing 2.0 research is one more step forward in that progression and in other ways it’s a new way to think about leading impact organizations.

Maximpact: In Impact Investing, your seminal book with Anthony Bugg-Levine, you write about the need for a move from charismatic to collaborative leadership. Do you see evidence in this report that an evolution is taking place in fund leadership?

Jed Emerson: I think it’s clearly taking place! It’s interesting, because in 2000, when I published my first working paper on blended value during a faculty appointment at Harvard Business School, I talked about “mutant managers”. At the time I said we need these oddly genetically modified people that could play both/and rather than either/or in social investing.

The term “multilingual leaders” is probably a more accurate way to describe what these new kinds of leaders do; cutting across silos to draw connections between business and the social/development finance sectors.

For me this term holds special meaning because in some ways that’s the background I come out of. I started my career in social work and youth work and morphed from that into venture philanthropy, community development, sustainable private equity and then on into the areas I’m active in now, in impact investing. In an important sense, this is a very personal kind of observation for me.

Part of this insight was formed simply from watching the sector develop over time. I’ve spent the last 20 years observing both the field and its practitioners emerge into this “new” space. It’s been striking to see the finance-first people, who’ve come into the conversation with traditional banking and investment skills, needing to get up to speed with the social element of impact investing. Meanwhile, you see people coming out of the more traditional development backgrounds who are really sucking up the skill sets around investing and finance while recognizing that if your ventures are not sustainable on financial terms they won’t be sustainable in impact terms.

Whether you’re giving your profit to shareholders and investors or using it to build community equity, if you don’t know how to play this type of dual game you won’t be effective.

As we were going through the two-year process of first identifying the 12 funds we wanted to profile and then beginning the deep dive analysis and case study work, we did multiple interviews with investors and managers making use of the various products and strategies these funds were bringing to market. It was really interesting to see our research team as a whole realizing this issue of leadership was central to the success of the funds we looked at.

I was surprised myself because I think the focus of a lot of the discussions around impact investing in the last five to ten years has been “we need to improve our skill set around financial structuring”, or “we need people who have done deals who know how to invest”. We’ve heard a lot of this kind of rhetoric.

However, what we found during the course of the research was, no, in fact what funds need are more people who can play in the muddy middle, first, without losing track of the financial discipline that one needs and, second, without losing the focus on impact, which is the reason we’re applying those financial skills to begin with.

The research process reminded us what a lot of us already knew: that funds need both financial and impact discipline to be successful. On the other hand our research has shed new light on the idea of multilingual leadership. For us, at the level of fund investment teams, this means a kind of leadership that includes various individuals that speak the language of various parts of the practice.

The funds that have performed most effectively are those that have teams and individuals who can really play across perspectives and silos rather than coming in as representatives of a particular, individual perspective or silo.

Maximpact: Can you say more about how it works? Who is on the multilingual management dream team?

Jed Emerson: We speak of it as themes rather than directives in the report because in each case the constellation and makeup of the teams is different. Yet, at the end of the day, all of them reflect this multilingual orientation.

For example, you may have a fund with a leader who has more expertise on one side or the other but who has the ability to understand all the perspectives and the language of all the different silos he or she is drawing upon. The leadership team might be made up of individuals who are each fully multilingual, or be comprised of folks who come into the conversation with a deeper expertise in one or the other silos.

The important thing is that all team members have an understanding of the humility with which multilingual leadership comes forward. By that I mean an awareness of the fact that, though you may be really great in your area, you won’t be successful unless you’re able to take your expertise and marry it with that of the other experts in your team in an effective way. As individuals, it means seeing your own “blind spots” and working to establish a wider vision of where you yourself need to develop new skills and leadership language.

In the context of the funds we’re seeing, yes, there are individuals who are outstanding in terms of their work and expertise and skill set. But the success of the fund is a function of teamwork and integrated perspective and practice. It’s not the success of an individual, not the triumph of the charismatic leader. The charismatic leader may be able to hold the torch, but the light is shed by the team as a whole.

Maximpact: What are the core skills needed on a fund management team?

Jed Emerson: On the one hand, there are skills around being able to maintain financial discipline: analyzing deals, understanding the marketplace in which the deal will function, looking at various investors; perspectives on value creation in a possible deal. It’s having the skills needed in order to be a successful financial investor.

At the same time the management team needs to understand the impact context in which the investment will play out. For example, if your impact goal is job creation but you’re creating lousy jobs, then that’s not a successful strategy.

That financial discipline has to be complemented fully by an understanding of context and social opportunity. If you have both those things, you can then translate that social opportunity into financial metrics. In this way the impact investment process looks more like a DNA strand than a double bottom line. From this we derived the schematic for the Mission First and Last section of the report.

Maximpact: Does multilingual leadership reflect the multi-stakeholder nature of impact investing?

Jed Emerson: Definitely! It speaks to the idea that when you’re investing for impact there are multiple beneficiaries; as well as multiple actors contributing to value creation. You have various levels of financial return that come to shareholders and stakeholders alike. Those financial returns are in fact part and parcel of the generation of social and environmental impacts that grow out of being able to work on a sustainable financial basis. The multilingual team reflects that range of interests and outcomes.

Maximpact: Can graduate schools create the kind of multilingual leaders you’re talking about?

Jed Emerson: Not only can graduate schools create multilingual leaders, but they have to! I read a comment in a McKenzie report the other day that said business schools can no longer be teaching business as usual and the incoming classes are increasingly demanding schools give them the skills and tools needed to execute within this new context of impact generation.

20 years ago none of the graduate schools were doing anything like this. Then slowly things began to change. Harvard Business School started the ball rolling with its social enterprise initiative in the 90s. This was complemented by the work at Stanford Center for Social Innovation and Kellogg School of Management; I taught social entrepreneurship at Kellogg in 1999-2000.

We’ve seen this movement come forward over two decades; and now it’s been fully unleashed. I see the evidence everywhere. For example, I wasn’t able to attend the NetImpact conference this week but I was tracking the twitter feeds. Boy, could you feel the passion and enthusiasm coming through those posts and tweets! More than that, you could feel the sense of urgency and focused direction from the participants. To me, this is the driving force behind the need to train our future leaders in this multilingual way.

Maximpact: Are any grad schools doing it now?

Jed Emerson: A good example of a school taking up the challenge is the James Lee Sorenson Center for Impact Investing in Utah. Lewis Hower is their fund director. The interesting thing for me is that they’re using students to engage in the due diligence around impact investing opportunities.

When I first heard about this, honestly my reaction was, “Man, that’s got to be a recipe for disaster!” Because you’ve got these folks who are learning skills while they’re doing the analysis, so you might think maybe that analysis is going to have to be improved over time. Yet the work these students are doing with Center staff is evidently really strong. It’s very good analysis.

My other observation is that the students who are coming to learn at the Sorenson Center are not just business or economics students. They’re coming out of the humanities and much more traditional liberal arts backgrounds as well. Now, that is the future of impact leadership!

In my view, the Sorenson Center and others are creating an environment with the potential to produce the multilingual leaders of the future. No CEO can aspire to lead a global organization these days and not be aware of all the things beyond the balance sheet that will determine whether that organization is successful. As a matter of course, the leadership of these organizations will be looking to hire managers and team members who can come to the table ready to play on that basis. Business schools and graduate programs will have to provide their students with the education and the tools and the learning they need to be successful in this new market.

Maximpact: How can impact funds go about building these multilingual teams?

Jed Emerson: I work with a small set of family offices, one of which is currently recruiting folks to run a new impact fund. I wasn’t sure when we started recruiting what kind of candidates we would see. Truthfully, I expected a lot of candidates with very traditional private equity and venture capital backgrounds who had decided they were done making money and wanted to go “do good.” And I’m not such a big fan of the “do gooder” approach, so was kind of bracing myself;

But I was pleasantly surprised to see the number of folks that clearly fit our research team’s description of multilingual leaders. Yet the thing that really surprised and pleased me was the high caliber and solid quality of these individuals. The experience has validated my feeling we’re on the right track and the change is happening.

I’d like to point out that the Impact Investing 2.0 report doesn’t say, “This is what needs to happen”. It’s not prescriptive in that sense. What the report says is, “This is what is already happening in the most successful funds”. It describes what is currently the practice of the better organizations. As new fund mangers and new investors come up through these processes, I think we will begin to see the practices we identify in this report as the default operating process of the field. This will simply be the way we do business.

Maximpact: What happens to those poor charismatic leaders once the multilingual team takes over?

Jed Emerson: (Laughs) I think that the role of the charismatic leader will always be with us yet we’ll move beyond them being the focus. We need those individuals for movement building and for creating so many aspects of organizations. That said, you can’t build a successful organization on the back of an individual!

The most successful charismatic leaders will recognize this multilingual future. As opposed to the classic “founder-syndrome” individual who clutches on to power until the organization withers and dies, successful charismatic leaders will take on a new role helping position their teams for success.

The rise of multilingual leadership provides charismatic leaders with the option of an out, an opportunity to go back to developing new ideas, to be innovative, to be visionary; yet they will have to step aside. They’ll be able to pursue new avenues because they can be confident the teams they nurtured are shepherding their original vision; but taking it to new places and new levels of success.

I see “Leadership of the Whole” rather than leadership of individuals as the future of this sector. It’s a movement in many ways, but it’s also simply how you build effective sustainable organizations that are creating value over the long term; over multiple lifetimes and not individual careers. For me, this topic of leadership is really the crux of how we will all and each be successful over the long haul!

About Jed Emerson

Jed is widely recognized as an international thought leader on impact investing, performance metrics and sustainable finance. Originator of the term blended value, he has spent over two decades exploring how capital investment strategies may be executed to create multiple returns.

Jed has held appointments at Harvard, Stanford and Oxford business schools and has written extensively on impact investing, social return on investment, and related areas. He is co-author with Anthony Bugg-Levine of Impact Investing: Transforming How We Make Money While Making A Difference.

Jed is Chief Impact Strategist for ImpactAssets and chair of the ImpactAssets 50, a field-building strategy that promotes leading impact investing firms. He is a founding director of both Larkin Street Services and the Roberts Enterprise Development Fund (REDF), a founding board member of Pacific Community Ventures, and the first senior fellow at Generation Investment Management, among numerous other appointments.

Jed is currently a senior fellow with the Center for Social Investment (Heidelberg University) and senior advisor to The Sterling Group (Hong Kong).

You can follow Jed Emerson on Twitter via: @blendedvalue

Read the full Impact Investing 2.0 report.

Watch the video of Jed Emerson, Cathy Clark and Ben Thornley introducing Impact Investing 2.0 at SOCAP13:

[Image credit: Courtesy of Jed Emerson]

Better Names for Impact Investing (and other insights from Hazel Henderson)

by Marta Maretich

Hazel Henderson has never really liked the term “impact investing”.

“All investments have impacts,” she told us. “I pointed this out to the authors of the original paper published by the Rockefeller Foundation. Some of these impacts include blowing the tops off mountains and spilling oil in the Gulf of Mexico!”

Not mincing words is one of the characteristics that has made Henderson a thought leader in the ethical investing movement. Futurist, evolutionary economist, worldwide syndicated columnist, consultant on sustainable development and author of many books, articles and blogs, Henderson has turned her personal vision of a new kind of capitalism into a remarkable career spanning four decades.

Her CV is beyond distinguished, including 22 years of service on the Advisory Council of the Calvert Social Investment Fund and membership in the Social Investment Forum and the Social Venture Network. She founded Ethical Markets Media and won a slew of international honors for her work. She is the creator of the Green Transition Scoreboard, a tool that tracks the private financial system for all green sectors worldwide since 2007 (current total is $5.2 trillion) and measures progress “as defined by the triple bottom line of planet, people and profits”. Follow #greenscore on Twitter.

Taking a measured view of impact

This stellar track record speaks of Henderson’s lifelong commitment to positive change in the area of beneficial finance and socially responsible investing. It also makes her a hard person to impress. While the world gets more excited about the potential of impact investing to solve its many problems, her support for the practice is tempered with realism.

“While I applaud the approach and achievements so far of this kind of investing,” she says, “I don’t see it as a new “asset class” since it must operate within all the old and still failing models of mainstream investing. And, as I have discussed with many of impact investing’s best practitioners in our TV series Transforming Finance the term “impact investing” simply adds to the confusion! Why not call it “positive impact investing” and thus make its good intentions clear?”

She’s right of course

Henderson makes several important points here; ones borne out by the latest research into impact investing.

One is that impact investing is not a distinct new field of investing, or “asset class”, but an investment approach that spans asset classes. For Henderson, who has been at the forefront of the worldwide movement to diversify the financial methods that can be used to achieve social and environmental benefit, it’s only one tool in the larger toolbox that now (thanks to her and social benefit investment pioneers like her) includes a full spectrum of approaches: microfinance, social entrepreneurship, social impact bonds, venture philanthropy, catalytic capital, responsible investing, patient capital and so on.

Another of Henderson’s points is that not all impact is good impact: “blowing the tops off mountains,” as she puts it, definitely comes into the bad impact category.

The principle here is that intentionality matters when it comes to impact investing. Obviously, the idea is to avoid bad impacts; that goes without saying. But it’s not enough for good impacts to happen by accident, either, or as mere byproducts of doing business. To be authentic impact businesses, enterprises have to be built around the positive impacts they exist to create (along with profits).

And it’s not enough to cross our fingers and hope for positive impact without bothering to find out whether it’s really happening. Positive impact goals; and the metric processes that measure them; need to form part of the business plan of impact businesses. Otherwise, there’s nothing to distinguish them from ordinary businesses and no reason for impact investors (who currently complain of a shortage of good opportunities) to commit their capital.

Keeping sight of a higher purpose

Finally; and perhaps most importantly; Henderson’s comment reflects her belief that we need to do more than just tinker with the way world finance works.

Impact investing may be a good thing, but its dependence on the “old and still failing models of mainstream investing” mean that the approach is, after all, nothing so revolutionary as is sometimes claimed. More precisely, it’s an adaptation of what we’ve had in the past, using familiar techniques and market models, though in new contexts. As such, it doesn’t go far enough to satisfy Henderson, whose organization’s mission is: “to foster the evolution of capitalism beyond current models based on materialism, maximizing self-interest and profit, competition and fear of scarcity”. Henderson proposes to achieve this by reforming markets and metrics while growing the green economy worldwide.

Henderson’s vision for the future of finance is more radical than that of the elite group that gave impact investing its name. Where they hoped to harness the power of capital for good, Henderson wants to alter the very nature of capitalism, transforming it into something that better serves the needs of humanity and the planet. This higher purpose makes it unlikely that she will champion any single approach to changing the way we invest. In one example of her far-reaching strategy, Henderson has partnered with the company Biomimicry 3.8 to create a set of Principles of Ethical Biomimicry Finance, now available on license to responsible asset managers.

Henderson is well placed to take the long view of various social investing movements. Her comment serves a reminder that impact investing is just beginning to prove itself. The jury is still out, and it’s probably a good thing the early hype seems to be dying down. However keen we are on impact investing (and we are keen) it is not a silver bullet for solving the world’s problems.

At the same time, it’s a good thing that the sector is growing. More deals, more collaboration and more experimentation may serve to take us closer to a time when all businesses are, as Henderson would have it, positive impact businesses.

For more about Hazel Henderson see this interview in Green Money Journal.

Hazel has recently released Mapping the Global Transition to the Solar Age: From Economism to Earth Systems Science from the UK’s Institute of Chartered Accountants of England and Wales (ICAEW) and Tomorrow’s Company. It will appear soon in the US from Cosimo Publications, NY.

How to Find Impact Investors to Finance Your Sustainable Business

By Marta Maretich

Originally posted on the OpenForests blog. OpenForests is a consultancy specializing in sustainable forestry projects.

So, you’ve written the business plan. Congratulations! (And thanks to OpenForests for their useful guide to writing a business plan for a sustainable forestry enterprise.) Now you’re ready to look past the trees and focus on the forest; the wide world of impact investment. It’s time to go out and raise capital. But where do you start?

Decide what kind of investment you’re looking for

Capital is capital, right? Not exactly. There are many different ways of structuring finance and many different ways a business can relate to its investors. Writing your business plan has given you an idea of the amount of investment you need. Now it’s time to think about the kind of investment you’re looking for.

Are you looking for debt or equity? How long will you need the money for? Do you want partners who will offer more than just capital, who will give you advice and contacts, for example? Do you need pure capital, or a blend of capital and grants?

To find out which model might work for you, tune in to the wider world of impact investing and learn about your options. Find projects similar to your own and research how their funding is structured and who their investors are. Websites and company reports can help you form a picture of what’s out there and develop more knowledge about funding choices.

Build impact measurement into your business plan

In the world of impact investment, impact measurement is as important as financial return. Impact investors look for financially viable businesses that have clear, defined and above all measurable social and/or environmental outcome targets.

To succeed with impact investors, impact metrics need to be prominent in your business plan and your pitch. You’ll need to decide which measures will mean success for you, then define how you will measure and report them. This blog by Jonanthan Kuo shows how important metrics are to Acumen, a successful impact investing pioneer.

How do you know which metrics to include? There are several systems on offer right now but IRIS, from the GIIN is a good starting place for those new to impact metrics. This standardized system offers a broad range of metrics that can be adapted to suit the needs of your business. The key is to choose metrics that are realistic, practicable, fit into your operations and serve your strategic goals. For more on the best way to “do metrics” see my recent blog post for Maximpact.com.

Research investors

The range of impact investors is growing and so is their spectrum of approaches. Some impact investors simply provide capital, others mix catalytic capital with grants to promote growth. Still others work as venture philanthropists, bringing hands-on expertise and networks to help businesses grow. Getting familiar with the different types of investors will help you target the ones that can help you most.

Conferences like SOCAP are a good place to learn about and meet potential impact investors; and if you can’t be there in person, they make videos of many of their discussions and panels available on the web.

Industry blogs like OpenForests, media streams like FastCoexist or Huffpost feature stories about impact businesses and the investors that support them. Our impact deal portal, Maximpact.com, hosts all of these types of investors on it, all of them actively looking for deals. Do your groundwork and understand your options.

Types of impact investors

  • Accelerators, Hubs and Intermediaries
  • Angel Investors
  • Venture Philanthropists
  • Enterprise Capitalists
  • Large corporations with sustainability agendas
  • Foundations
  • Family offices
  • Governments
  • International development agencies

Cultivate relationships

Business, like life, is all about relationships. Cultivating good relationships with a number of potential investors will pay off now and in the future.

Make a short list of impact investors to approach with your business plan and research them carefully before you set up a meeting. Identify their impact mission- do they want to stop deforestation, protect indigenous communities, promote synergies between agriculture and forest habitats?

Find out what investments they’ve made in the past and learn the names and backgrounds of key personnel; impact investing remains a sector where personal values matter, even at the highest levels.

Once you understand your investor, you can speak to their interests and demonstrate how your project will help them meet both their financial and social or environmental impact goals.Be prepared for a two-way dialogue. Your investors may have strong views about your business model and impact goals. Keep an open mind and be prepared to negotiate.

For more insights into how impact investors think about business, see this post by Tilman Ehrbeck.

Find out more about Maximpact.com or list a deal on our global platform.

[Image credit: 123rf]

One Year of Maximpact by Tom Holland

Maximpact.com has been in operation almost one year. And what a year it’s been for impact investing and for us.

The last twelve months have seen impact investing; in fact all forms of social and sustainable investing gain significant ground. We saw the Impact G8 in London and heard the buzz around impact grow louder. Some of the main infrastructure issues such as measurement and exits have begun to be addressed. The US has launched a huge impact investing initiative. Social Impact Bonds are beginning to prove their worth. And all over the world, new educational programs have been launched to train the impact professionals of the future.

Impact investing is on its way to becoming mainstream; and the range of opportunities for investors and businesses has never been broader.

For Maximpact it’s been a year of discovery. Recently someone asked me what the highlight of Maximpact’s first year has been. That’s a tough question in a 12-month period that’s seen us doing so many new things for the first time. Yet I suppose the highlight has been all the support we’ve had from all parts of the various sectors. We see this support very directly from the number of individual funds, intermediaries and funds listing on the deal site. And we’ve heard it through the user feedback, which has been very positive both in person and through our social media channels like Twitter and LinkedIn.

Users from many sectors including impact, sustainability, eco and green are telling us Maximpact is useful for networking, finding deals,identifying collaboration partners and securing investment. They also say it’s a good way to find new ideas and technologies and a way to deploy existing technologies for new uses. Our Newsstand resources feature has proved very popular. We’re also having more approaches from organizations and funds who want to collaborate with Maximpact; the EVPA is one example we’re proud of.

Surprises, good ones

This is everything we hoped for when we started out a year ago. Yet in some ways, the experience has been one big year-long surprise. I mean, we thought that our big tent approach would help the markets increase volume and gain momentum. Bringing CSR, eco and green, cleantech and sustainable investing all onto one platform was a strategy designed to open up the market and create more impact. We believed in the idea completely, but no one had tried it before and there’s always that fear that your brilliant concept won’t work in practice.

I’m very glad and relieved to say it does work. The industry has taken to the idea. There are signs that some of the old barriers are coming down, opening up the way for more investment, more impact. Now, with this year behind us, I can confidently encourage more people do what we’ve done: to innovate, to collaborate, to encourage collaboration and to accelerate change.To dive in and do their part.

That’s not to say there isn’t a lot more for us to do. There are quite a number of people that see the good in what Maximpact is doing but are still sitting on the sidelines. There are still whole parts of the sector that haven’t yet recognized the extraordinary potential in this kind of investing. We continue to try to draw these players in, to get them to try the platform and join the open community. The truth is that impact investing and other forms of sustainable investing need many approaches and innovators. We are doing it one way, but there will be other ways. We welcome this diversity.

What’s on the horizon

Anniversaries naturally make you look back; they also force you to look forward.

For the industry as a whole, we think the next growth phase is going to be very interesting. Responsible and sustainable practice is becoming the expected norm in all aspects of business, in all industries. Businesses that once made their “green” and “social” credentials a selling point, for example, now hardly even mention them. And yet in practice they may be more”green” and “social” than ever. These values are now almost taken for granted by the public as part of a new contract between business and society.

This revolution is being driven by public demand and by governments who see the benefit of a more sustainable approach. As an important part of this larger trend, the view of finance is also changing. We’re all heading toward socially conscious financing and investment. Philanthropic organizations are finding more synergies between market practices and mission goals. They have hugely valuable intellectual property and knowledge, which gives them an edge for pioneering some of these new models. All this will have a dramatic effect on the size of the social benefit, impact and eco and green investing markets in the coming year and far into the future.

For Maximpact, the challenge is to keep ahead of this fast-moving trend. This means continually streamlining our deal platform, making it more efficient, adding more users and more deals and doing everything we canto make it the most lively marketplace in the industry.

We’re also adding new services: video pitches that allow users take their deals directly to potential investors; software that gives enterprises the tools to become investment-ready; a boutique fee-based service to provide specialized professional expertise to the sustainable and social investors. And so much more; we’re rolling out new software products in just a few weeks, a move we’re all excited about.

What we’re building around Maximpact is a solution center for the whole industry. It’s all about putting vision together with the skills and tools of finance. We think the coming year is going to be even more exciting than the last; and we’re looking forward to it.

Impact Meets Cleantech at the Crossroads

by Tom Holland, CEO and founder of Maximpact.com

Impact investing and the cleantech sector are both at a crossroads.

For impact, the outlook is positive. We’re expanding, entering the mainstream and becoming a widely accepted approach to doing business and doing good. The recent Impact G8 in London is one measure of how far impact has come in just a few short years. The sector is growing at a fast rate and new players are getting involved every day. Maximpact’s portal reflects this movement. It now hosts more deals and a wider variety of deals than ever before and we look forward to continuing to grow with the sector.

The story is different for cleantech. Despite amazing success over recent years that sector is facing a much tougher financial landscape. Investment is down, capital is harder to come by. There are bright spots, like the success of Tesla. Yet many cleantech companies are finding it necessary to retrench or change tack. Some are going out of business. Many more are looking for new markets and new sources of finance.

At Maximpact, we’re in two minds about this change of fortune. On the one hand, we don’t like it because we think cleantech holds the key to a cleaner, healthier and more sustainable future for the whole planet. They’re coming up with solutions to problems we share and showing the kind of creativity that should have us all excited. Renewable energy, biomimicry, 3D printing: these things are going to reshape industries, revolutionize business models and change the way we live our lives for the better. We don’t want to see cleantech’s progress slowed or stopped by financial fluctuations.

On the other hand, the sobering of the cleantech market presents opportunities for impact and sustainability investors. This, we like.

“At Maximpact we think cleantech holds the key to a cleaner, healthier and a more sustainable future for the whole planet.” Tom Holland

From the beginning, Maximpact was designed around a broad definition of impact that specifically included cleantech, eco and green. The idea was to bring cleantech, eco and green together with other sectors including philanthropy, venture philanthropy and CSR. The aim was to break down silos and encourage collaboration and investment across sectors to accelerate the pace of change.

Maximpact was always intended to be a hub for aggregating and finding new applications for technology. We intentionally made the platform transparent so users can observe how others are applying technologies to solve problems. This allows people to see what technologies are available out there. It gives them the opportunity to find ones they can adapt for their own uses and deploy them in different parts of the world, multiplying the force of their impact.

Given the situation of the sector today, I believe that is the perfect time for investors to get behind cleantech. They should do this for several reasons:

  1. The first is purely financial. Despite the cooling of the market, many clean tech companies are promising from a business standpoint. They’ve proven they can scale and there’s evidence that they will continue to gain ground in the mainstream of business. It’s certain that well chosen clean tech investments can help impact investors meet their goal of achieving a sustainable financial return.
  2. The second reason is altruistic: clean technologies have the potential to bring a better life and a cleaner environment to all of us. Clean tech’s products have applications in every country and at every social level from the bottom of the pyramid to the top. Cleantech also helps emerging economies and regions to start off with the tools that will provide a more sustainable future from day one.
  3. The benefits clean tech can bring; preserved eco-systems, more efficient use of energy, more sustainable economies; align with the impact ambitions of many investors and are the best reason to get behind clean tech and help the sector grow.

So impact and clean tech meet at the crossroads. Here at Maximpact, we’d like to see them join forces and continue along the same path.