Investing_for_impact Credit Suisse — Schwab Report

The report lead me down an interesting thought path on the “next steps” of the sector…

Evidence:  The report highlights several successful social enterprise models that are part of Schwab’s network. My personal favourite was Bam Aquino of Hapinoy in the Philippines — investment funds that creates sustainable distribution channels and business development strategies to empower formerly isolated and informal sectors of the Filipino economy. The report above, complements the Data Driven JP Morgan-GIIN report, that drills drown into the numbers and breakdown of social enterprise in different sectors.

As a next step, I would love to see a report that focusses more on the accessibility and availability of investments in the space — from an investors perspective. Coming from an asset-management background, I have developed a strong belief that understanding the investment is just as important as knowing your investment options. Currently, main-stream investor’s exposure of ‘social’ in investments are SRI offerings — they need to be educated on different entry points and impact investing product offerings ranging from an institutional and private client perspective. A great starting point to this step is Impact Asset’s 50: A listing of Impact Fund Managers.

Failure: With the industry in a growth stage, as great as it is to know the successes and the landscape, it is just as important to know the failures. Where did we go wrong? What worked? How did you manage to pivot? How do you prioritize your mission and your finances? When did you know the time to scale? There is such a stigma with failure in the non-profit/charity world. This stigma should NOT be carried forward into the impact investing/social enterprise sector. Failure is a gift — and the ability to speak freely to learn from them, should be embraced by this sector. A wonderful example of embracing failure is the EWB Canada’s Failure Reports. I would love to see a similar initiative in the impact investing sector. Even internally within organizations — as a start.

Road-Map: There is a wealth of information on impact investing that has been churned up within the last few years or so. The issue is knowing where to look: from funding social enterprises to exiting an investment. A natural next step to this would be for various stakeholders to share their “how-tos” and points of consideration in the impact sector. Some organizations have already begun to pave the way for this, but what we need is for more road-maps to appear so at the very least, when you’re at the starting line — you have a general sense of direction on where to go.

Note: I had the pleasure of co-organizing the event I wrote up below, and it turned out to be one of the most inspiring nights in my young professional career. Many thanks to the team at YWiB as well as all the attendees for being so honest and open. 

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“Stories set the inner life into motion, and this is particularly important where the inner life is frightened, wedged, or cornered. Story greases the hoists and pulleys, it causes adrenaline to surge, shows us the way out, down, or up, and for our trouble, cuts for us fine wide doors in previously blank walls, openings that lead to the dreamland, that lead to love and learning, that lead us back to our own real lives as knowing wildish women.”

—Clarissa Pinkola Estes

Stories are how people make sense of their worlds. As a child, we spontaneously play out stories on who we hope to become and how people relate to one another. As teenagers, we continuously explore our own stories and others in order to understand our ever-expanding world. As adults, the stories that we tell and fall in love with are the ones we value most in this world. In a very real sense, stories are a window into how we perceive the world around us and ultimately, influences our humanity.

It is through the power of stories that Young Women in Business (YWiB) brought together 20 influential women leaders and 20 upcoming young women for an evening of shared values, fears and hopes in Vancouver, Canada this past weekend.

The 40 women came from a myriad of backgrounds: high profile Canadian politicians. Mothers. Partners of legal and financial firms. Trail-blazers. Successful social entrepreneurs. Aspiring young professionals. And above all, lifelong learners. The vision for the evening was to connect those who have paved the opportunities facing young women today, with those who have the eagerness to make a difference in their communities.

Questions posed to the both generational ends of the conversation included:

• What has been one of your most vulnerable moments?
• What do you not like being stereotyped as?
• In one sentence, what would you wish most for your future self?
• What do you look for in a business partner? how about a personal relationship?
• What are components of a healthy relationship? (business, mentorship, romantic relationship)
• What will be different in your life in exactly 1 year?

As the night started, each women shared genuinely her story and how she got to where she is. Several key trends and themes emerged:

1) On work and leading a balanced life

“Our (older) generation overdid it. We overcompensated for our weaknesses and gender when we should have been owning it. We pounded away and sacrificed too many things. Please be smart on how you work.”

“Work with people who have a value base.”

“Your why is more important than your fear. Women have to think bigger and take more risks.”

2) On health

“Watching someone die is one of the best and worst things in life. It puts everything into perspective. Being alive and healthy is a privilege. Cherish it while you can.”

“ Do not ever ever give up on a balanced life.”

3) On inter-generational sharing and mentoring

“My whole life has been spent being spotted and mentored by other intelligent men and
women. It’s not being a man or a woman, it’s about being presentable, intelligent and knowing what you’re talking about.”

“Decisions that are complemented by men AND women are better. Include men in conversations and remember to make sure your that voice is heard.”

As attendees left for the night, each walked out a little more courageous, a little more humbled and a little more inspired by the stories that were shared over last the previous two hours. The salon was particularly a beautiful reminder on the strength of inter-generational relationships. When we start sharing from a place that is vulnerable, we start to see each generation’s defining moments — making us listen closely to people around us and more importantly, to ourselves.

There are three things about development data that you need to know: 1) It is beautiful; 2) There is a hidden story within each combination; and 3) It needs to be set free.

Last year, the World Bank released it’s prized possession of data – one that tells the stories of economic, socio and political realities around the world. This is a push to “democratize development data” and embrace its open information policy. It’s absolutely incredible what has been done with the data and I wanted to highlight some of the initiatives that have been born out of this:

1) http://data.worldbank.org/

This is the main Knowledge Bank where you can information from poverty rates to the average life expectancy of a country. Data is sorted by topic, countries, indicators, sectors and the World Bank even made a neat feature of key development indicators around the world. It covers over 200 counties and in some cases, dates back as far as 50 years.

The data is updated regularly and as you can see from the screenshot below, you can even find information on the newest country in the world – South Sudan! The site includes the Bank’s widely-used and extremely useful datasets: the 2010 World Development Indicators (WDI), Africa Development Indicators (ADI), Global Economic Monitor (GEM) and Global Development Finance.

2) Apps for Development

With the launch of the the above resource, the World Bank organized an Apps for Development Competition – bringing together the best ideas from developers and data to create useful software applications that is related to the Millenium Development Goals (MDGs). The competition was a tremendous success and the Bank received apps from 36 countries: 30 of the 107 final submissions from Africa. You can check out the winners from this competition here.

A side spinoff from this competition was also an International Day Hackathon on Dec 4th last year where developers write applications using open data to support and encourage the adoption of open data policies by the world’s governments. My favorite application is the San Francisco Crimespotting – an interactive map of crimes in San Francisco and a tool for understanding crime in cities. Helping keep people safe with open data. Amazing!

3) Mapping for Results

This Platform provides detailed information about the World Bank’s work in poverty alleviation and development around the world. It provides access to interactive maps that highlights locations of the bank’s projects around the world and involved releasing data provided by governments and other entities.

4) Data on the Go!

The World Bank is bringing accessibility of data to a whole new level by providing information on an iPhone app. They have six apps ( 4 published and 2 in the pipelines) that are being developed and the interface and usability for the data is just incredible. My personal favorite is the classic Datafinder – an app that lets you access 50 years of WB data on global economic indicators that can easily be shared in presentations, research and projects. Two more apps are being released in August 2011 – The World Bank at a Glance and the World Bank’s Finances.

Data is truly beautiful and with the world’s development data at your fingertips, we can use, analyze and even criticize.. but the only thing we shouldn’t do is ignore it. The video below is an example at how magical data can be. 4 minutes – 200 countries, 200 years by world renown economist – Hans Rosling.

The question that caused this surprising reaction was: why do you believe in social entrepreneurship?

My brain raced through the reasons, each reason followed by what seemed like a giant red sign that screamed CLICHE.

I believe in a human centred market based solution to poverty. Cliche.

I believe in making the world a better place and leaving it better than when I’ve found it. Cliche.

My background and journey has led me to believe in the power of entrepreneurship. Cliche.

I come from a family whose lives have been changed through entrepreneurship. Cliche.

I stumbled into this field unknowingly. Cliche.

Social entrepreneurs are the key in unlocking the levers of change. Cliche.

Entrepreneurs have the ability to create and imagine. With support and direction, they can be the change we wish to see in this world. Cliche.

In my head, my emotions quickly churned from alarm to frustration. Why was it that I couldn’t explain my Why? Was it because I didn’t understand my reasons, or perhaps was it because I couldn’t find the words to say? Why do these reasons seem cliche? Perhaps people have overused them and they have lost their meaning…and then the question becomes: how do you do then convey any one of those reasons with sincere belief? After all, how can you capture passion and belief in 30 seconds. In a paragraph even. It doesn’t seem to even do it justice.

About a year ago, I wrote a post on the beauty of imagination. Although I still believe this reason to be true, I couldn’t quite get the reason of imagination to fit within the social enterprise/international development piece of my beliefs. It seemed to be missing a piece.

Truth be told, I was then suddenly mesmerized by the fact that perhaps, just perhaps my reason WAS the combination of all those cliches. And more. After all, isn’t our understanding of the world a limitation of what we have experienced and inherited knowledge? Maybe my passion is a combination of a mathematical sequence of experiences (I like to think so!):

1) I grew up painfully aware of poverty and socio-economic oppression

2) My family’s story changed because of entrepreneurship

3) Hard work and a stranger’s faith in seeing my potential allowed me to continue my education in Canada

4) I unknowingly stumbled into this field through a “less-than-perfect” volunteer program through my university

5) Tipping point: Working with a women’s group in Lesotho ignited an understanding that identifying change levers in a community can change lives

6) Throughout business school, I have developed a natural bias towards a market based solution to solving problems.

Therefore: 7) Giving people the opportunity (just like it has been given to me) to create and imagine a better life is the key to creating a better world. A human-centered market based solution.

Social entrepreneurship shakes up our complacencies by challenging how we place value on social and economic urgencies. It spins us round in two ways at once: it shows us the sights and social values that we might ordinarily ignore; but it also, and more deeply, shows us parts of capitalism that have grown rusty and need changing.

So what is my answer you might ask? For now, I will have to settle for a combination of cliche answers, my sequence of experiences and that nagging voice at the of my head telling me that it is the right thing to believe in.

I’ll be sure to check in with my answer again as my understanding of the world continues to grow!

SOCAP is a organization dedicated in exploring the intersection of money and meaning. Their annual conference in San Fran is THE event to attend for leading global investors, innovators, curators and social entrepreneurs to build this social capital markets space.

I will be publishing a few pre-conference pieces and will write throughout the conference on socialearth.org. I will also be live tweeting during some key speeches (will be revealing who as the conference draws closer!) — so follow me on twitter if you want to be updated! If you are planning on attending, presenting or speaking at the conference, I would love to be in touch. You can contact me here. I would seriously love to hear from you.

My goal at the conference not only includes highlighting and reporting the event, but to also: 1) deepen my personal understanding of this intersection; 2) meet other individuals who are passionate about this cause and 3) learn about opportunities and initiatives in this intersection of money and meaning. Who knows what we may create after this!

Check out more about the conference here.

What I have been drawing on my current position and my research on the side is an interesting perspective from both ends of the specturm: capitalist vs. social. I did want to share today (coming from this double ended perspective) is my practical idealism and thoughts on answering the question of: How can I design/frame/create solution(s) that would help the BoP improve their standard of living. (I was also inspired by this post on OpenIDEO on designing for low-income communities)

This question has been one that has been asked over and over again and I would like to throw my thoughts into the stirring pot particularly in the area of segmenting the BoP.  This would be Part 1 of X and I would like to preface my thoughts by stating that the most important piece in this design is designing the solution around the terms of the BoP — taking into account culture, resources, country mentality/beliefs, business environment and politics. Anything that we design or create to help this segment has to be very very good and on their terms in order to be sustainable ( although now I wonder whether this is even possible — after all capitalism is a broken structure in itself. But I digress!).

photo credit: Jametiks

I have narrowed it down into three ways to segment the BoP:

1) Living Standard:

Those living at the BoP can be sliced into three main categories: Low Income — $3-$5 a day; Subsistence — $1 — $3 a day; and Extreme poverty — Under $1 a day. Often, this ecosystem is overlooked and are lumped into one. Most aid, social enterprises and businesses only affect the Low Income portion of the segment as they provide affordable services and products that require a financial exchange. If some businesses are really lucky, they get to skim on the surface of the subsistence group with enough scale and good management. Some social or local enterprises manage to hit this second group indirectly through local community or supply chain engagement. As for those in extreme poverty, lack of nutrition, finances and limited education make them the most vulnerable. This is where governmental relief programs and non-profits step in. So how can we design social businesses that target all three groups?

I know some businesses hope to achieve this by scale, but perhaps another way to look at it would be to design into the business structure from the start a waterfall effect of each group helping to elevate the next as they are being given a hand up.

2) Value-Creation

Another way of segmenting the BoP is through value creation: consumers, producers and co-producers. By understanding the roles we play in the pyramid, we can then understand the incentives that drive each group. Income, basic needs, material wants. The first two groups are self-explanatory. However, the third requires more than just business structure. It requires a shift in our perspective and approach and considering the poor as equals in our shared humanity. We are co-producers and the BoP are no longer receivers of what we give them. This third value-creation group is perhaps the most important as numerous businesses have stumbled by failing to understand their role as a co-creator of value. All too often, they see their responsibilities end with the provision of a service or product but really, their role is so much more.

When I was working on the ground with an orphanage in Soweto, South Africa one of the key lessons I took away was to always know where you are creating value and to never try to be everything to everyone. You often find in brainstorm sessions that everyone always has a vision to be the hub, to offer everything — which is what I saw in this orphanage. They wanted to help kids with nutrition, provide money for education, counselling and often you’ll find in development sectors, there will always be something to do and to help in. Before you know it, you’ll be running around trying to catching all the falling pieces and wonder how you even got there in the first place. The key is knowing where we can design value. It might only be in one area — and that’s ok!

3) Need — Classification

The final segmentation is by need, and really draws on the first two to set a base of what is required. Needs classification breaks down into more macro pieces like: education, nutrition, housing, health, technology. Because the BoP’s needs are many, a business who is segmenting by this sector should enter a community by providing outstanding understanding of value…and that value should be a hand up for sustainability and empowerment.

Segmenting by need also means that the business’s ability to design the intersection of social and comercial value matters even more. This is because designing needs, means partnerships with other organizations, governments or businesses who might not have the same vision as we do.

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What’s exciting is that at the end of the day, a new future is slowly being designed and sculpted in both developing and industrialized countries exploring the Base of the Pyramid. Now it’s really up to us to make sure we’re designing it right with all the right pieces in mind.

OpenIDEO is an online crowdsourced platform “where people design better, together for social good.” It’s a beautifully designed concept which highlights 5 principles — inclusive, community-centered, collaborative, optimistic and always in beta. My favourite principle is the last one because it really reflects continuous learning, improvement and evolution. Something which most platforms do not traditionally announce — usually platforms aim to be out of beta mode, signalling “perfection.” It is founded by IDEO, a design and innovation firm that leverages design thinking  to help organizations innovate and grow.

I love crowdsourced platforms,but here’s why OpenIDEO really stood out for me:

1) Listening — there’s something to be said about communities designing for other communities. It has a low barrier to entry and your experiences and input can help shape a better concept. Alot of crowdsourcing platforms are one way highways rather than two ways. I appreciate the openness of the platform where I can simple “applaud” an idea to creating a concept. My involvement is as much as I want it to be. Sidenote: thought I would share a really interesting infographic on a comparison of questions asked to #askobama on Tuesday which breaks down the percent of questions asked for twitter vs. journalists. This disparity in questions asked only goes to show how important listening is to what people want to know and need.

Picture credit: Infographic taken from boston.com

2) Design — Of course! Great job to the team who designed this website. They paid such great attention to detail to the point where you would even had a little heart next to the number of people who had applauded your comment. Sharing the love via great design! 

On a more serious note on design though — I liked the fact that although there were several challenges tied to a broader challenge, the way the design was setup was so that concepts weren’t lost in the noise. Below is the current challenge and we’re currently in the concepting stage. The featured concept ensures that the most popular concept doesn’t just remain at the ‘top’ and the filters at the bottom of the screenshot ensure that each concept gets viewed. Getting proper exposure for each concept is important because I know several platforms that struggle to eliminate the natural bias of selection by viewing what you see first and foremost.

3) Community — In a new platform, it really helps to have a frame of reference on what to do. I really liked the fact they had a community tab that featured their top contributors to the site. I was able to go into their profiles and see what they have done and that definitely sped up my learning process. OpenIDEO also integrated a design quotient into your profile, where it tracks pts on where and what you have contributed. I must admit it was very satisfying to see my points increase after contributing to a concept. I now have 13 pts for collaboration!

My only feedback for the site at the moment would be in this section too. It would nice to expand the community section into one where I can search more than just the top contributors to the platform. The search function on the RHS allows me to search for people but only if I know specifically who I want. It would be great to browse in what way people have contributed to the platform and connect with them. Although, for those interested, there is an informal  twitter list by one of OpenIDEO’s top contributer: @arjantupan/openideocommunity

All in all, a great platform for an even greater cause. I highly recommend taking this for a spin. If you do decide to create a concept, let me know and I would love to check it out!

Simply Wonder-full.

P/s: I also love the Alpaca Reversible hat! Made in Peru by a group of women to improve their family’s income.

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Capitalism, as we know it, has evolved to focus on a one dimensional view of human nature – the pursuit of profit and self preservation. The emergence of the industrial revolution capitalized on this one dimensional theory, where humanity has been persuaded that the best way to attain happiness is to enthusiastically embrace this theory and subsequently transform ourselves into a profit driven generation. In the later part of the 20th century, a powerful movement called globalization swept across the world and the evolution of capitalism was solidified globally. The world now trended towards a ‘global’ economic system which resulted in the widening gap between the rich and poor and between developed and developing countries.

Today, the majority of the world is so entranced with the success of capitalism and the wake of globalization that we have forgotten the true line between what is reality and theory. We  have forgotten that at the end of the day, people are multi-dimensional beings and we are slowly coming to an awakening to what has been deeply intertwined in humanity all this time: the need for meaning. Thus, the emergence of the non-profit sector. A section on the other end of the capitalist spectrum to fulfil humanity’s search for meaning.

However, this purely double ended spectrum with purely charitable capital at one end and for-profit capital at the other is breaking down. Instead, a continuum is slowly taking its place. As SOCAP’s website states, “A new form of capitalism is arising that recognizes our ability to direct the power and efficiency of market systems toward social impact.” We are moving beyond the myopia of pure financial returns with the understanding that not every business or market is bound to serve the single objective of profit maximization and that not every non-profit is bound to serve the single objective of service.

On May 30th to June 1st, progressive impact driven investors, social entrepreneurs and innovators are gathering in Amsterdam at the historic site of the first stock exchange, to discover what it means to be at the intersection of money and meaning. The conference, Social Capital Markets Europe, is a collaboration of co-creation and vigorous due diligence to produce an output of over 70 panels and workshops tracking 7 key themes including: impact investing, investing in fragile states and the middle east, infrastructure and innovation, social funding, stories of social enterprise and technology for social change.

SOCAP Europe aims to create a platform at which “investors gather to collaborate and learn from others who are finding a way to invest their money for financial return as well as for the benefit of people and the planet; where entrepreneurs come to find out who has made a break through and who their next partner or next investor could be” – Kevin Jones, Co-founder of SOCAP . Much of the discussion at SOCAP Europe is expected to focus on the social-capital continuum and to discover, for any given social goal, which sort of social capital, or mix of different sorts of it, is most likely to succeed.

“Triodos Bank, Doen Foundation, Voxtra, Root Capital, Unltd, Blue Orchard Finance, Kiva.org, and OPIC are among the pioneering organizations that will be present at SOCAP/Europe. The gathering’s collaborative format will include problem-solving discussions, game-changing funding model exploration, and opportunities to delve into world-class case studies in entrepreneurial innovation” – SOCAP Europe

The notion of social capital markets can seen idealistic, because it is a disruptive idea to capitalism as we know it. There is a compelling case for exploring this continuum. I think there is also a compelling case in our self-interest to do so. We have already waited for far too long. The time to start this social capital movement is now. Let the discovery begin.