I’m really excited to announce that I will be speaking at the inaugural Canadian Global Impact Investing meetup in Vancouver on behalf of the group — sharing the acumen model (both on a global and chapter level) to the impact investing community in Vancouver. The event will be held on Wednesday, Nov 23rd from 6:30pm — 9pm at SFU Segal Graduate School of Business in downtown Vancouver. You can check out more details about the event here.

Three other organizations will also be presenting at the event: Vancity, Global Catalyst Initiative and Opportunity International Canada. Also, at the event, they will be giving away door prizes ( 2 books I couldn’t recommend highly enough): Impact investing: Transforming How We make Money While Making a Difference – Jed Emerson, Antony Bugg-Levine and Banker to the Poor – Muhammad Yunus.

See you on the 23rd. Looking forward to connecting with other fellow impact investing/social enterprise champions.

So 2 quick updates. Upcoming (free!) webinars on impact investing.

1) How to Be An Impact Investor hosted by MaRS Centre for Impact Investing

Date: Thurs, Oct 27th 2011

Time: 12pm — 1pm (EST)

Key themes/questions (from event description):

• How do you convert your motivations for a just and equitable society or a pollution-free environment into an effective investment policy statement that will enable you to make both positive impact and seek the financial return requirements of your organization?
• What level of due diligence should you conduct to determine whether a venture is a good candidate for such investments?
• What skills and expertise can you draw on internally or acquire through external advisors or managers to aid in your decision-making process?
• What opportunities and challenges should you be cognizant of as you seek to re-align your investment portfolio with your mission and values, both organizationally and personally?

2) Impact Investing: Challenges and Prospects hosted by Jed Emerson and Antony Bugg-Levine

Date: Mon, Nov 7th 2011

Time: 12pm –1pm (EST)

Key themes/questions (from event description):

• Roots of impact investing, examples of its practice today
• Challenges that need to be addressed: regulations, cultivating transformational leaders, measuring blended value, bringing in philanthropic capital, limits and challenges of impact investing
• Charting a course for ‘blended value’ investment strategies that make money while improving social and environmental conditions.

*The post below was orig­i­nally pub­lished on http://www.socialearth.org on Oct 11, 2011

Capitalism has alot to answer for these days. Members of this group range from ardent Occupy Wall Street protesters to a sense of common vision that seems lacking amongst citizens. Today, we turn to four wonderful publications highlighted at  SOCAP11  that has been creating momentum to redefine capitalism and would be a significant contribution to the public debate.

1) Impact Investing: Transforming How We Make Money While Making A Difference – Jed Emerson, Antony Bugg-Levine

This ground-breaking book should be your first choice to pick up to explore the transformative power of impact investing. The book explores an integrated alternative to traditional philanthropy and investing – highlighting the applications of impact investing as well as its potential. It demonstrates how it is and can be a positive disruptive force. Perhaps the most interesting angle of this book is the usage of time with impact investing, providing a historical and predictive perspective enabling readers to have a solid understanding of what the present holds. The authors ultimately offer a optimistic vision for what we can collectively achieve when our assets work in unison with our values. As a bonus, I can assure you that the authors are as inspiring in person as they are in the book. No jokes.

Further Resources:

• My interview with one of the authors, Antony Bugg-Levine
• The HIP Investor: Making Bigger Profits by Building a Better World

2) Innovations Journal: SOCAP 11 – Impact Investing Special Edition

I’ve been a big fan of Innovations – quarterly compilations of commentary, research and essays from leading innovators in their field. There was a special edition of Innovations for SOCAP11 containing a myriad of perspectives on building the intersection on money and meaning as part of the solution to global challenges. Below is the complete list of contributors in this special edition.

My pick out of all the essays was one by Robert Katz and Brian Trelstad of Acumen Fund on Mission, Margin and Mandate. The essay firstly unwraps the definition of scale and sustainability and then lays out the three paths to achieve this goal through mission, margin and mandate. I was particularly hooked on the dilemma presented: what should take precedence when building out a social enterprise?

• “At what point do you evangelize your solution to raise mission-based grant capital or volunteer support to work on that new product?
• At what point to you buckle down and simply execute on sales and service to grow your margins?
• When do you approach the government for changes to policy that might help get that mandate to scale?”

Further Resources:

• You can obtain a free copy of their essay here
• Bonus offer: Write an Amazon review for the SOCAP11 Impact Investing Special Edition and receive a free subscription to the Innovations Journal.

3) Design for the Other 90% – Cynthia Smith, Paul Polok

“It is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity”. Tim Brown, Change By Design

This book is an extraordinary collection of more than 30 design projects targeted specifically to design low-cost solutions for the world’s population that have little or no access to most products (the other 90%). The stories and brilliant illustrations (partnered with the Smithsonian’s Cooper Hewitt, National Design Museum) takes the reader through unique ways to provide better access to basic needs and how innovations in design are often the most successfull in addressing these issues.

Further Resources:

• IDEO’s Human Centered Design Toolkit
• Support: IDEO’s mission to design an end to poverty

4) A New Foundation for Portfolio Management - Portfolio 21, RSF Social Finance

One of the fundamental concepts that permeates portfolio construction and the asset management world is Modern Portfolio Theory (MPT) – how do you maximize portfolio expected return for a given amount of risk by choosing various proportions of assets. This paper is a great starting point in a call to arms to reevaluate MPT in light of the impact of ecological limits and global impact of investments. The premise of the paper focuses on: 1) Integrated Risk; 2) Selective Growth; and 3) Multidimensional Utility Function to provide investors clarity on the long-term implications of managing a portfolio that goes beyond a purely financial purpose.

Further Resources:

• Portfolios of the Poor: How the poor live on $2 a day  - Daryl Collins, Jonathan Morduch, Stuart Rutherford, Orlanda Ruthven

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.

***

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.

I read her book, Dead Aid, when it first came out and it opened my eyes to a very different perspective of aid, development and the financial world. Her views are a challenge and a strong vision on how to address the global poverty issue. Spread the word (and read the book!)

The question/issue was: Would I recommend people to be involved with programs like SE101 with the issues of sustainability, cost and knowledge at hand? ( Please read my previous blog post for more insight)

Essentially, what I believe can be framed in 3 ways:

1) Motivation

Image taken from: http://www.blogcatalog.com/blog/motivational-cartoons

It has become the social ‘cool’ these days to participate on trips to developing nations to ‘help’, be it a stint in Kenya to build wells, building homes in Mexico or helping the Orang Utan preservation in Borneo etc. I believe that if you want to participate on a trip of such, you need to believe in its cause,  what you are contributing and what you want to learn.

The worst thing to do is to spend over $4,000 on a trip like this, write it down in your resume and tell your friends you’re going away to a 3rd world country receiving [insert ’ that is so cool’ response here] and… that’s it. I believe that people need to be accountable when volunteering. No one is going to turn around and say “you are so selfish for volunteering because all you are taking into consideration in your trip is yourself and having that experience.” The responses would likely be along the lines of “that’s so cool you’re volunteering. You’e doing such a good thing!”

Therefore, I  believe that people  need to be aware of the costs associated with volunteering. Let me break a typical 3 week trip down for you ( conservative rough estimate):

Airfare $2,500

Accomodation $500

Food $500

Paying the organization/prof/administrative fees/utilities $500

Total: Approx $4,000

That’s alot of money. Now, with the same amount, you can make 160 $25 microcredit loans at places like Kiva and change the lives of 160 people. You can sponsor 200 children at World Vision by paying $20 for their yearly school fees. You can feed the homeless for a month in Vancouver donating to the soup kitchen. That’s 160 lives you can change. From sitting in front of your computer with several clicks of your mouse.

Get the sense of comparison? You may argue that donating the money is different than the actual experience of volunteering, and yes I agree. However, what is stopping you then from volunteering online in places around world ie. writing grants, doing research, or even, actually following up with the organisations and places that you have volunteered at? Or even volunteer locally at your homeless soup kitchen?

Or are you one of those people that volunteer for the sake of its exoticness, take a ‘holiday’ jumping from one country to another each for a month, to write down in your resume that you’ve helped build refugee centers in Cambodia or [insert some form of program volunteering here].

Volunteering is alot more serious when you think of it in terms of opportunity cost — what you are giving up and whose life you are impacting.

2) Sustainability

Now, if you have the right intentions and motivation, the next question you should really be asking yourself is: Is  the program I am plugging myself into sustainable? Is this the most effective way I can contribute my time and money (refer to point one on cost comparison) to give the most impact?

This is where research comes in. Research your program, talk to people, connect with past participants, find out where your money goes to. Research, research, research.

Let me give you some examples.

Program 1: Building wells in rural Kenya to provide a water source for local villagers.

Sounds great right? Well, a little more research would tell you that by participating in a program like this and building wells, you’ve just put the local water source provider, who has a family of 5 out of business along with the several other village water source providers out of business because you not only built one well, you built 3 wells in 3 different villagers. Congratulations.

Program 2: Collecting old clothes for donating to local villages in Vietnam

Sounds like a good cause? Well, a little more research would tell you that all your clothes have just put the local tailors who sells shirts for $1 out of business. Congratulations.

These 2 examples are the classic typical programs that you can find all round.

So essentially, please participate wisely. There are so many NGOs these days that you need to research and filter. The world doesn’t need another volunteer that is helping others at the expense of another person.

3) Prepare

So you have the right motivations, the right program and organisation. The last thing: Prepare. In the right way.

I cannot even begin to emphasize this last point enough. In my last post I described what it was like, to be on the ground and be completely paralyzed by my own ignorance. Yes, I have been guilty of it and wish what I know now.

Just like any normal situation, you need to be prepared as much as you can. Don’t swallow what is given to you. Investigate and learn.

Side Note: I want to make it CLEAR, that there is a big difference between signing up for labour volunteering, as opposed to ‘program’ volunteering. The difference lies in 1), you are tapping into an area which needs your time and labour, ie. hurricaine relief work in New orleans, as opposed to, 2) you are participating in a program that has a framework ie. building homes in Mexico.

What I have been addressing are PROGRAMS.

***

So, in summary, to answer the question of whether I would recommend people to participate in volunteer programs… My answer is: I would. As long as they:

1) Have the right motivation. Know the cost benefit breakdown of the trip.

2) Make sure it is a sustainable program. Research.

3) Prepare. In the RIGHT way.

These 3 criterias seem very simple, but it’s the simple things that we forget when we get caught up in an idea and in our lives.

Good luck volunteering! If you have stories/experiences to share, I would love to hear them.