Studio Earth - Social Finance Workshop

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Information about Studio Earth - Social Finance Workshop

Published on January 10, 2009

Author: MichaelLewkowitz


Social Finance Workshop Michael Lewkowitz Karim Harji Andrew Dilts


This Growth is biggering is Great! buggering us!

We’ve got issues • Aging population • Environmental degredation • Resource depletion • Economic and systemic collapse

Why Money?

“Money plays the largest part in determining the course of history.quot; - Karl Marx

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” - Ayn Rand CAUSEWAY: a national collaboration

quot;Money. It's a gas.quot; - Pink Floyd

Social Finance

SOCIAL FINANCE Includes intermediaries, funds, mechanisms... and the marketplace that makes it work. ts en tm es nv nI la uil q :A ce ur So

Social Social “PRI” Commercial Public Grants Angels VC Debt Debt Market SRI Capital Domini Social RSF Social Finance Underdog New Schools Investments Transactional Calvert Special Equities - CF CI Notes - Calvert Mutual Funds Good Capital (e.g. Funds) Patient Capital NFF SouthShore Bank Generation Acumen Fund Collaborative NFF Lending Investments Capital Deutsche Eye Fund Partners Calvert UK Social Philanthropic Stock Exchange BOVESPA Assets/DAF Exchange Social Local Exchange Platform Stock Exchange Infrastructure Investors’ Chicago Climate Circle Exchange Origo Evaluation/ B Lab GRI Certification AA1000 Ashoka Fourth Sector Network Generation Foundation Aspen Institute Landscape Definition More intermediaries a sign of new money in the Blended Value Market © Jay Coen Gilbert, Don Shaffer and John Katovich Source: GoodCaptial Story Index Presentation and Jay Coen Gilbert, Don Shaffer and John Katovich

Capital Flow TAX INVEST Individuals Government Organizations Financial Entities SOURCE -> - managing other’s money DIRECT ORGANIZATION -> USE -> Operations Programs Assets

It begins with a conversation… • Aligning interests to create innovative solutions Constructive Dynamic R eq Source Perspective n Use Perspective ur ui re et m R en ts ns o i t ic R tr is es k R Constrictive Dynamic CAUSEWAY: a national collaboration

… results in specific products • Venture capital – Capital regional et coopérative Desjardins (CRCD) is a $500 million venture capital fund created in 2001 by the Desjardins Movement with the help of a provincial tax credit. Individual investors can invest up to $3500 a year in shares with a 50% tax credit. Shares must be kept for a minimum of seven years. Mission: to provide capital, expertise and access to networks for businesses and cooperatives in all Québec’s regions • Local community development – The Columbus Foundation used $2 million to seed an $18 million low-cost housing fund to build 1,600 new units of affordable housing. • Startup or expansion capital in underserved communities – Deutsche Bank announced it will create an innovative $20 million investment fund to finance the expansion of eye care hospitals in developing countries. The Eye Fund I will provide loans and guarantees to support the development of affordable, sustainable and accessible eye care for the world's poor while providing a near-market return for investors • Debt mechanisms – Milestone achievement of $100m in loans to community finance institutions and social enterprises by Calvert Foundation’s Community Investment Note • Acquisition of assets – BC Pension Funds – 21 BC-based union and management pension funds pooled $27 M to form Concert Properties in 1989 (originally named VLC) with the objective of financing affordable rental housing in BC, and creating jobs in the unionized construction industry. Today the 100% pension plan owned real estate corporation has $800 million in assets, with a track record of creating 10 million hours of on-site employment for unionized construction workers. CAUSEWAY: a national collaboration

… and can change whole systems. • Coming together of the great catalysts – capital + community • Great Bear Rainforest (2 million hectares) – Start: environmentalists + lumber companies get together – 2001: private foundations + BC premier’s office -> 1st nat. – 2002/3: determination of ecological value and economic pot. – 2007 Outcomes: • $120 M across 2 funds: $30 M fed, $30 M prov., $60 M private • Provincial government actions – New ‘ecosystem based’ land management regime (3x PEI) – New park designation for ecological protection • Collaborations – Collective land-use agreement among prov. gov’t and first nations – North coast first nations collaborating (e.g. joint marketing and distribution of fish) – Shared governance between private, first nations, government CAUSEWAY: a national collaboration Could mobilize > $100B

Micro Finance

The Future of Social Capital Markets Katherine Fulton October 2008 MONITOR INSTITUTE 21

How Big Could it Be? U.S. Philanthropy $0.31 Trillion Impact Investing in 5–10 years? Negatively Screened Funds + Impact Investing $2.71 Trillion All Investing $61.90 Trillion Impact Investing has the potential to grow to ~1% of total managed assets, which could result in ~$600B of capital channeled towards social and environmental impact MONITOR INSTITUTE 22

A convergence of actions Create industry defining funds as a beacon for how to address specific social issue(s) THAT’S Place substantial catalytic, risk-taking capital in mezzanine finance structures HOW IT Coordinated COULD Leadership Develop impact investing network TAKE OFF Set the industry standards for social measurement Lobby for specific policy / regulatory change MONITOR INSTITUTE 23

Canadian Context • Limiting regulatory framework • Income Tax Act and charity law significantly constrain flow of capital • Strong non-profit sector • $120 B annual expenditures • >7% of Canada’s GDP • Non-profit income sources Above average growth • 1.5 M workers + 0.5 M volunteers • Corporation Gifts Individual 2nd largest in world per capita s 5% Donations 3% 8% • Internationally significant • Resourcesenergy, forests Government 49% Earned •Examples Water, Income • Great Bear Rainforest 35% •

Design Breakouts Approach • A change in conversation • A change in flow Application • Investments • Products • Systems

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Social Finance Workshop Michael Lewkowitz Karim Harji Andrew Dilts

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