Growth Finance For Social Entrepreneurs «

Growth Finance For Social Entrepreneurs

Financing the growth of operations to achieve major scale is without a doubt the biggest challenge facing social entrepreneurs. Not only are larger amounts of capital hard to obtain, but the funding available frequently neglects the need to build the core capacity of the to organisations — and can result in pressures that dilute the to organisations focus on maximizing social impact. This panel recorded at the 2008 Skoll World Forum, explores a range of methods and strategies available to social entrepreneurs for financing their growth plans, including emerging ways to create new asset classes (including hybrid, for-profit, and for-benefit models); and cutting-edge intermediaries supporting social entrepreneurs’ financing efforts. And a seasoned social entrepreneur will be on hand to share experiences on the ground in obtaining major funding from both grant and investor sources.

What I'd like to encourage you to do is also to think through what is the underlying issue that we're trying to address. Are we in the space of classical public good education - health, human rights, security potentially - where it may not be so easy to develop revenue generating activities if you really focus on the most excluded segments of the population?

Or are we talking about private goods? Are we in this space of micro finance, for example, where any kind of loan for example, any kind of good or service that you provide to your end client in the field unlocks substantial economic benefits that you should be able to monetize so that you might be able to at least recover part of your cost or break even?

So these are two fundamentally different issues, financing public good social enterprises and private good social enterprises. Fortunately, in this endeavor, in this exciting space...understanding this exciting space of social enterprise and how it's being financed, we're helped by a great panel. Let me just introduce our panelists in alphabetical order.

We have with us Antony Bag Levine, who is the managing director at the Rockefeller Foundation. So he'll bring the foundation perspective to the table with the advantage of seeing all in a sense the deal flow, 'cause a lot of people would like to understand the reasons get funding from the Rockefeller foundation.

So I think he will be able to add a good comparative perspective here. But who also knows how it is to have worked as a social entrepreneur on the ground, because he ran the Techno Serve operations in Kenya previously - in addition to having been a consultant with McKinsey. So I think, a good, good basis here.

We also with us Mark Campanali from the UK. He was one of the first analysts social...of socially responsible investments in the city in the late 1980s, has done a lot of interesting things since then. Worked with Tannison Global Investors, an asset management company of some 1.1 billion pounds of funds under sustainable and responsible investment guidelines.

How you work with the ecology funds that you've it's management, moved to other organizations. He's been very active in the discussion and setting the parameters here in the UK marketplace regarding socially responsible sustainable investments. And I think that he will help us to understand what's the link between SRI and Social Enterprise Financing, what are some of the capital market structures that are evolving.

One of the fundamental objectives in designing this session was to make it as practical as possible. There are two elements to that. One is, we will be interactive so, after our opening statements we will take questions and answer them. But the other one is, we wanted to have a case, so we have a social entrepreneur with us as well Christine Eib Singer who is the co-founder and executive vice president of E and Co., an organization that invests in clean energy businesses throughout Africa, Asia, and Latin America.

So, it's of course interesting to hear what kinds of challenges she has faced personally in scaling the operations. I said earlier that grant financing, even though it's maybe not as sexy anymore is still very important and it's likely to continue to be so for the foreseeable future. We are fortunate to have with us as well Chuck Harris.

He spent 23 years in the banking business with Goldman Sachs as a partner and he's currently the executive partner of C-Change Capital Partners and that's really a newly formed non-profit financial intermediary that wants to enhance the flows of growth capital, but mainly grants I would say to social enterprises.

So, as you can see we have a fairly diverse perspective here. It's exciting to be with you this morning. I hope you're fully loaded up on coffee, that the sessions haven't been too tiring so far. We will make this topic as hot as possible. It's clearly relevant, let's try to make it exciting as well.

And with that, I'd like to turn it over to, Chuck. The approach that we'll take here is opening statements for about seven to ten minutes. I've brought a Swiss watch, you see, they come in all sizes, shapes and level of quality. To make sure that we do not run over and give you enough time. So, ideally, after the first 40, 50.

In a few minutes, we should become highly interactive and take your questions. Chuck, your turn.

Thank you Max, good morning. Let me restate. One thing Max just said. C Change Capital Partners in non profit financial firm based in New York, that seeks to enhance the flow of philanthropic grant capital from wealthy donors to select high performing, emphasis on high performing non-profit organizations in need of funds to support their growth.

We intend to identify non-profits with strong track records and to present opportunities for supporting them to a pre-built network of potential donors, most importantly consisting of wealthy individuals and families but also including foundations and corporations. We're fortunate and in fact privileged to have Goldman Saks as our founding donor, which we need very much to grow well beyond the walls of the firm, but it's not a bad place to start rounding up support.

The, the return to capital providers in our network will come in the form of measurable social change, not as financial return and in the personal satisfaction of helping to finance large scale interventions in areas where traditional markets are failing. We view this kind of funding as the equity cap in our issue areas.

And I think we'd all agree that the solutions to the social issues that we're working on require more financial support over longer periods of time than any single funder can provide. Initially we'll be working in the fields of youth education and development, in all cases raising grant money to go against the opportunity and achievement gaps faced by young people in low-income communities in the United States.

We believe these sectors provide significant opportunities for donors to fund outstanding non-profits that face challenges in attracting enough capital to grow. If the platform proves to be successful in mobilizing resources, we are eager at the soonest practical opportunity to expand our issue areas and their geographic focus, but I think it's important to start in a focused manner in an area that we know enough about to be dangerous.

Our primary interest is in building a model, not another captive endowment. We are raising a small fund, the Sea Change Catalyst Fund, in order to be principles, not just agents in our financing transactions. Our vision of a market is of many participants making individual, well-informed decisions rather than having us make those decisions for them .

So we'll function in a kind of merchant banking capacity, soliciting members of our donor network to co invest with us in discreet growth capital financings, multi-million-dollar, multi-year rounds of funding focused on the organization's business plan. A representative of our firm or our network will join the board of directors of each grantee, adhering to the venture capitol and private equity engagement model.

And our basic intent is to employ the applicable practices from the for-profit capital markets and also from the very successful non-profit capital campaign strategies that are used most notably in the world of elite higher education to aggregate giving. To try to make this a bit more concrete, many of you are probably familiar with College Summit and its CEO J B Schramm, who was here yesterday but has now left and is a Skoll Foundation award recipient and internationally recognized social entrepreneur.

A financing that I helped design and lead for college summit before Sea Change Capitol was formed will illustrate the approach we're talking about. In 2004, College Summit sought to pre-fund a 4-year effort to expand its program from relatively small summer workshops to a program that would serve every rising senior in its client's school districts, you know, high school seniors.

So we worked to tighten up the business plan, stress testing it for things that could reasonably diverge from plan. Imagine investing in a For profit investment opportunity based on a single optimistic aspirational forecast, you'll never do it. And yet, when was the last time you received a financing solicitation from a nonprofit that had anything else in it.

So, we assessed the financial impact of actually falling some what short of perfection. And we sought to fund one of our more conservative cases in a kind of typical capital campaign technique. I and another member of our board made lead commitments to jump start the process. We held individual and group presentations to wealthy individuals with banking, capital markets and investment backgrounds.

And we were successful in raising fifteen million dollars of commitments in about six months from ten donors, with only two pledges less than a million dollars, the rest ranging up to six million dollars. We're now three years into what we're calling our proof plan and this funding has helped us in a variety of ways, as you can imagine.

First, other funding has flowed into the organization more freely because we are now well capitalized and look like a safer bet. Second, the senior management team has freed up considerable more time for execution of the plan. Third we've been in a position to say no to nonstrategic funding proposals that might take us off mission.

And finally, through our periodic reporting to our proof fund donors we've gathered important strategic and tactical advice, and formed deeper relationships with that group. So in a very similar way, See Change Capital will work to arrange these multi-year rounds of funding in the social change sector, where mission is clear results are measured objectively.

Informed by success and failures and the organization is committed to a credible path. Credible in our view anyway to ongoing sustainability. that sustainability may well have a strong philanthropic component. And we could talk about some examples of what I mean there. But sustainability nonetheless.

We think with this kind of funding, the chances of attaining appropriate scale would be greatly enhanced. Common terms and reporting for all funders and a condensed time frame for the financing would enhance efficiency. We can offer investors, donors certainty of funding success through coordinated closings with specified minimums, where if we think it takes 20 million dollars to accomplish the plan and we can only raise eight, we don't close on those eight.

No partial fundings here.

Some meaningful part of the answer to this question is kind of process oriented. We found that market oriented philanthropists are attracted to clarity of presentation, to a realistic and open discussion of risk, to a concise statement of goals and how they'll be measured. They're accustomed to having their capital called as needed, leaving them the opportunity to earn higher financial returns in the interim.

And they want to see any investment opportunity presented in context. What are the other alternative investments against the same set of problems and how does performance stack up? They want transparent reporting of results on an ongoing basis. Many of them want the opportunity to advise on strategy and tactics.

And very importantly, all of these process steps must not obscure the heart string elements of the proposition. Testimonial site visits, volunteer opportunities, and probably most importantly, exposure to inspirational leadership also must be woven into the presentation and to the ongoing engagement opportunities for our donors.

Now given the very siloed nature of much and maybe most philanthropy, what might motivate someone to join the Sea Change Capital Donor Network and to conduct a portion of his and her giving to our channel. We believe it's the opportunity to come together with others who shares similar objectives in terms of addressing critical social problems on a broad scale, to accomplish financing that no one individual or foundation could accomplish alone.

My personal experience, and that of others I know well, teaches me that philanthropy, like lots of other activities, can actually be enhanced when conducted as part of a community of like-minded peers. The opportunity to learn from each other and to share in the appreciation of the outcomes we help engender, I feel enhances rather than limits the philanthropic experience.

Thanks so much, Chuck. One, can you hear me?

Yeah, perfect.

One question, just to clarify, Chuck, you focus, so you're building essentially a new way, or probably a more efficient way of raising funds in scale for social enterprises.

True.

You've spoken a lot about the process piece. You need to get the process rightObviously, you need to get the fundamentals right? I mean selecting organizations that are investible, documenting why they are, what role because after all it's a fairly new organization, what role does trust play? and how do you assure the signal without having, I mean you have personally, a long standing track record, and you have the endorsement of Golden-Sax but, the organization itself is fairly new.

How do you handle that piece? How important is trust? Because you talk about the technocratic piece of fundraising and funding, but we also, I think you need to think about relationship is very hard.

Well, thank you for reminding me of that because it is absolutely essential. I've never seen a seven-figured gift move on the basis of the merits alone. And so, in some ways we're the dinosaurs at the table here, we're basically old fashioned in relationship bankers. And, very importantly, before we become operational we are pre-building a community of interest.

That's a process that I'm finding is a multiple meeting with each individual or each family. You know, if they happen to know me or my colleagues, that's all the better. If they don't, Then there's probably more up front investment on our part required to build some trust. But there is no question that I think our job will be easier two or three years from now when we do have some more substantial track record.

But, the, this is a relationship business as I see it.

Thank you, thanks Chuck. So we've seen one model in action, in a sense. As you know social enterprise is a very vast space. Lets look at a completely different kind of intervention IANCO which is lead by Christina Absinger. Which is probably more, resonates more closely with some of the for-profit discussions that we've had here social enterprise space.

How do you do it, what's your business model, and what are your challenges? All right, thank you.

Well, I just can't wait until Chuck heads to the international market. Because everything he described resonates very clearly with Ianco and our model. Especially the stress test part. The other night, when Lord Gibbons was talking about social entrepreneurs as change makers, tackling something that others said can't be done, that was impossible and not bothering with it.

I said, "That's definitely the space that I've been living in for the last 14 years." When I think about how Ianco which is a clean-energy finance company has grown over these past 14 years. I think it will present to you a very clear example of a social enterprise evolution, but before I get there, what I'd like to do is just talk a little bit about IanCo and its evolution.

IanCo is a U.S. nonprofit that invests business development services and investment capital in clean energy office in Africa, Asia and Latin America. Through the end of 2007 we've invested more than 25 million dollars in more then 160 companies. Which now covering clean energy access to over 4 million people and offset three and a half million tons of carbon.

All my efforts in capitalizing when it's non profit or public purpose investment company date back to the early 1990's. When as part of the global environment program at the Rockefeller Foundation, I was engaged to look at the question, of how do you utilize public resources, to create a platform for the public sector to engage in addressing environmental issues in developing countries.

Over the 1990 to 1994 period, I traveled to Brazil to learn about Brazil nuts and the non-timber forest products, I designed a Belaggio forum on eco-tourism, I engaged with the Smithsonian Institute, Conservation International, and others, and looked at what the business opportunities were in bio-diversity.

And we began to support small companies in China, India, Brazil, and the Dominican Republican that were engaged in renewable energy. And we began experimenting with something. We called at that point recyclable grants to the private sector. This period of experimentation led to the conclusion that energy was the sector to focus on if you were going to look at environment and development issues in the Third World, and that it had to be addressed via a business model.

Because the reality was, the energy access needs in these markets could not be addressed by government and civil society alone. In this last conclusion lies the real driver of the IANCO hybrid business model that there's a third way. It's a blending of public and private capital that allows for business development and growth.

In my case, specifically in the energy sector. A little bit on my background--prior to working at the Rockefeller Foundation, or with the Foundation, I spent been 10 years of the port authority of New York and New Jersey, which is a public authority, where I cut my teeth on public development and finance.

is derived from this public authority experience. It's not 100% public or charitable, it's not 100% for-profit; it's a third way. In 1994, I co-founded E and Co. along with Phil [xx] who is the current CEO. And you can imagine the challenge of raising capital in 1990's for a non-profit that would invest in small, clean-energy, renewable-energy businesses in rural markets, in developing countries, that was dealing with poverty and climate change.

Talk about crazy and talk about fitting Lord Gibbon's description about social entrepenours tackling things that others said couldn't be done. We were fortunate that for the first five years of our existence, the Rockefeller Foundation provided core operating support and initial grant based equity for early investments.

But we dove into investment partnerships very early. And in 1996 received $2.2 million venture fund from the Inter-American Development Bank and a $750,000 program-related investment from the MacArthur Foundation, both of which I'm very pleased to say I've been completely repaid. This takes me back to the IANCO business model.

The combination of business development services and capital is the foundation of IANCO's Enterprise System of Development. And frankly, part of its success. The business development services which includes Market validation, technology assessment, financial structuring and business plan development are central to the investment itself.

Risk mitigation strategy. However, though some of these costs are recouped through the interest rate and dividends received from the investments, the reality is the. Entrepreneurs cannot afford to pay the full cost of these services, which are provided up front before the investment. This presents a double challenge in.

raising capital. The first is that the money is needed upfront, before the investment. Just like many of our entrepreneurs, IANCO faces a need for working Capital. We need the money up front to utilize, to prepare for the investments. The second, is that since this money is the public, or charitable component of our work, it does need to be subsidized.

We've been told by many that this sort of capacity-building work is the work that governments ought to be doing. Think about the U.S. Small Business Administration. This is the first color of money that IANCO deals in. Originally, we only invested seed capital, which is our second color of money. This money is, too, more charitable and grant-like, in that it has higher risk, lower returns, more transaction costs.

The thesis originally was that once we had invested the seed capital, and the business model and the technology was proven, the market would respond. How naive. Even after we made these seed capital investments, and we were getting results from our companies, local financial institutions, the multilaterals and funds with capital F, still thought it was much too risky.

And our enterprises couldn't grow, which means we weren't getting paid back, and we weren't getting taken out as expected. So, we decided to take control of our own destiny, which is another attribute, I believe, of social entrepreneurs. And we went out and raised the growth capital directly to invest ourselves.

The third color of money: this actually proved to be a good thing. Growth finance generally provided as a serial investment into an enterprise that we've already provided seed capital to, means less business development is needed for the entrepreneur, there's less risk because we have that trust in that relationship that's been built with the entrepreneur, we know the market and we get a higher return.

this increases the return in our portfolio, and lowers our costs. As we were learning all of this in the 1994-2000 period also trying to institutionalize as a non-profit organization. The ever hard to get core support and G and A, which is exactly what I believe Chucks organization organization is trying to help, such organizations as ourselves address, this is the fourth color of money.

Were it not for the US and dutch governments, and a couple of you US foundations, all of the track records and lessons learned that we had gotten from those first three colors of money, would have been lost the Impact Assessments programs. So few organizations want to support the important systems and foundation of non-profit organizations impacts assessments,systems development, fundraising.

And then when you layer on top of this that IANCO's work is international and energy specific You can understand how tough it is, and was, to raise the capital. And at this point of time the rainbow of money that we were managing just wasn't yet producing the results to enable us to pay for it, through our operating, through our revenues.

With multi-year contracts from USAID and the Dutch government, and the implementation of this successful United Nations Foundation Avery program, we began to get on a fairly stable funding base by 2002. That's of course after we took payroll cuts to pay for a first brochure in 2000.

But in 2004 we issued our first private offering memorandum for accredited investors, and in 2005 we closed an eighteen million dollar facility with the international finance corporation. A facility that has all four colors of money embedded in it's design. I just want to pause very briefly here, and introduce you to Mohammed Pabriah, one of our entrepreneurs, and I would say that all of the [xx] co.'s entrepreneurs would fit Lord Given's definition of what a social entrepreneur is.

In 2000, Mohammed was running a small electrical appliance business called Mona Muaza and he was experimenting with solar home systems. He approached team in 2001 about selling solar home systems. We worked with him on his business plan providing first of fifty thousand dollar loan, which was then repaid.

We continued to provide him business development services, and followed on with a hundred thousand dollar loan in 2004 that enabled him to increase the number of systems that he was importing and selling into the marketplace. We advised him on the dissemination or the development of a rural distribution business and provided an additional loan of $200,000 in 2006.

He is now in 11 rural locations in northern Tanzania. He has more than five thousand households that are now being served with solar home systems. He is on a path to to provide about 2000 systems a year and he was the winner last year of the International Ashton Award presented by Al Gore and Prince Charles in London.

And his current by all of his death requirements to IANCO. Today there are more than one hundred Muhammed propriots in the active portfolio, and each one of them is providing measurable, tripled bottom-line results. SO where are we now, in closing? IANCO is an organization That is invested in that is ready to invest in two hundred new companies over the next five years.

Companies that will bring energy access to seventeen million people and offset 16 million tons of carbon went the matter. We can do this. provide the required business development services, invest 150 million dollars and see measure the triple bottom line and operate a 50-person company that has 7 offices in the developing world and provide a 2% return.

We are a sustainable company. If there is anyone out there with $190 million of one color, 2% money, you want us. But you're not. And hopefully in the question and answer period I will be able to tell you about the way we're addressing going out and raising the multi-color money that we need to implement our plan.

Thank you.

Thank you very much, Christine. I think you have a fascinating position because on the one hand, you do make investments. At the same time, you look for resources. So I think hopefully we can draw out some of that in the subsequent discussion.

Antony, I think it's really your call. You need to help us now to figure out how does this landscape look like. Because we've looked at two very specific models. They're fairly different. I think both allude a bit to the fact that there may be some inefficiencies in this market, unfortunately. How do you feel?

Absolutely, I think that's a great question. Before I begin, I have a Blackberry. I don't have a watch. So if you see me checking it not because I'm bored of my own talking, it's just because I don't want Max, the Swiss German banker, to be mad at me about time, so that's what this is. Thank you everyone for coming.

I realize it's such a beautiful day out there. A beautiful Friday morning in England. It's great to come in here. And before I get started, without being overly maudlin about it, I just do want to note how remarkable it is for a South African to be sitting in the Nelson Mandela lecture hall. And I think, despite what we can talk about as inefficiencies in the markets and the great challenges we face, I don't take for granted what it means where we've come in the last twenty years as a country and as an international movement that made great change happen and so I just did want to note that the privilege I have, not just sitting in Oxford as I child of the post colonial, Anglophilic household, especially sitting in the Nelson Mandela lecture hall.

To your question Max and I think Christine really represents a great example of someone who suffers the ravages of being ahead of her time. often say that to people trying to make this new, this emerging industry of impact investing which I will talk about [xx]. I at Rockefeller have the great privilege for being able to really observe what I think is an incredibly exiting moment in the field of philanthropy, you know in a social enterprise and that is this emergence of an industry that I call impact investing and I'll get into why I use that word as opposed to social investing.

We define an impact investment and as an investment that seeks to generate a social and environmental return and at least get the money back to the investor, and I'm here to talk about in five minutes why that industry is so exciting for you, in answering the question you've come here to answer, and that is how do we get the money to make the change we want to change, build the organizations we want to build.

The impact investing industry is really the third way that Christine mentioned. You know here in England, you go the opposite of the third sector and America there are people that talk about the fourth sector. What it represents is a new movement of people who are unsatisfied with the old binary systems that say you must maximize financial returns with one part of your heart or your head and then give away money with the, you know, the other part of your heart.

The impact investing industry rejects that binary and says we can actually use private sector investment capital and private sector discipline. The kind of language that, you know, Chuck was talking about, transaction models, optimistic operational impact - that's the language of an impact investor, someone who really thinks in a different way about the role of business.

And, fundamentally, impact investing I think is far more optimistic and therefore will potentially be far more powerful even than the whole socially responsible movement that to some degree it builds on. Because it really recognizes that capitalism and investment principal has the potential to do great good and not simply the negatively screened mutual funds which take as an approach the notion that capitalism is a necessary evil.

You know, we need to invest for our children's future, but we don't really like big companies, so we screen out the bad ones. Impact investors have a very different approach, and they say there's a tool, and we can Harness it for good, and this industry is emerging. I know a few of you in the audience, many of you don't realize you are part of the same industry but you are.

Andrew Gains who structures deals, Ele Murer here from Endeavor who helps source deals for this industry. David Carington who is doing his work in England to push this forward. You don't realize you're in the same industry, and I think that's part of the problem. And, part of what's happening is this industry emerges, is people will understand that they are part of the same industry and therefore be able to work together.

The industry is emerging but the market is not clearing. I think that's very clear from Christine's discussion, the case study she's involved in, and really, you know, to some degree what motivates the models of people like Chuck Harris. One thing, that if you forget everything else I've said, take away from this meeting, and tell me if you think I'm crazy, supply of capital is not the binding constraint in this industry.

I know that that sounds crazy for people who spend fourteen hour days trying to raise capital for incredibly compelling companies and enterprises. Supply is not the binding constraint. The binding constraint...and I hope that you would believe that neither is the ability of companies and enterprises and NGO's to take money and use it productively.

So supply's not the constraint, but neither is the capacity, the absorptive capacity, of people like yourselves. Then clearly the problem in this industry is intermediation. People with money who want to make these kinds of investments are not finding you efficiently. The reason is...a lot of reasons when we get into it.

But I think it's very important that we understand that this is an emerging industry and that the supply of capital is growing. And is far exceeds already and will only exceed even more the needs of companies and others who are trying to work in this field.

The market isn't clearing because the language is confusing. I challenge you all to become...to overcome from your constitutional discomfort with exclusion. You have to say who is not a social entrepreneur and who is not within a group that able take an impact investment in order for those words to have any meaning at all.

If you're too willing to sort of say, "Well all of us are social entrepreneurs. All of us can be part of impact investing." then those phrases themselves lose meaning and it becomes very difficult for investors to find the data from the noise.

There's a lack of segmentation. Those of you--I call you the demand side. There's the supply side of investors, there's a demand side who need the money. The demand side is very unsophisticated when it tries to approach the supply side. You need to understand the difference between a private banking channel that Max can represent, an institutional investor, the retail channel that someone like Heba.org has been able to tap in a brilliant way.

Segment those markets, understand who they are, how they operate.

You need conviction. I think Max mentioned in the opening statement, the real need to understand what is a public good, that needs to be funded through philanthropy. The kind of work that Chuck is doing, and who actually has a business model that should be sustainable and able to attract investments.

And don't be defensive about it. Don't take what is a public good and that demand subsidy and try and turn it into something that is trying to attract investment capital, and you need to focus on where the money is. I represent a foundation, I promised myself I wouldn't say this because this session is on the record.

Foundations are largely a distraction when it comes to impact investing. And I know the US best. There is 25 trillion dollars professionally managed in the United States capital markets. There's 300 billion dollars held in foundation endowments and foundations spend about 60 billion dollars a year on philanthropy.

I leave you to interpret what that implies for where you think you're going to fund your businesses. I just have two more minutes. I always say to people like Christine, that I'm fascinated by the pain She goes through as an entrepreneur working in an emerging industry that is still dysfunctional.

I have the luxury of being fascinated. Christine has to incur the pain.

Max said at the beginning, he wanted this to be a practical session. I don't have easy answers. There is an industry emerging. There is more money than anyone knows what to do with. It is not currently finding efficiently where it needs to be.

For this session to be practical what you really want from us is to say, well, what can we do? There are really two levels on which you can operate. One is what can you do as an institution to try to be more effective in tapping that capital, and I have a few pointers there. Secondly, what can you do as an emerging industry to build the kind of collective action platforms and public goods that all industries need to be efficient; and that's certainly something that we're not seeing, and I'll get into that more later on.

I always say and when I ran TechnoServe in Kenya we worked with entrepreneurs that academics and even activists often focused. on some problems and bemoan them. Entrepreneurs focus on solutions. If you go in Kenya and you talk about how, the government or the academics will complain about how bad the roads are, the entrepreneurs will figure out new ways to move goods across bad roads and make profit from that.

So I challenge you to be the social entrepreneurs you claim to be and focus on the solutions. What can we do to make this market clear more effectively? I have a few thoughts on this. The first is, do not approach investors with a normative argument that tells them they should be supporting you because it's the right thing to do.

Normative arguments never move capital markets, and they won't. I'm sure that Chuck having spent 23 years at Goldman can tell this with far more authority than I can. And Max from his perspective at UBS. Do not go to these large sources of capital and tell them that they should be doing things in a different way.

Recognize that that work has been done. There are enough people out there who have convinced enough people with money that they should be moving their money into these kinds of. investments. That the challenge now is to not tell people what they should do, but help them to be able to move money more efficiently.

And I just came up with three thoughts on that and I will just lay them out and then get into them. The first is know the market, the second is chase the money, and the third is speak the language.

Know the market. When Kristine is out there raising her fund right now, the new capital raise, she walks in blindness. No one knows what I call the demand per for impact investments. Which channels are most lucrative? How does the market respond? Does a 2% note really move money versus a 1% note? Do people want less risks?

Do they want more return? We don't know. We need to know the market and understand that within this industry there's different channels with different imperatives. And I really like Kristine's notion of the colors of money. Know the market and understand who is attracted to what color. Chase the money.

The money in this world is held in institutional investments, in pension funds, in private banking channels, and, understanding how capital markets work I think is crucial to be able to access the money effectively. And then finally, speak the language. Again, you're not going to convince people to, you know, come over to your side and speak the way you do.

You really have to relate to people in words that resonate with them. I've already picked up, Christine talking about a risk mitigation strategy, Chuck talking about a market oriented philanthropist, the transaction models. Being comfortable with that kind of language is very important. The last thing I'll say is that Jimmy Carter, yesterday, for those of you lucky enough to see his speech, he told us that the greatest moral imperative of our time is the growing gap between rich and poor people.

Impact investing is one way we are closing the closing that gap, and as we all work together to help that industry mature, not only will it enable more of you to access the kind of growth capital that you need. But it really will be a part of walking, walking the journey that Jimmy Carter challenged us to walk.

And I think we have the great privilege of being part of an emerging industry which means we really have the ability to shape it and accelerate its maturation. Thank you.

Thanks so much, and now we know why we got the Nelson Mandela Lecture Theater, fantastic. I think there are a few points here that I hope my company will help us work through. Anthony spoke of the market, but in reality it seems to me from the discussion where they are, it's the markets. There are different kinds of markets that function according to different kinds of logic.

Whether you are looking for grants or whether you are looking for investment. And the challenge seems to be to connect these two. Your point about the emerging industry ties back nicely to the issue of culture and context. Also, taking the box so our friends at school will be happier trying to move finance.

To connect financial because of these. Mark if we think about, about you know understanding who to look to for resources. The difference between looking fund, from say a VC fund, philanthropist, the whole SRI movement. How do you see it, how would you segment now from taking UK perspective, how would you segment this and what are the main chance where will we be ten years from now.

Ok, thanks for that. Although, I will try to stay otherwise. There was a newspaper headline in the "Observer" last Sunday and I can recollect thus or I mean to reread it, but I was kind of thought about it a little bit, and the headline was, "Capital Markets Are Too Important To Be Left To The Hands Of The Capitalists." another saying is about that, is that, the markets are incredibly powerful things.

Capital markets dominate global business and international trade and so on and the financial is that you'd think about or just traded through the London market are staggering to believe. Billions of dollars in a day. And the challenge really for us as a community, as a movement, is how can we access the right kinds of capital, and how can we find people that are sympathetic to our goals and get them to support what we are trying to achieve as entrepreneurs.

And my career goes back--I was originally working in a sort of voluntary sector, I was working as an agricultural economist in Africa. And this was a time during the Band Aid/Live Aid thing in '85/'86. And I was struck by the fact that during that famine, Ethiopia was an exporter of food. I guess you probably know that.

And, one of the things that was a paradox was that there wasn't so much a shortage of food as a shortage of the money in the pocket for the people to go to the market to buy the food. And the market wasn't really sending the right signals, people weren't turning up to buy, and the people that were buying were people buying exported food crops and coffee crops.

And I was thinking about okay, how can we maybe think more creatively to get capital and support entrepreneurs and help them develop and so on and change some of those capital flows and so forth. And so with some friends in the late 80's, we came up with... we had this sort of slightly crazy thought that if you want to change capitalism, the first thing you gotta do is take control of the capital.

Its the number one job. So what do we do? We.... this particular woman [xx] who continues to inspire me and another one called [xx]... is we listed the first environmental investment trust in the London Stock Exchange in 1990. We raised what... thirty million sterling? Which I guess is a few hundred million dollars in today's money.

And we...

That's yesterday's money.
Yesterday's money. And we went out and and we tried to find things that were fitted more about the types of businesses that we wanted to find. So we're into geothermal energy, we're into first of the wind turbines. We invested in first clean tech fund in 1991 and lost all our money. That was a learning experience.

And we try to find the businesses that supported what we though of as the social mission and an end goal. And what was key to it was the kinds of question were: Well who controls the capital? Who could we approach? So it was high net worth individuals, charities, foundations, and public sector pension funds are the biggest ones that supported us.My first job we raised, I guess around 300 million, thereabouts.

To go in this direction. We wanted to, so the questions were: where is this money going to be invested? How is it invested? And what is the ultimate purpose of this? What are the businesses trying to do? And also who are our customers? I think it's important to distinguish that when you're looking at the captial markets, what we're not doing is doing philanthropy.

We're doing it for profit, but it's what the businesses do that is important for us, so it's social housing. was educational businesses. But as the 1990's went through and I changed firms, I ended up at Hendersons, we started to see an increasing number of what you probably could describe as social enterprises.

We started to see the likes of Cafe Direct and Trade Craft and The Ethical Property Company. And the way they were presented to us... they were not presented in a way that was invest-able . The shares were not.... they didn't come to us on an exchange and the rules of the funds that we were running was that you had to trade equities on a recognized investment exchange for regulatory reasons, they are the wrong size.

We took bundle deals together that were big enough... they were too small. But we had large piles of capital. So if you look at the social investment sector today, there's two parts to it. You've got the smaller end which tends to be small... $5, $10, $15 million social venture funds, and social venture philanthropy funds.

But right at the other end of the perspective, in the UK, there is currently 8 billion pounds in socially responsible investment funds today. And if you look at that eight billion, dare I say less than 0.01 percent is invested in social enterprise sector. And those that we did see, like Cafe Direct, we couldn't buy.

And the other paradox that we had was, we were looking after the savings of thousands of people, we had forty, fifty thousand customers, and we were managing the pension schemes for charities, we looked after green piece of friends the earth, and we even look after bit of Trade Craft pension scheme, but we we could not invest their capital into say Trade Craft, they were a company that had shares, but the way they were structured, we couldn't even buy the shares with the funds.

We had regular savings money coming through. 20, 30, 40, 50 pounds a month in the case of stakeholder pensions coming through into our account that we had to deploy. One of the things we looked at is that there is probably around three million people in the UK that work in the third sector, charities of public sector type work is, and when we look at pension schemes managed by the big fund managers, none of that capital which is saved in peoples' pension has been reinvested [xx].

So where did this go, where did this take us? By about 2007, the social investment movement had grown huge. Thus, if you look at it globally, you are speaking of tens of billions of pounds and it's all invested in... a substantial amount is invested in listed equities. So the clear conclusion that I had is that we have got to close the gap, we have to find a way where we can intermediate between the social investment funds which had been raised in the city, the kinds of things I was doing at Jupiter ; Henderson and where the demand is, the social enterprises.

We've got to find a better way of getting there. And sometimes we break the rules to invest in some social, but we had to find a smarter way. So over the last 3 to 4 years with the Charities Aid Foundation and then your Economics Foundation with some of the support from the office of the third sector we started to look at developing a new investment exchange for social enterprises.

One that would aggregate together social purpose businesses and social enterprises. If you look at two of the exchanges in the UK, Aim and Plus Markets, we already find companies listed that come from the social enterprise space. The best known ones are Freeplay, which is a windup radio company; Good Energy, which is the hundred percent renewable energy company run by Juliet Davenport, and there are other businesses.

There is a children's theater company listed on the London Stock Exchange. There is a company that looks after disabled people with contracts from the state, called Community CareTech. That's listed on the stock exchange. How can we bring some of these for-profit models but deliver powerful social outcomes?

How can we put them together in one place that enables investors to find those types of businesses? And can we create a new investment exchange that enables social enterprises to IPO? So today we've just, yes, it's being announced after this meeting. Rockefeller Foundational is supporting to the ground, the development of a social stock exchange where our principle work is going to be working with the financial services authority.

To look at a regulated investment exchange. To listen and talk to the social enterprise sector. To talk to companies are already listed on exchanges that people haven't found, though we found the new investment and to talk to intermediaries. Now, there were six or seven hundred companies on plus A name with a market capitalization of less than 10 million and there is a whole community of auditors, accountants, advisers, brokers, investors that invest in those types of companies and some of the people who talked to me about the social enterprise in fact said it's too small 'cause it's too early a stage.

We will have a look at some of the companies already listed on London. Half a dozen folks turn over 30,000 pounds a year, raised 5 million on the plus market. You know. And that's...we've gotta start connecting with actually what's happening in these capital markets, but we've got to control the framework by which we do that.

And there are a whole supporting community of advisers and brokers who specialize in this. And what I anticipate will happen is a lot of the specialist people in the social enterprise space that are working with social enterprises will become the future brokers and nominated advisers and corporate finance advisers to the space, and they'll be working with an efficient capital market.

And the investors - and this is my 10 years to the future next - is the investors will be people working in the third sector. They'll be putting 10 percent of their pension fund back into the third sector and they'll be owning social enterprises in their portfolios. And they'll be deploying the capital more strategically in a more focused way.

And we'll be doing internationally, so we have already started to talk with the folks at the Kenyan social stock exchange, with folks in India, also talking around the Mumbai exchange, and also with B Corporation in the States. And we want to make it an international phenomenon and we want to tap the international capital markets.

The supply of capital is not the challenge in this situation. I think you're absolutely right, Antony. It's how do we find our friends, how do we bring people together, and how do we work constructively. So in ten years' time, I think I started off eighteen years ago where we said we got to take control of the capital.

And I still believe that. I still think we've got to take back control. Because if we don't, others will use the money in the capital markets for their own ends. And a good example...I'll give you two examples of this. In the UK, we have something called the Private Finance Initiative. It's where the private sector builds schools and they build hospitals.

But they don't just do it for profit. They do it for every ounce of return they can squeeze out of the government. And the returns that I've seen from fund managers, I have sat next to them at different desks. They're getting very high double digit returns from financing building schools. The UK government has 100 billion financed through private finance initiatives, building schools and hospitals.

My vision is a situation mission with the social enterprise sector actually gets to win these contracts and runs it and builds the schools, and builds the hospitals, and we don't leave it to the private contractors who are doing it only for one reason. And we've got to take back control of the capital markets in other respects.

Just in the last three months 800,000 hectares of the Congo rain forest was listed on the London Stock Exchange. A huge area of Amazon rain forest was listed on the London Stock Exchange, and when you look at what they are going to be doing with it, they aren't going to be cuddling up to it. And we have to be aware of whose money are they using.

Whether they are using endowment money to do this, they are using church and faith group money to do this. And so I guess what I am saying, I'll stop, is that we've got to get back in the driving seat, and don't wait for others to do it for us. And take back control of this capital. Because if we don't, there is others who will think of less beneficial ways of using that capital than perhaps a more focused socially directed movement can do.

Thanks.

Thank you very much Mark. I have to say... it is playing out beautifully. We have different perspectives at the table, and we are really on time, that's great. I was ... would suffer extensively if we are not. What have we learned so far? Clearly inter-mediation is one of the core challenges. We have seen two different proposals here, I don't think they are mutually exclusive .

One chucks transaction driven model, to build a network of donors at the end of the day, so that funds can be sourced and scaled for excellent social enterprises or investees at large. On the other hand, at the other end of the continuum so to speak, the social stock exchange proposal or model that Mark outlined and we have seen I think in [xx] that one example that typifies many of the challenges that you see today if you work as a social entrepreneur.

That it's no longer enough to being playing just in either one of these spaces, the grant space or the investment space. But in many cases in fact you have a value chain where some pieces can be resourced on commercial terms and some pieces cannot, yet you have to do both, otherwise you cannot, you cannot deliver you got to service.

What we would like to do now is to open it now for questions. Now questions end with a question mark. So I know that many of you have exciting projects and we would all love to learn more about them in detail later, but please ask questions. What we will do is a first round of about three or four questions.

Please identify yourself and the name of your organization, and then we will get a panel to respond. And I think the mic is going around as well.

From Calvert Foundation, thank you for very very impressive panel. My question to you all is actually pick up on a comment that Antony had put forth which has to do around language and both.

[xx] so that we can as a feel begin to understand when we were talking about, you know growth capital that it is, equity that is a donation, versus growth capital that is mezzanine finance, what kinds of financial returns can be expected etc. In part of it is there is been a lot of different languages that kind of moves around and the question is how do we as a field begin to find more, begin to articulate more clearly the different slices and colors of money and that was very helpful Christine, and if you all have some ideas about how we can move that discussion further and create greater clarity so that we can all speak to one another and speak the same language.

Excellent, thanks. Another question? I am [xx] from [xx], I am just interested to hear from each of the panelist Your seeing in terms of return too, that someone from a foundation versus what you might be looking at on a social stock exchange versus how you are talking about return to the grant you are doing both from a social perspective and also from actual financial return as well.

OK,third question.

I am Mark Imannuel with the Ciscal Systems in the high tech field we look at start up companies going through several rounds with these sort of C-capital VC funding with an eye towards an exit, either a trade sale or a public offering. Can we look at similar models in the sector in the social enterprise sector, where entrepreneurs are looking at continuum where they go to some kind of a successful exit or scaling?

Great, thank you. Think we will take one more and then we will do the first round of answers. There's, I think you need a mic here.

[xx]

Hi, Tommy Hutchonson from [xx].
We've got members in over ninety countries and I'd imagine probably ninety something percent of them are desperately in need of finance. The question would be... follows on from the one about language... is there some way, I mean even within the UK, people understanding how to raise money from financiers, even from banks... its an extremely complex issue, an issue of language is very hard for both sides to understand each other.

In a global scale up, the problem becomes magnified even more enormously. Is there some way... it's interesting the way how Kiva have managed to create a very efficient way to raise relatively small amounts of money. But is there on a slightly higher ticket... a better finance scale... do the panelists perceive a way of maybe some of what you do can be adjusted to improve the efficiency see from your side and then those that are trying to collectively get a group of social entrepreneurs together, so we can work on how to improve efficiency from our side which is something that can be done on the market place in the different types of market places, where you can where little things could make a difference in terms of the efficiency and the way you arrive to get the money after?.

Thank you, So we have four questions on the table 1 who are leading to the need for a share with [xx]. Everone talks about the same things. Secondly, the question about returns, different kinds of returns, it's really a question about investive preferences what kinds of preferences do investors have?

and how can you segment them? Thirdly, can we learn from the Hi Tech industry, in terms of building scale models and finally, what can the investors themselves do, what should they be doing to improve the efficiency of their actions? Who wants to jump in? Let's be democratic. Do you want to start?

I'll make a few comments.

In terms of social enterprises, there really have been a series of issues through IPO's We should have been successful there opened up the equity base the company to extend to the investors, nothing is record of that. What I like to say is significant removal of that and they share base them diversifying out to a broader community, the public, other foundations and perhaps even main stream investors.

So I think that, what we need to do see more of it, and typically you have to ask the reason why a company would want to do that? There could be a couple of reasons, one is a founding investor would want to exit, maybe a foundation has invested in social enterprise They won't save the money back and they are going to invest in another social enterprise except we.

One of the best ways doing now, trades. So we have to look some other doing, expansion finance so it comes to market and they want to raise $5 or $10 million on top of what they're already doing and to grow the business and there's a very good reason to come to a public market. My view is the coming onto a traditional mainstream market you're gonna get lost, and the intermediaries aren't working efficiently yet to bring people together to find these IPO investments, and I know that from my own experiences difference we're trying to do one last year.

With a social enterprise with half of these customers are charities and half were sort of bordering the same space on its where to go when they want to do IPOs we need to get that working more efficiently. Can I comment on the returns things? Sure. Returns is a really strange one because people often say, "Well if you are investing in a social responsible way by definition you would transfer some of its called Complex picture then I will be you example of that is a new investment exchange for trading mission with option credits when they floated they had the the revenue got through a four million dollars of turnover with the market capitalization increase to I think it was eight hundred million with in a year and half and when you look cut the share price graph, anybody who went in at the IPO and sold out a year later would've, you know, increased their money ten-fold, so if you said to an investor "OK, that was kind of an environmental investment, was a sub optimal return, was a return less than the market, clearly was an example of a stock that out-performed the market.

However, when it comes to returns, I much prefer to look at dividend yield as an indicator of the value of a company and its ability to pay dividends, and the valuation should be stuck to an ability to pay out to shareholders, rather than some kind of speculation on the future growth of it. There's no reason why social enterprises that are doubling or tripling in size because they're growing what they're doing.

I spend the weekend with a guy who was, who does training for people who have been in drug and alcohol dependency. And he wants to, he thinks he can grow his business five fold and he does, because he's got a very successful model for it and he wants to raise his finance and there is an example I think, with the company Where you could really grow significantly in that business.

And what the markets like to do is value companies which grow and can increase their revenues and grow profits. And there is no reason why social enterprises can't do that successfully, so I'm not really, we are in a situation where trading equity, you're really trading what you think the company's worth.

And if the companies are really growing and doing something significant, there's no reason why they shouldn't grow their value and their perceived value by the market. Corporate finance advisers and who works. Tom, Tommy, your question.

I don't think we've really got this working particularly well in the UK. We've got groups like Triados and Rod Schwartz with his group Catalyst. And they will work with Social enterprises to help find investors, and I know there's some investors in this room like Bridges and all that dozens of cope-up finance advisers working with social enterprises to help get them investment ready to take to and funds like, you know, like Bridges and some of the other funds, I think they are.

And I think that's a massive gap that needs to be addressed.

[xx]

Sure.
Just a couple of comments on Sherry's comment about the language. We live... we're very schizophrenic and really we talk out of our both sides of mouth sometimes because when we were talking to the grant side, the philanthropic side, and we talk about our investment model and we talk about the returns, many of them just glaze over and don't get it.

They don't understand that there's still a public good that's underpinning this investment model leading to sustainable businesses in the regions within which we work. And so that is a challenge I think often, that is more of a challenge in the philanthropic space than it is when you learn... when you're in an investment model because you're speaking that language with your entrepreneurs, you incorporate language like risk mitigation, return on investment, all of the elements that the private sector investors are more comfortable with.

We've also just gone, as I mentioned, we issued our first private offering memorandum in 2004 and have just come out with People and Planet Notes which is our major fund-raising vehicle in our new capitalization strategy. So we as an organization have had to learn that whole language of private offering memorandum and risk mitigation and all of the things that the lawyers have pounded into our heads about talking to accredited investors, this is not an offer, by the way!

And so all of those elements, and it is particularly I think for social entrepreneurs who are coming out of the non profit space, it's a real schizophrenia. And maybe perhaps as part of the work that the impact investment collaboration is doing, we could come up with a vocabulary, a glossary of the terms that you need to do when you're talking to a specific color of money.

The other question like to address is the one on returns. We learned very early on in our work that. When you live in the grant based world you have to that impact assessment stuff to your reporting and so on. We started working with investors and people who were loaning us capital we knew our markets, our return is below market.

So we knew, right at the beginning, we were going to need to be very clear on what the other returns were, that INCOS investments were producing.And so we began counting in 1998, thirty six indicators. This would have also be great for yesterday's impact assessment presentation. We measure thirty six indicators across the financial, for social and the environmental sectors.

And, not every enterprise hits off thirty six. We are looking at things like number of jobs and must important one how many people are served with clean energy deforest station avoided, amount of kerosene that's been displaced. Of course, carbon now because point of our strategy is we're monetizing the carbon that's produced by our carbon outsets the resulted from our investments and we didn't interpret them, we didn't put a value on them, because each investors coming with their own lens of what's important to them.

Is it how many women entrepreneurs? Is it how much deforestation has been avoided? What's important to you as a social and environmental investor in addition to the financial return that you are going to be receiving on the product. And that has proven to be one of our major strengths and it really, we've been leading very much in our sector and working with our colleagues so that we can get some comment or peer investors groups to get some common language on that is indicators are, but I think its a very important element t We are able to tell our investors what those social impacts are and then they can put their own value on what is important to them.

Internal stages of capital raising in the pure non-profit sector which is where I am focused, I think its fairly clear upto a point that is to say, there is an angel type... a group of angel type donors who typically launch organisations. There is an emerging class of so called venture philanthropy funds which come in at a fairly early stage with money and with management consulting resources.

We see ourselves as perhaps the next stage and in fact, I think our target issue is if you will, it probably will have come out of somebody's venture philanthropy pipeline by and large, there is a big question as to what comes after that. There certainly isn't a, you know a secondary market for any of this and therefore no pure exit mechanism.

It's more of a hot potato or pass the shell game, frankly. Who's gonna take the next stage of risk? But i do think the first two or three [xx] are starting to develop some structure and that's encouraging to me. On the language point, you know, I'm both a culprit and a victim of the Questions that is what i have tried to learn to do is to position my language around the audience in the sense on the Donor's side which is the most.

My focus is at the moment and I am trying to convince people with business backgrounds to take an e podium investment approach to their and it should be by definition . Jumbled up which is one of the reasons that is a mouthful for me conversation i think it seems simple to me but it doesn't seem that simple to others.

Thanks .You want comment.

Just very quickly, i think a mature functional market exhibits traits that are sort of the antonyms you for described. A mature market has.... is a common language where words have meaning and enable people [xx] communication occurring incredibly quickly i said about private equity it means something to you and i said about venture capital it is a whole set of meanings associated with the word and I have communicated that in three seconds.

Christine goes to talk to someone xx you know and that is months of relationship building to explain what she does. You are a good communicator. The mature industry is clear segmentation. In any mature industry you know what your customers is in a fund business you know the different layers of funds what they want,how to approach them the different colours of money and we live in a multi coloured dream code of confusion.

In a mature market there is simple and efficient [xx] but you were mentioning between the different layers of capital and finally in a mature market have what I have called blacked word unraught interactions where I am coming to your points people with money were able to put their money into investments without their.

being a lot of emotion and judgement and self-righteousness: the whole dynamic that occurs often when social-entrepreneurs now approach capital markets. Those things are changing as field is emerging. I said earlier the reason I use the word impact investing and not social investing is because our social investing means so many things to so many people that it actually means nothing.

And again, we are corporate as much as we are predicts. If you read the [xx]foundation annual report it will say that we invested in university in Kenya. We didn't. We gave them a grant. So what is a social investment? If you Google the word social stock exchange, you will come with a South African or Brazilian social stock exchanges, which are found to be clearing houses that help connect grand makers to charities.

Very important work, has nothing to do with the stock exchange in terms of that word actually means. So, I think, there's a lot of confusion again, I mean, we suffer both the dysfunctions of being at a moment when the market industry is emerging, but also great opportunities it is a very exciting time.

The last thing I want to say on this issue is, how do you connect social entrepreneurs with the capital markets and with investors in a way that is coherent. I think you absolutely have a really good point about that. I have a specific story on this. The Rockefeller Foundation is doing work now in urban upgrading and emerging markets and we convened a meeting last year, in which we had a series of people, including a woman, a young lawyer from Nairobi named Jane Wehru, who is part of an organization, an incredible organization called Slum Dwellers International, that has created a new model for organizing slum dwellers around the world.

And really creating social capital and then turning that social capital into political capital and transforming the lives, both practically of these people, getting them land tenure and the ability to build homes, but profoundly changing the social dynamic under which they live. And we brought a change, together with a spectrum of people, including a New York hedge fund manager.

And the premise of the meeting was how do we finance, at a major scale, the transformation of slums and emerging markets. It was a week long meeting, and i would say that if it had been a one day meeting, the premise that Jane [xx], the hedge fund manager, could actually interact it would never have worked, because, and this i have seen a lot of in this industry.

If Jane and the representatives, and the activists and academics who support [xx] international capital markets and investors are [xx] heartless and investors assume that people like [xx] even self indulgent and that's the starting point So, the question of how do we build functional capital markets that connect the people who hold capital and who manage it with the people who really have the ability to change the world if they can a hold of that capital, demands that we overcome the kind of [xx] interactions that occur, when people like that get together.

In an emerging industry, you overcome by putting the two of them in a conference for a week, they'll build something and it will be a product and it will be small and then over time it will be replicated and picked up and the time One hunderedth time it's done, you won't need to be putting people in a conference room in a week, the [xx] will be clear, the arguments will have been made.

At the end of this meeting, Jane [xx] said something that sounds very But it was incredibly profound she said you know I came to this meeting and I didn't trust you bankers and I don't believe from these experience of these slum doors that I work with that You actually. have any consideration for us, because we go to banks.

You don't want us to be there; you're embarrassed by our presence. She said after being with you for a week, I now realize that we need each other. And that sounds very simple, but I think it's very important that we understand the premise as Mark and I have laid out, and that is that if there is more money looking for deals than there is So it is not a one way pardon [xx] it is not simply social enterprises meet to go banking to rich people and change over their due near x suits and talk like bankers.

That is important but I think; if you recognize x x x x x working now; where there is more money looking to be placed, that does new balance, where people who have a compelling value proposition to an investor actually have the ability to enter into those discourses with a greater sense of agency and a greater balance of power, so that it is not simply the social enterpreneurs need to figure out how to talk like the bankers.

I think there is also a real need of for the capital market to move as well and to me atleast some where in the middle and that's how this industry going to be built. Thanks Antony, I think we can even address the fourth question. What do the Investors need to do. I would like to briefly comment on the issue of the language because I think we need to be fairly realistic here.

As long as to be perceived as a social entrepreneur, to label your self as a social entrepreneur is attractive, is preceived as being attractive, in attracting additional capital. You will have entry. There will be people who according to your due to finish and not a social entrepreneur will label themselves like that.

This is just something that antony didn't talk about the last yesterday, but wrote quite a bit reflexivity. You know, if we think about particles, you know, particles if we do physics well they don't read the journals and if you write something, if you come up with new insights, they will not change their behavior, but human beings do.

Human beings will all be influenced, hopefully inspired, by this panel by the conference. You will all change a way of thinking. And this is one of the fundamental challenges in this emerging space. The concept in itself is fairly broad, that's good in the sense because its inclusive, but of course it is a risk of being meaningless in the sense of not being able to convey as Anthony, for example, just pointed out, as Christine pointed out, in a short amount of time, to a potential investor, what is unique about your value proposition.

Why should someone give money to you suppose to someone else and the thing this is something where this needs to be taking care of, but the doubt that we can do it simply with top down saying we will recognize the problem which is the two we differently we know because the dynamic phenomenon. I would challenge all of us to simply be extremely clear and specific about what we do and how we operate, as opposed to fighting over labels, because we can't win them.

It's impossible. Good news is we are being really efficient in the allocation of time, I hope also the problem solving, and so we have the time for another round of questions.Who would like to solve?I think you can bear with me na? Explore well innovations of university .I wanted to do ask a question of another particularly dark colour of money that falls sure is capital investment but that I think could be important for the goes of of xx government procurement of money, particularly in contexts where it's possible to effect the standards for procurement and position social enterprises to be able to bid successfully.

And just an example, the kick start's first substantial source of revenue was through a large and can't to act the bill [xx] which [xx] their alternate adjective in a prize creation [xx ]given them opportunity to build a capacity and to demonstrate some capability so just wondered what the panel thought of that?

Okay, thanks. Well we have [xx] you then you are in the front and the person at the back go ahead. Jara Bouche [sp?] from the Institute for Social Entrepreneurs. Could you talk, each of you, about the Pros and cons of debt versus equity at the various levels of financing. Ok, that is very crisp and short.

with a question mark I think you have been, in fact the gentleman here had his hand up in the air for a long time. Here. And the good news is that there are a lot of questions, that's great. And we will hopefully be able to address most of them.

Thank you very much. Phil Conway from IVM and called to care work with disabled kids.

I'm not a corporate finance guy, but what I keep hearing is misdisfunction of demand and supply. And the city of London had huge misfunctions as I understand it, of demand and supply in the eighties. And they adjusted with a big bang. Where everyone was involved, and everyone somehow got round the table.

And did sort out a major demand and supply alteration that dramatically increased the efficiency. And I wondered where there was an application a possible Wyford[sp?] foresee about the Big Bang Ok [silence] question? I think, sorry there is only one question per person because others also want to ask question.

[x x x x x x]. It very easy to get about mission when you talking in this and i just want to bring it because that's the key. It's all very well eradicating [xx] diseases of poverty, but unless we actually dismantle poverty then we're doing nothing. And so what for me is the real issue and that if we talk about stock exchange which on five [xx] on [xx] various of machine rest and being shocked Amazon because of your investors and your shareholders, main garrage of body shop and we saw the things in the body shot where we need to the great light.

Erotic, had the vans going down about domestic violence, share value fell and Pulmonasian government said we should not count on that, we also know when they were attacked for their values, share prices fell. So I think that we need to look how to preserve those missions if we are actually could eradicate poverty and therefore, I think we need to look at how we control that, and I was going to ask a penalty have an examples, the one I have is got to trust, 'The Guardian' newspaper xx Guardian news paper set up a trust above the magazine and the newspaper which ensures independent journalism.

And I think we probably need to look at next is that the innovative except that it could drive a valid.

Perfect I think we will do another round at a later stage. We have on the table Government procurement money that was security, Big Bang and mission to earth. So a lot of issues.

And lot to comment on to death versus equity question in the non-profit sector. I look at it the same way i looked at it when i was a corporate from the [xx] professional, which is to look at the risk profile of the cash flows of the the organization in question, can they support debt? If they can, debt is a wonderful tool for accelerating progress.

If your organization choose entirely film topically supported and that film topic base is on certain enhancements in, you know, weaker eared time is again why organizations are [xx] kind of borrow the increasing existence of hybrid revenue models whether [xx] for sure [xx ] along with the philanthropy i think great oppurtunity that financing the market for that financing for non profits the [xx] Supply side of that equation in the united States is quite robust, and probably not being utilized as effectively as it could to take the Government procurement question.

Many of the enterprises that E-encur supports in the markets we're working are responding to Government procurement. There is a major element of their initial leap into the sector, particularly in solar photovoltaics and servicing government contracts for health clinics and schools and so forth, so that is an element that certainly is looked at within some of the enterprises we support.

On the debt and equity question E-encur is a non-profit. We love equity 'cause it means its grant, but we see clearly a major element of our growth is based on the borrowing and going out in to the market place with a private offering memorandum. When we invest in our companies, only fifteen percent of the capital we invest in our enterprises is equity and the reason for that has been, you know, very much alluded to here, is exit.

We are working in small companies, start up companies, in markets that don't have ability to do many IPOs And thus another one thus another one of those vocabulary words. And clearly what we are trying to do is cash is the best exit especially when we as an intermediary are borrowing Funds that we have to repay.

So we need to have some surety on our own cash flow which is thus build on the back of the cash flow of the businesses in which we invest. Body Shop gets bought by L'oreal. Green and Blacks gets bought by Cadberry Schwepps. Ben and Jerry's gets bought by Unilever. And what's happening is these big names from the sector that we you know, knew and grew and loved.

As they grow up and so on, they getting bought by the big corporatesand when we asked them why, it's because they felt that that's the only route they could go, because they couldn't get the expansion capital, they couldn't think of another way, and so on I suspect that what you're going to see happen is if it create a more viable exchange mechanism social enterprises is some of the behavioral characteristics of the social investors will start to pop up.

So if you look at the average turnover, the proportion of your portfolio of investments that gets turned to be a year, I think the average holding period for a fund management in the city has now dropped to less than a year and you'll see portfolios and I had colleagues running portfolios where they turned over a hundred and seventy percent in a year which means they're constantly buying and selling.

Now with the social investment funds that I was involved, as we dropped our turn over right down, and we had an implied holding period of somewhere around five years typically for a stock. And so that's what I think will happen, you'll find that the social investors who will be drawn to you will be longer term shareholders, and you won't experience what will happen with the constant buying and selling in the secondary market that you see.

So I think it's an important feel that [xx] but I suspect the investors will hold on for much longer and will be more supportive investors. At the end of the day, I think it's about identifying the right kind of share holder, and I read its comments [xx] to be published on development social capital market he actually published this phrase I wish we never listed the [xx] first what he actually said very much the reason [xx] but we did now is you need to access capital to grow the business and so we are trying do is bring together values based investor with values based companies, and these one of these things kinda bugs me.

The younger people have values and the companies, and the investors don't have any values, and the What is going to happen is that somehow investors with no values are going take over value based business and destroy the values. Actually i don't think that is what is going to happen.My experience is there were hundreds more values based investors out there waiting to find these kinds of investments, and they can't find them, there's navigation issue and the,when the first work who happened in the early nineteens from my college warning non ecological funds over class who is doing Money?

On our desk people weren't withdrawing their money, and what was actually happening they were sticking with these investments. because they felt this is a very important thing for them of any portfolios they were selling, if they had main stream portfolios, they were selling that. So I suspect that these types investors will be stickier, more longer term, and will share common values.

They want to do it professionally they want to hope people to account for how what they do with their business. but I think you are going to find them more supportive. Just very briefly on the last two questions, I think we need to know what we're talking about money used to be a bunch of metal in a bank, now it's a bunch of ink on paper.

That's what money is we call it capital, it makes it sound more profound, and we kind of wave our hands and oh capital. none of us care about money as an end in itself, and I think you are absolutely right Request on mission with promise a higher level of marriage it will using sites of means and ends to me that issued mission is to say how do you remember of no [xx] who has a solar panel who's child is now doing better at school because they can read at night.

I mean that's the kind of thing they think about and i think in this whole discussion, we sometimes tend to fetish investment for investments sake. It's cooler to run a social enterprise then to run a NGO that gets charity. So i think we just need to remember what we're talking about. About, and then also be very clear, and i [xx] this earlier that many, the market under supplies public goods that have positive any of you who have studied economics, i suspect lectures here the first day of micro-economics.

They'll say that and it's true and i think we shouldn't overstate the accentuation of market will solve all the problems. There are many fantastic NGOs that should and will be supported by subsidiary. What's important is to approach Capital and the different colors of money out of understanding and not ignorance, and to make decisions about how you approach [xx] fund raising that enables you to harness money harness money to your machine rather than rejected out of conviction and i think that's important if you choose to Historical analogues might project this kind of money .Do so because thought about it and not because you believe that capital is inherently evil and is definitively distorting.Do us a disservice.

In an involving industry it could be that we lose opportunities to do things in a different way because we are constrained by what we know our predecessors could not do. Last question around the big bang, I think that's a really interesting question. Here i think historical analogs do serve us to a certain extent.

There have been other industries that have emerged. This is not new phenomenon. The kinds of frustrations we're going through, the confusion on language, it is what happens when industries emerge, and there are some industries that have emerged through a big bang supposed push by Government and others.

There are other industries that have emerged more organically. Probably the most interesting analog thought it's imperfect and over applied is the industry that microsoft finance industry which emerged not three years ago when go through bank started structuring CEO's, but forty years ago and probably a thousand years before that but certainly as a concept.

Forty years ago it was emerged through major application of grant based subsidies by private philanthropists then government so i think there was no big push but there steps along the way some intentional some opportunistic but it no one allowed an industry to grow over 40 years to the point where it is now.

Some of them were intentional. Some of them where organized by governments. The multilateral were involved. Sat in a room and [xx] i mean it was other than the few people came up with it i think we need to balance the need for some thing as a big push. It's a very attractive idea because it, in a way, could create the coherence and set the language.

But i think this industry is going to emerge, as other industries have, through the opportunistic actions of entrepreneurs through trial and error. Through competition. One thing we tend to do when we structure big pushes especially as philanthropists is organize markets which i think does a disservice but from [xx] apartments in the [xx] of any viewer chance to see what those guys are doing very interesting work of setting standards and you know accreditation is a social enterprise which you can't have a social [xx] change you don't have a such standard what is a social business i mean is a sort of infrastructure we need in this field [xx] changes one part of it there are many pieces but [xx] she says we clearly have a market people are making deals money is moving though we don't have a current marketplace, and i think that is the challenge how that will emerge.

I don't think we need a big push though an intelligent push could accelerate that. I think what i find very interesting in the second round of question is initially it was to the and possible in a large session but some what technical and but i think especially your question about machine rift really brought the issues with the passion, emotions of values to the i think the good news is that the [xx] of the people have no values now i have to say you know technically is not possible [xx] values, just like you can not communicate, may have different values.

But the good news is normal investors in fact, look for meaning in their lives, in ways that are similar to the ways you look for meaning. Things simply, the way it's being actualized is different. Unfortunate Everyone can be at the grassroots level, working with people in the field. But I think that we are really and I think that this whole forum and this whole movement, social entrepreneurship movement attest to, that we are on the verge of a different, more globalized society, where people are in different positions, ultimately share certain values, simply because of the notion we are in the same planet, the finiteness of specific resources, certain ideas and values are shared, social entrepreneurship is just one aspect of that and I think we're making a mistake if we're trying to dicotomize and say "well you just need to " you just dress up what you do in the language of the market so that you convinced investors.

I think what needs to be done is, we need to get much better navigation, because with some people, some groups, there is a certain alignment of values and therefore you can, through vehicles such as the one Chuck was building, hopefully, you can access more efficiently. With others is completely hopeless.

You are in a game now. You're in a game that's focused exclusively on financial returns; so why bother. So I think interestingly enough we come back to this issue of values of clarity. There are no easy answers for that, but I think everyone in their, you know, as you engage in raising resources for your organizations, if you know the underlying model and what takes to sustainability, well if you then segment when you identify people, when you work through other networks if you understand early on is there a basic alignment or not, I think you can at least save a lot of time in terms of who you should be talking to, who you should be sending emails, where you should be following, where you shouldn't.

I think we have time for another round of questions and then I would like to invite the panelists also to provide closing statements. Are there any more questions? Yes, over there.

Thank you. Rob John from the Skoll Center. I think Nigel asked my question of out mission and legitimacy, so I'm going to throw in something about the credit crunch. One of the consequences of the current credit issue globally is flows of capital from the Middle East and Asia, and I think Max that the largest share holder in your bank is the Singapore Government.

I'm just, percent, exactly, largest single share holder. I'm just wondering are we going to see in the next twenty five years the dawning of philanthropy in the Middle East and Asia as we are all saying capital flows from those regions.

Ok, great questions I think we look forward to discussing that. Next one.

I 'm Dorothy Wolfe. I'm working with the Par youth that pays for itself. And my question is about return on investment. Christine gave us a very interesting example and thank you for those indicators you shared with us about how you are measuring your impact i would like to know if [xx] have some examples of methodologies or instruments or frameworks the tape particularly find useful for measuring impact and reporting impact to investors, and in particular models that investors find useful in that area thank you great third question [xx] from the lions [xx] I just want to back to the issue of language obviously foundations of and other grounds makes very much as we put it out the term investment as a sort of statement of their values they want to invest long term they want to achieve impact and so on and not is to encourage I want to foundation should be helpful if foundation sort to step back from this language and quite specialize who encourage them to invest their assets as well as my grams with their gram making money and whether this is confusing the field, and you know, I don't think it's probably going to happen, but whether it be actually useful to try to encourage this for a bit of greater clarity.

I can see the questions are getting more challenging you with one here in the front, I think you had your.

Question I had was relating also to the initial question about the Middle East and Asia. Is there a trend with financing and structure models that are compliant or according, so you can address that in some way.

One last question. Life is brutal I know. I think you had your hand up Thank you. My name is authored now I know what impact investments and my question is very specific for Christine and Antony because your on both sides I would like to hear from both of you two or three concrete examples of intermediary that you would like to see that would facilitate and solve some of the recent problems, thank you.

Thanks, so we have a portfolio of questions here middle east in a sense. Impact and impact measurement reporting frameworks the role of foundations in clarifying or confusing I guess the language in the space so we are compliant investments And now so i just take one by one and will become the passes of managing some down of money and handles in i mean you can down sixty billion pounds invested in the capital markets by UK based foundations alone when we looked at how they were reported they talked about impact of the investments donations the thing almost most different from all of them refused to give any commentery on the social impact of that real investment of earlier and refused a change language i would like to say that we are balanced some of the bigger foundations sitting on you know three four five hundred million pounds should be asked to give detail commentary on the social impact of the judiction investment failure purposely on the most go the more mission related investments by foundations that invest in line with their purpose and we're not really seeing that and things have certainly proven to be very slow.

Can I just comment also about Islamic finance? It's cracked up in the London market and the issuance of, is it Sukuks, has been huge and the UK government made an announcement last year that it was going to encourage London to be the center for sort of these kinds of Islamic finance type deals. But when you unbundle some of them, I was looking at it, because I was speaking, we were approached by some Islamic scholars who wanted to do Sharia compliant equity structures.

It was all the ethical negative screening that all of us used to do fifteen, eighteen years ago, and what hasn't caught up yet is positive focused, mission-related type investments which I believe there is an appetite for that out there, and I certainly hope that the sovereign wealth funds in the Middle East world start to come in this line.

And we're beginning to see it in the cleantech market, the Masdar Fund, the funds in Abu Dhabi. And they've now started to recruit staff who can advise on sustainable investments. And when they start moving, that's going to be absolutely enormous in the cleantech space. We haven't seen it yet in the social investment space, but I would certainly love to see that move.

Sure, I will just take the question around return on investment and when you began saying return on investment and this is the Caroline's point I started saying, give me social or financial, I mean, still again this whole question is quite confusing. On the issue of measuring impact, I think a really important point is to understand the appetite of the investor.

The measurement of social impact has been pushed by a lot of academics, who inherently believe it would be a good thing if people measured social impact. I look at the micro finance movement and observe the fact that It is also that the training in development studies what tell you that there is no academic proof that micro finance actually creates long term economic growth and similarly they do very little micro finance banks of really watch social factor acts actually generating it hasn't starts micro finance absorbing huge flow impact on investment capital.

So I think I start on the question of social impact on really asking, "what does the market demand?". So, don't go out and measure impact. I mean, Christine has a really interesting story and the kind of pain they've gone through to develop a proprietary methodology and system and software to track 36 metrics, reflects.

it's than investors who wan't that, but understand what business you're in, and I think the crux point is there is an emotional aspect around this field that will not be replaced by numbers and in many cases the numbers there is no appetite from investor four numbers so it is a straight thing to go for a foundation we encourage lots of question matrices on people i start from the question of, what does the market demand?

And understanding who is your potential investor? And ultimately, I mean, as someone who ran an NGO that was quite metrics-focused, the other thing that I realize is that unless metrics are used to influence management decisions, they will not be seriously recorded, they will not be kept up, they'll be a burden that management goes through.

So I think aligning, I call it mission align metrics. You measure those things that will actually make you perform to your mission more effectively and then articulate them clearly to your investors and on Caroline's question around "would it be better if foundations stop saying investment when they mean grant?", Yes for this, no for the agenda that pushed foundations to do that, which is that they're trying to re-brand and, not just re-brand but genuinely change the way they do what they're doing.

So, I go back to Max's point, you know, you said "should we encourage foundations to stop using the word investment". I think Max's point earlier was We can't ask that question. Because, people don't respond to encouragement. People are just, they do what they do, and so, a better question is, would it be a better world?

Yes, but that's highly theoretical and it's not going to happen. So, I don't think, and that's why I say, I use impact investment, but I'm not proprietary about it. You know, for me, it means certain set of things and it resonates with certain investors, but I don't think we are going to be able to clear this field of confusion and finally on your question out of those three examples of inter-mediation that's working, so the three that I normally have mentioned and I give you a range.

Christine, not just because she is sitting on my right but even when I am not in the room with her, is a really good example of an intermediator in terms of the track, you know, what Christine has pulled off is one of the most effective track records in this field and she is doing her current capital raise on the basis of, for 15 years, having moved 20 million dollars into 160 investments.

Now that's, in Mark's world, is not a track record, and it's not scale. But, in the impact investing world, it's a really interesting intermediation.

And so, you know, what Christine does, is for an impact investor is, provide the ability to source the deals, vet them, measure them - that an investor couldn't do. That's exactly what intermediation does: it solves the market's demand for placing money, but aggregating those deals so that the whole deal sourcing can be outsourced to the intermediator.

Another really good example of somebody who does something different is Geoff Burnand, who runs a business in London called Investing for Good. He was a wealth advisor of Merrill Lynch for fifteen years and came to realize that his clients, some of his clients, were asking him to actually have a more interesting relationship than simply every quarter coming to him and saying well, you were really rich last quarter and now you're really really rich.

And instead, what they said to him, some of them not all of them, said next quarter could you tell me that I'm still really rich but my money's actually made a difference through investments? And when he recognized that market demand he responded to it by setting up a company about 3 or 4 years ago called Investing for good.

His business is to advise wealth advisers, and what I really like about his business model is, he has the insight to know you can't advise rich people, because the wealth advisers are like gate keepers and are territorial and therefore if you try to do that, the business model wouldn't work. He advises wealth advisers and enables them to respond to their client demand.

His business in last few months has taken off, largely because, instead of having to convince one wealth adviser at a time to do this, he is now having major private banks coming to him and saying, "could we put our entire private banking channel on your platform?". So, he is a great example, I think.

Christine's great problem, I have fifteen offering memorandums like hers in my laptop. Right now those are getting close. There was promising channels to private banks, I mean, the rich people and Christine has directly people like to seen have a, raise five million, two million, three million by going from rich person to rich person, getting a hundred thousand here two hundred thousand there, may be getting some corporate clients to put a million in.

That's not the way things work in Mark's world. When someone's trying to raise five hundred million dollars for a fund, they don't do it by going to five thousand rich people. They do it by going to through these recognized channels of wealth advisers or for dealers, the kind of thing that Max sits on top of; and Jeff is one of the people who is helping intermediate that.

The last example is a guy named James [xx] who runs a phenomenal enterprise in Kenya called Equity Bank. He banks now about sixty percent of all customers in Kenya in the formal banking sector. It started about ten years ago as a micro finance company that served two thousand tea farmers... its a phenomenal story and he really intermediates.

I mean he is generating percentage points of GDP based on what his company does. Its a for profit company listed on the [xx] stock exchange, but I would say is an impacts investments and a different example of a inter-mediator. He didn't set out to be an inter-mediator the way that Christina has to some degree or Jeff and [xx] and yet is a phenomenal[ xx] impact investment.

[xx]

I think
the one I would like comment on is the return question and its relevance in what I have seen. I have not seen overarching framework that I find compelling, that works in every situation. I have seen some specific examples - the Robin-hood Foundation, that amazing H fund driven philanthropic machine in New York city talks and is very proud of its evaluation mechanisms in... I think the reason it works for them is that they have a singular focus on poverty reduction so that whether they're giving to an early childhood program, or to a job training program... granted its harder in one case than the other, they can make a real stab at tracking the economic impact of what they do on the individuals that they serve.

Having said that, they don't report it widely, and I don't think it has anything to do with the money that they raise, other than their ability to say, we do that. I think it's a more they're very effective, so I don't want. It is one of the social exercise, frankly. In the college summer, that I mentioned in my remark.

One of the things we decided to do was calculate an IRR of a dollar put into the program. And so we focused on the incremental based on some assumptions about the impact on a young person's lifetime earnings of attending university or not what's the internal rate of return over, in terms of incremental tax revenues generated and that number alone is arguably is not why we're in this business something like a thousand percent per annum and so it was so big that it wasn't credible.

It had no impact on decision making and I think you find that pretty broadly. The several times that I have attempted to make those calculations, the numbers are absolutely enormous. That's a good thing, but its not a decision tool. What we hope to do in our work is at least within a given problem sector... so if it happened to be college access, decide what the appropriate measurement, outcome measurements are in that field and be able to compare across organizations that are going after that problem.

That's certainly only part of the way towards developing an overarching framework, but it would be better than what I think donors face today.

Thanks Chuck.. I think that Rob's question still got to, still needs to be addressed. Clearly yes. Absolutely, I think you know philanthropy is becoming more and more of a global phenomenon. At the same time you have to see the charity you know has been this... has a long [xx] tradition. It is one of the five pillars of Islam.

And in fact the volumes, if you should look at the volumes of money that go to social purpose organizations in Islamic countries These are very, very large.

Now, are these vehicles, are these organizations on the ground necessarily social enterprises? Something we could discuss or could be complicated and certainly not politically correct if we go to discussions. We should do that offline. But clearly yes.

I mean, I think one of the things that we're seeing now is that philanthropy, social investments, social enterprise, are becoming global phenomena. Different countries, different cultural regions are different stages in a sense that they all have, because I think this is really a fundamental human characteristic that we are altruistic, that we care about others as well.

All cultural traditions have giving, have caring for others embedded. So, we are in this fascinating situation where we have a global phenomenon, such as social entrepreneurship or philanthropy, American style philanthropy, at the end of the day, interacting in a local field of forces with a specific cultural and historical setting.

And of course that means philanthropy and social enterprise today will not be the same in each of these cultural areas, but there's certain global trends that everyone is reacting to and I personally find that very positive. There is a lot of innovation going on in the area of philanthropy and social enterprise [xx].

If we look at the volumes, you'll think this is one of the things we... that we are all skeptical about, I would say. You know, on the one hand you all hear there's a lot of money, but at the same time you spend probably 70% of your time trying to get it and it's hard work. So something clearly doesn't seem to add up here.

The statistics tell us that in 2006, high net worth [xx] individuals globally gave about 285 billion dollars to charitable organizations, organizations with charitable status. Now that sounds like a lot of money, no doubt. I think what we need to ask our selves, and I think the panel should answer this collectively is how can we make the work, because clearly the seems to be the key challenge here.

It simply doesn't work. If you look at the payouts. You know, the top 50 European foundations, for example. Well the payouts are not so high because there's not a mandated payout rate, but nevertheless it was 3.8 billion Euro in 2006 compared to 6 Billion Euro in the US on; again because of the pay-out rate higher, higher endowment on 147 billion as opposed to 133 billion, but why is this money not getting to social enterprises in?

I think POD is because, just now witnessing new channels emerging. I think, he was one of them, what Chuck is doing. Ever long but I think there is a critical mass issue we have now the world are having enough organizations that are investing simple on the one hand, on the other hand more and more intermediaries can do this more efficiently.

So I think overall we can be optimistic. It will simply take time. It will take us time to get there. And it's really key to get the relationship and the values element right. I think to make it just a technocratic exercise, it won't work. I think this is one of the key takeaways for me from the phone conversation with Chuck.

I'd like to, we have 270 seconds I think. I'd like to invite our panelists to give one closing statement as to. So given, I think, this positive vibe, what we've learned, where will we be 10 years from now?

Sure, I'm motivated by four conversations I've had in the last year. A friend of mine who made a lot more money than he ever thought he would in his twenties, and now his children are five years old and seven years old, and he phoned me and he said, "I would like to have a conversation. My kids are old enough; we can talk about money, and I'd like to preserve the money for them.

But I don't need to get any richer and they don't either and I would like to have a conversation with them that explains how we as custodians not just of our own financial wealth but also of our own society and we are putting our money to work to do that. James [xx], the CEO of Equity Bank approached me and said I need to raise a 150 million dollars of equity to take my company and the great work it can do for poor people throughout the region.

He's in Kenya, he wants to be throughout East-Centeral Africa. But I worry because I get calls from hedge funds that if I go that route, I will lose the ability to hue to my social mission. Christine has a very compelling note out there, this is not an offer or solicitation for investment, but is stuck in a world in which foundations don't know how to deal with her because she's not asking for grant money, at least not that piece of it and investors don't know how to deal with her because she's not offering anything on the risk-return frontier.

And finally I meet a lot of grad students who say to me, you know I was at an investment bank, I was at a consulting company, I'm now getting my MBA. I have a passion to make a difference in the world and I want to find a place Well I can go that my chance to work are not destined and so my passion and where you been ten years is that by Every systems that currently prevent those people from forcing them to ask those questions and I having them to solved there has been a wealth advising there will be services that enable rich people to make impact investments and not simply have to operate on one side or the other.

There will be capital markers that enable James Wongie to raise expansion Capital from investors from understand the machines factors and now be much more internal markets that clear that markets we haven't spoken about because we have got xx That connect the grad student who has a lot of skills to put to work with the social enterprises who desperately want people like him and her.

A lot less pain. There will also be a lot less to talk about. Which, you know, will be good for those of you who are currently suffering the dysfunctional markets and worse for people like me who get paid to talk about them. wow,that's a great vision ya it is fantastic, I'll share a lot of that and ya, in ten years time I hope that what will happen is social capital markets will be working efficiently as, I guess, what you call traditional capital markets if, we'll have social enterprises in people's self-invested pension plan we getting forty percent tax relief from the government, which is what you get if you hold ordinary shares in your pension plan, will have enterprise allowance schemes and will have venture capital trusts where you get benefits from investing in social enterprise and like the London AIM market, if you invest in AIM for two years, you can hold all the benefits, or the capital gains you can hold out of your state for inheritance tax purposes,is an example between our investments in social enterprises and social purpose businesses.

So we'll have grown up in five, ten years time will have used all of the structures already provided for us by the state in terms of tax advantages, but we'll be using it, and we're creating vehicles, investment vehicles, and advisory services to Right back money to enable social entrepreuners to build another business to fly from his sequences to thanks man.ten years time, Yenko will have invested in about five hundred to six hundred more companies who will be bringing clean energy access to over one hundred million people in Africa, Asia in Latin America.

I will have retired, and at that juncture we would be looking at a company that can support itself, that has brought, sold off its carbon offset is manatized carbon financed and product to the world brought . so you retired early very early mature in a parochial but at least a way that I understand, by commenting on the spectrum of attitudes that I see within the Goldman Sachs employee population.

The senior lower you have got several hundred people who individually given away ten to fifteen million dollars never heard social entrepreneur that might challenge Find it extremely exciting once they learn about it. The younger people in the organisations is come on and on do not wait until their forties and fifties to get engaged in this game.

They're engaged now, they insist on it and that's creating a very powerful of the slower than one might like the movement within corporate America, to provide, and perhaps around the world, to provide social engagement opportunities for their people. That's all gonna play out and I think in the context of the kind of infrastructure work this work is doing to create a more liquid set of financial flows and hopefully a larger range of private sector government collaboration to go after these enormous problems.

Thank you. I think I have to say, I feel really good after listening to our panelists because I think we can be optimistic. It is going to be hard work, of course, but I think really owe it to ourselves and to our children to make this next step. What I'd like to ask all of us is, let's try to learn from each other, let's try to be collaborative because figuring out how exactly we get there is not going to be easy, but I think we can do it.

I hope you'll forgive us for having taken four minutes off your coffee break.

Thanks for being with us. It was great fun.Thank you

Growth Finance For Social Entrepreneurs

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