 My name is Sasha Dichter. I'm the co-founder and CEO of 60 Decibels. I will allow our panelists to introduce themselves, but we have a really great panel. When I was asked to organize a panel, my goal was to make it as technical and wonky as possible. And so we're not actually, and I think going to pull that off with the fact that you all read the session description and said, that's the one I want to go to. Just as a special group. And I feel like there's a lot of kinship here, and I'm happy about that. Oh, well, that depends on how you all behave, actually, and on the questions. So I'll give, I'm going to let them introduce them. Everyone introduce themselves in the context of what we're going to talk about, so I'll just do a second here. But the motivation for this panel has been, I've been in this space for a long time, and specifically with 60 decibels in the social impact measurement space for a while, and the getting people to pay us for social impact measurement for a little while. And it struck me, probably a year or a year and a half ago, we were speaking to the CEO of one of our clients who essentially said, love your guys' work, nice, all these good things. It's kind of crazy how everybody kind of has to look for money between the couch cushions to pay you all. How's that going? And the observation was a little bit more of a structural point, which is there is an increasing amount of social impact measurement happening. There are vendors like us and others who are doing it. But it seems to be that most people who are hiring those folks each are figuring it out for themselves how to pay for this. And I literally was talking to someone earlier today. I was like, should we pay? Should the company pay? How does it? And it just seemed to me that this is not one of the things that we talk about that much. And it struck me that there are some structural limitations that are keeping us back. And again, the premise is that there's valuable social impact measurement to pay for, which could be a different panel. But I think it's up to the people who are doing that to show and create value. But my observation would be, and there are some ways that it makes it harder for even if that value is there, for the people who want to use those services to avail themselves of it. So that's kind of the purpose behind the panel. With that as context, I'd love each of our panelists to just introduce themselves. And you could say who you are, where you work, what your role is. And then after that, but not before, I would come back and sort of ask for your first reactions to the thesis. So let's go ahead. I was actually told that EJ was going to start. Oh, well, then EJ, over to you. No one told me that. I'm a terrible moderator. No, no, it's fine. Great to see everyone. My name is EJ Ogbeche. I've been with Cambridge Associates now for a little over four years, but roughly 15 years in the industry and experience. Live in the Bay Area in the East Bay, if you know where Berkeley is exactly, wife and three kids, eight, six, and three. That's my life. So as soon as this is over, I'm going to go do the pickups. My wife's out of town this week, so bear with me. But more about the firm, Cambridge. Folks often think of Cambridge as the old school consultants. I don't blame you. That's how I felt when I joined. Cambridge has been around for 50 years, starting as two research analysts at the Harvard Management Company trying to help them change their asset allocation from 50% stocks and 50% bonds to venture capital and energy, including new sectors and industries. Fast forward, they now, as a firm, we now work with most of the Ivy League schools, lots of universities, private foundations, health systems, pensions, and private wealth individuals. So we sort of divide our house into research and the folks that work directly with clients. I sit on the client side. I work with Dalmas and Foundations in particular, and what I love about my job is we get to think about their mission and think about their portfolios in perpetuity, and so I come to this conversation having worked with many of my clients are have a focus on ESG or DEI. And so I come to this conversation having clients, these LPs, having asked me, how do we get, what is impact? What is diversity? And having that conversation and digging deeper into what that means. So I joined this conversation very humbly, but with some context from our clients. So I'll pause there and let everyone else choose. Awesome. My name is Kelly McCarthy. I'm the head of impact at the Vistria Group, but I'm on this panel kind of wearing two hats. I've been with the Vistria Group for, well, since January, but spent the bulk of my career, the bulk of my career prior at the GIN, the Global Impact Investing Network, where I was the chief impact officer, and if any of you are in the room are familiar with Iris Plus, led the development evolution of that for the duration of my time with the firm. But a little bit about the Vistria Group and context for this conversation. The Vistria Group is a middle market buyout firm, Private Equity, based in Chicago. It's about 10 years old. We just celebrated our 10 year anniversary around 10 billion assets under management. And we focus on healthcare, education, and financial services. Colloquially internally, we like to think about this as the three pillars of a thriving economy. So if you think about like healthy, wealthy, wise, you know, really sort of constituting what we are striving for. We recently added a housing fund really under the sort of philosophy that if you don't have a roof over your head, how can you even strive for some of these very basic things like health, wealth, and education, you know, a sort of solid education? We kind of, I think, my perspective might be very different than the others on the panel. Per moderator instruction, I will hold back my opening remarks on that front. So my name is Leslie Cornell. I am a Vice President and Deputy General Counsel at Social Finance. Social Finance is an impact advisory and finance nonprofit, and also a registered investment advisor. We really work with partners across sectors to try to mobilize, design, and manage innovative impact first fund investment vehicles or investments. And one of the real focuses of our impact investing team and us as fund managers right now is unlocking new capital, whether that is through community and national foundations, through donor advice funds, which is definitely a focus for our team, or even public dollars, and really just try to catalyze that all for and towards more impact. I'm actually super curious too, if it's okay, how many folks in the room are fund managers or have, or LPs? Some? Is there a lot of impact measurement professionals in the room? Okay, great. But yeah, so that's a- Lawyers, wait, it was actually lawyers or- Lawyers? Ooh, yay! Or friends of lawyers. That's awesome. Everything else? Don't like raising your hands? All of us just say Social Finance, I mean, we've mobilized 350 million in capital towards social challenges in the last few years, spanning from economic mobility to healthcare to affordable housing. So, very excited to be here. Cool. So I'm actually gonna do more polls to keep us, to reward everyone for coming. So, but I think that some of the framing for all of the way we're gonna approach this will probably come from us sitting in slightly different seats. So I would just, if each of you could say, are you, so are you, what kind of capital are you thinking about mostly? Meaning, private, liquid, et cetera. And also, to Leslie's point, describe Social Finance's impact first, any imperfect definitions, lots of caveats, but impact first kind of mark. So if you could just situate yourself because your comments will probably mostly refer to that, that would be super helpful and then have something for the audience. Yeah, I think I already put us squarely. We are definitely a non-profit, charitable purpose and absolutely focused in the impact first finance space. Okay. Private equity, foundation of everything that we do is impact-driven, but we are squarely market rate. We're also squarely market rate. Our clients are the asset owners and we also, in our network, are the investment managers. So we sort of sit between them. They're mostly funds? Mostly funds. Cool. And my perspective is also most like, we tend to sell mostly two funds in corporations and do some other things as well. Okay, so from the audience, my Goldilocks poll would be, I started by saying I think overall, less than would be optimal, high-quality impact measurement is getting done. That's my thesis. And I'm just curious if you could just raise your hand for too much, just right, too little on that question. So those who think that too much, that's not a fair question, too much high-quality social impact measuring is being done. I don't think I was gonna say that. But would anybody raise their hand for too much just in general, like noise? There's a lot of requests for the, okay, so there's a too much, some too much on the noise, lots of stuff. Just right. No one thinks it's just right. Okay, one person thinks it's just right. We might make you argue for that point in a second. And too little. Okay, cool. That's helpful. So for each of the panelists, who, so my question, my first question would be, who is asking you to do your impact measurement? And what I'm asking by that is, how much is it you all internally, because you mostly feel like to do our work, like this is our strategy, this is who we are with, versus it's more external. And if external, who are the external drivers of that? Like I would just love if you could put some color around that and whoever wants to take it first. Well, Leslie, why don't you go first and we'll go that way. Yeah, sure. I mean, social finance, the impacts, a laser focused on outcomes is embedded in our DNA. We were founded in 2010, 2011, truly around social impact bonds, which some in the audience may know, but pay for success contracting, outcome-based contracting, paying for outcomes is embedded in what and who we are. And in order to pay for outcomes and understand the outcomes of your work, you really need a robust impact measurement and data collection and understanding so that you can make those assessments about what outcomes have been achieved. So I would say that for social finance, it is definitely coming from an internal place. That's the DNA that drives kind of the work that social finance does as a nonprofit, and especially in the impact investing sphere. But I also think it's part of the value proposition that we offer to our LPs and the investors that come to work with us. And so when you think about, I think that they are definitely out there asking for it, but when they come to social finance, they know that impact measurement's going to be embedded in the work that we do. They know there's going to be a focus on outcomes, and that's why they seek us out. So I think it is internal. And in that conversation, if they have that expectation, how do they or you understand who is actually paying? And like what bucket or pocket does that come from? I think it's, and I know that we'll kind of get into a little bit of where the different pockets are that some of this is currently being paid for. And certainly for us, it's definitely a mix. I mean, it comes from out of our management fee for our funds. It's philanthropically funded in a lot of instances, especially the more robust our learning agendas get, the more additive and complimentary they are to the project that we're undertaking. But the conversation with them is often very laser focused on the very specific outcomes that they're hoping to achieve. Issue area specialization or expertise is often one of the reasons that they come to us, but how it's funded is not the first line of questioning. So it's interesting. So if I could summarize, it is core to the value proposition. It's understood like, this is why we'll do this with social finance. Yes. And yet, even so, there's some vagueness of how it will get covered. Absolutely. Great. Kelly, what's your take? Yes, so, I mean, similarly, Vistria was founded 10 years ago by Marty Nesbitt, Kip Kirkpatrick under this idea that you could have purpose alongside profit, that you could genuinely be profitable if you did impactful things. So similarly, it's in the DNA. And furthermore, similarly, this idea that we can invest alongside, so basically, if you think about the three pillars, we're looking at public sector problems. We're looking at bringing private capital and private solutions to public sector problems. So we're trying to address some of those gaps in the market where some things are not necessarily moving along. So again, under that umbrella, we also have to hold ourselves to a very high bar in terms of how we understand what are the issues and what are the interventions and what are the solutions and how our capital is going to actually help address those solutions. And so I would say to your first question, it's driven very much by the philosophy and the strategy that we have for our capital. But I will also say, and I'm just gonna switch hats for a second. I was sharing this with my fellow colleagues here the other day. When I was at the gym, I heard over and over and over again, no one is asking. No LPs are asking for this information. No one's asking. It's only driven by the GPs. It's only driven by a sense of FOMO or whatever. And I call bleep on that. It's not, that is not my experience at all. We have a significant number of LPs that ask us, I mean, literally this morning I wrote out another LP request just about our practices, about how we think about data, what metrics we're using. I mean, you name it. So whether or not that's unique to us, which I do not think is the case, I will leave it there, but I will say that in my experience, it's coming from a lot of different areas and maybe that's just a sign of the times. LPs are getting a lot more sophisticated and thinking about how their capital is being deployed towards positive solutions and really holding their managers to account. And it would be helpful as we keep going to describe what the data is, because I think there can be a lot of data and it'd be helpful to understand how relevant you feel the data is and how aligned are the LP requests to the things that you really think are driving change. Let's leave that, but I think it's an important backdrop. As Lord knows, there's a lot of data out there. But EJ, your take, just your overall. And if you remember the question. Yeah, absolutely. I almost want to touch on the key performance indicators that you're talking about there, but who's asking us for these data? Generally, we're getting those questions from our LPs, our clients who are trying to drive, trying to communicate the impact of their portfolios, but also there are managers who are paying for this from their manager fee, whether it's an explicit line item from a third party that they've agreed to or part of their value statement. Oftentimes managers are coming to us saying we are impact first or not, but the statistics and the data that they're using to prove that they are impact first, low and middle income wages or jobs or greenhouse emissions, those data that they track have to be relevant to the business that they have. And so if that, assuming that that is the case, they're often the ones trying to prove those data with the management fees that they're collecting anyway. It's a value driver for them. It's not a cost center for them, for managers who are impact first. And my dilemma as the moderator, because we had a prep meeting and I sort of started by saying, here's my premise. And Kelly and EJ were like, that's kind of not my experience. So that's where we are. And so we're a little bit try to unpack that all, just because we're all here and we want to keep this entertaining. My take on why that might be are a few things. And I don't know which one of these it is and I'd love to hear if you all agree. One is kind of US versus non-US markets. One is kind of fun size. Sorry, and the US versus global mostly has to do with the availability of data. And then the third would be just kind of the quality of the data. And I'll give an example, like investing into 60 decibels is a pretty mainstream private equity fund whose LPs have said to them that they need to get data from us on our impact. And so what we need to send them, we need to spend $1,250 to assess our carbon footprint. Like of all the things you would assess 60 decibels on from an impact perspective, that's like the last thing, right? We're like a remote data collection company all over the world, like carbon is not material. So that would both, in my mind, fit under the data is being requested ostensibly about impact. But to me, it seems like the wrong questions. And so to me, the question would be, this intersection of data being needed, data being provided, and willingness to spend on getting the data and the materiality of that data to your thesis around social change. And I don't think we can unpack all of that, but that's just maybe you can take that as a backdrop and all the things I said that if you don't agree with, please take a shot at them. What I'll do is to get us to the specifics of the how you pay because we're trying to keep this reasonably focused. In my mind, there are either four or five ways to pay for this stuff. So one would be, and I'm thinking more private capital here, so please expand if you disagree, but in the management fee itself, the 2% or whatever that number happens to be, those of you talking about philanthropy, TA, whatever, but something philanthropic, something that's not functionally part of the fund would be the second way. The third way would be putting into the deal fees itself. So before doing a deal, do you spend a lot of money in that transaction? It's totally normal to spend six figures on a transaction and you could put it there. Or it could be in the LP agreement itself, which I'll leave as the last one because I wanna go into that one a little bit more. And I guess the last one is the company could pay for itself, which would be either in the deal or separately. So sort of those are the four ways. And I guess I'd just be curious when you hear those four ways, like phenomenally, just like factually to give this audience, because it's a pretty diverse group in terms of how, what kind of assets you manage, like which of those buckets applies to you? What do you predominantly do? So maybe we can go, EJ, we can go this way back. Yeah, I think predominantly we would focus on the LPs that are paying for this. From the managers are asking, sorry, the LPs are asking the managers to pay for this. Out of where? Out of the management fees. So the assumption is when an LP is hiring a manager, the all-in cost is not just for the outperformance or the goal of the investment, but it's all the costs associated with that. So if it's impact first or not, whatever data you're pulling needs to support your, the ultimate return that they're looking for. And just to push on this a little more, is that need and the cost associated with it specified in advance? Like if you're the manager who has a fixed pool and then the LP calls up and says, I'd like you to do a triple backflip. You're like, well, that's really expensive. Like how does that work in practice? In practice, I've seen it as a line item in LPAs or I've seen it requested separately, right? To verify from like a third party, like a tight line or something. Yeah, okay. Kelly, what buckets make most sense to you guys? So maybe I'm gonna answer your question, but I might get out a little differently. So the way that we think about this, you know, managers pay for, investors pay for services all the time and pay for value-added services all the time and your investors trust you to figure out what you need to, who you need to hire, what you need to do to kind of get at the return or the expectations that they have for you. So the way that we think about this is very much in line with how we might think of any vendor, any value-added service period that we would be hiring or bringing on to help us with a variety of things with our investment. So I'll just kind of walk, I'll break this down across kind of the chain. One of the things that we're really committed to is when you think about the impact that you expect from the investment that you make, I often have found that it becomes the sort of measurement, the understanding of performance, the understanding of like what's actually happening is sort of an afterthought. And this I think gets at your question about cost. I think when it is treated as an afterthought, when it is treated as separate from the deal-making process, it becomes a cost center that sits in this very random hard-to-assign place. In our case, we think of it as part of our underwriting. So we actually ahead of our, when we make a deal, we have a pretty robust theme process where we're really thinking through like where do we wanna go, what do we wanna invest in? This is prior to even like sourcing. And at that point, we also outline a few impact theses that we might actually be able to tackle. So when we actually find a company that we might want to invest in, during the diligence process, so we have a lot of, I think, evaluators in the room are people who do IMM, so I'm gonna use say input-output model. I think everybody knows that it's like a logic model. So we basically will say what are the inputs and have that sort of built into our model? Like really, really simply, like what do we think we need to put into this company to create the impact or to grow the impact that we think is possible with this particular company? And so we bake that in right away from the very beginning into our modeling to think about what goes in and how much what goes out and does this all make sense from an economics perspective? And if the answer is yes, great. So when you say what goes in and what goes out, do you mean the value added services that you all need to put in or the logic model for the company to create impact? So it's related. So it's like, let's say we have an early childhood investment and an investment in early childhood education. And let's say we are thinking about, we know that there are a variety of different communities that, first of all, I mean, I think everybody in this room knows that investments in early childhood education have long, long lasting outcomes for kids throughout their entire life. There's a lot of evidence to show. So but a lot of kids in certain geographies or communities do not have access to quality early childhood programs. So let's just use that as an example. We would say, well, how do we take a really good model and make it work in other places or whatever? And I'm just using this as an illustrative. We would have to say in our upfront, we'd have to say, okay, well, what would that, what does that actually look like from a cost perspective, both so your financials, but you also say to bring these types of services to other kids in different communities, different geographies, et cetera, et cetera, et cetera. Like, what does that actually, what will we have to do? What would we have to believe could be true? What do we have to do? And that's on the front end. But of course, when you ask yourself, what do you have to do? Then you have to also assign metrics to know if you're performing against that. You have to figure out your measurement plan to understand if you're on track, your KPIs and so on. So you're baking in just as you would do with any sort of financial KPIs, you're baking in from the onset, what would have to be true for the lifetime of the investment to know that you're on track with your investment and impact goals. Does that make sense? Sure, yeah. Okay, great. Yeah, well, we pay for impact measurement in a number of ways. And I think it's actually all of these resonate, but some of the, I think there's probably two unique characteristics of social finance funds that would be worth mentioning. One unique characteristic of our most recent social finance fund, which is our impact first fund of funds that we just launched earlier this year, is that we take on a significant component or a significant amount of that work for impact measurement and management in-house. So we have developed the expertise and the teams and brought that into the social finance umbrella. And that is not something that a fund manager necessarily typically offers. That's not an in-house function. And I'd be happy to go more into that, but I'm not sure how many people in the room that would be super applicable to, but there are unique challenges to paying for impact measurement for internal management teams. And we are on the cusp of trying to figure out how to allocate those costs effectively and fairly and in a way that's useful for our teams, but we're not quite there yet. And right now, most of that is coming out of management fees and social finance and impact first fund. We aren't even offering market rate management fees. We have below market management fees and we're trying to crowd in a lot of additional support with what we're offering as a fund manager. The other thing that I think is worth mentioning because it does deviate a little bit from how Kelly is describing their thesis, is that we have a lot of work and projects, especially in the economic mobility sector, where the impact that we're trying to achieve and the financial performance are just inextricably linked. I was worried about saying inextricably, I think it went okay. They can't be divorced from each other. And so we really require the impact data that we're seeking and that's one of the reasons that we've built that capacity in-house because we cannot have financial performance and these funds won't do well unless we are also having the impact that we're setting out to achieve. And so in that way, it is difficult to move them away from a pricing component, especially a thing about a fund of funds. We're not able to set pricing and underwriting criteria at different levels up front. Those are set, those are baked. We're entering into transactions with early stage fund managers, et cetera. So we have to figure out other ways to pay for our costs from a different perspective. Right now it is primarily management fees. Can I just say, can I just say, oh, sorry, just one thing. Well, so I think there's a premise here that I wanna make sure is very clear for us. Like we see impact as a core value driver. So like, I think, and I think that actually aligns really well with what you just said. I mean, we literally think that more impactful businesses are going to be worth more, period. And especially in the sectors that we're in, I mean, you take education, you have to prove outcomes. Companies in education are not going to be better companies if they're not delivering a high degree of, they're not proving their delivering educational outcomes or improving literacy in healthcare. If you are not improving that you are providing quality healthcare, quality services, like you are not a competitive business. So I think it's similarly tied to the strategy, the thesis, it's just deeply embedded. I would just chime in, because you all brought up some really great examples, but I would largely agree that as long as the information is relevant and important, the goal I think that we're trying to get to is just to observe the impact, right? Every investment has impact, whether it's an impact investment or not, it's a net impact, positive or negative. I think as an industry, we're trying to get to a point where we can just measure that impact and have some confidence in that number and be able to use it however we see fit. But specifically, just for the education example that you gave, I thought that was great because there are managers who are early stage education managers who try to, they communicate that diversity is very important to them and part of what they're trying to reach in their underlying investments and they have diverse hires even in their firm. But then when you look at the communities or the school districts that they work with, they're largely rich or affluent students and you just see that disconnect. And I think where a lot of our clients, our LPs are pushing us is to say, dig into the details of these data. Are they actually doing what they say they're going to do? Are they aligned with what they're saying they're going to do over the long term? And one point that I really wanted to bring in I think would be under your remiss if we didn't talk about it was just where this cost is born isn't just with the LP or the manager. It's also with the consultant who was going in there and trying to understand or verify these data. And you brought up a really good point about the smaller fund size. Very naturally, if you don't have the resources it's gonna be more of an issue for your fund. And I just wanted to point out that of those less resourced funds with smaller emerging managers funds one through four those tend to be managers of color, right? You see more managers serving underserved communities in that grouping. And so when you're thinking about the cost of who's bearing the cost of producing these data I think that's critical. And I applaud to one of my clients for really pointing this out that the diversity of the products and services that of the investment are just as important as the diversity of the team and things like that. So I mean, I would take that cost point a step further which is the cost of the difference between the impact you claim to be having and the impact you're actually having is born by the community, right? So I going out there and I have a fancy fund funded by fancy people and I'm saying I'm doing all these great things for the world. If I'm not actually doing that, really who bears the cost is the community that's not getting the services on whose backs those stories were being told. I mean, I would love to push a little more on the so I don't know how many of you managed to come to the opening session of the impact measurement track but I'll reiterate something that Anthony Bug Levine said which was that he was concerned that the level of discernment on the part of asset managers with respect to understanding of impact is very, very low. And I think he took it a step further to say if that level of discernment with respect to social impact, I said social because that's the area I'm in but of impact were that person to have that little discernment about financial and operational metrics they would lose their jobs, right? And so I do think it's very difficult to answer yes, no question on is their data is the impact baked in without looking at this other axis of at what detail and what quality and I think slightly counter example and it's again, it's possible it's different by sector because you mentioned early childhood education or education, healthcare where clearly you have to hit certain standards or simply you don't have license to operate but we do, for example, a ton of world in the financial inclusion in the FinTech space and I can say with confidence that the thesis of FinTech investors is we are gonna create reach and access for people who didn't have that before even that is data that is largely unavailable. So there's just sort of this premise that you build a FinTech in Mexico and you're breaching some unbanked people so you don't even know that but the other thing is unlike an early childhood intervention the access to credit could be good and could be bad and the amount of information that's had by that sector writ large which is a multi-billion dollar evaluation sector around whether or not these are loan sharks or financial inclusion plays is almost also non-existent. So I think one of the issues is the discernment of what is high enough quality data that allows you to actually understand at a meaningful enough level whether things are happening. So we can come back to that. I do wanna get to again this LP agreement point because two of our panelists mentioned it and it was one of the things that we did wanna get out in this conversation. What we have observed is by and large smaller managers like the management fee is I would posit not the answer to this question. The management fee is vanishingly small and even if someone has a $250 million fund any meaningful spend out of that seems to be highly constrained. And so it would be helpful and since you're our one lawyer if you could explain like what does it mean to have these costs in the LP agreement? Like just literally just explaining that to the audience because it's a reasonably technical point and then any thoughts on how because I know you all have actually implemented that so it'd be very interesting to hear what that actually looked like in practice. Yeah, I was unclear if I should take my lawyer hat off for this part of the conversation or put it back on, but we'll keep it on. So I think like the, so fund expenses is a way that you pass through costs that the investment manager is accruing during the course of their due diligence and passing it through fund expenses is the way that you can ensure that LPs and investors are paying for those costs directly because they are basically paying for those before any distributions are made out of the fund. And so it's a way for you to allocate and shift the costs of impact measurement directly to investors and LPs who are entering into the fund. I'm sorry to be clear, it's typically things you just need to have to operate, right? That's why this category exists as a whole. So maybe you could. Yeah, I mean, so fund expenses and it's kind of fascinating 10 years ago the market at how fund expenses were talked about was a very small, broad paragraph and now we've got long lists of the things that go into what fund expenses are and what is allowed to be paid for by the GP by the investment manager through an investment. And what is interesting is that in the market language, in the language that is used in most existing fund documents, LP agreements and the LP agreement is essentially just the agreement that our investors are signing on to saying that they're a part of the fund. The language is broad enough to allow right now for us to be able to potentially build in this impact reporting, impact measurement. The costs of third party vendors and consultants is often language that is directly in there. So that exists right now. It's not a norm. It's not a standard in the space and certainly not outside of the impact fund space. And that's where then the risk comes in. That's where you have to take a look at your fund. Are you aligned with your LPs? Are they gonna support the impact measurement that you're trying to do? And the real solution to that, if you're not already five years into a 10-year fund, if you're starting a fund right now, being extremely explicit about exactly what impact measurement you want to do, the services you're going to utilize, how it's going to impact day-to-day operations and management of your fund and building that and disclosing that directly into this fund expense section, what you're allowed to get paid for is a great way to set that precedent. And as we do that, the norms will shift. And I think one of the things that we've sort of thrown on is the things that are already expected in there are financial reporting, audits. These are costs that are expected and understood and no one ever bats an eye. And impact measurement can be that. We can shift the norms if we explicitly disclose in our fund expense sections if that's what we're trying to do. And that's where this conversation came from, which was the second half of my intro was when that person made that observation, they started talking about this as a structural answer to this question. And I think it's the fact that, again, you're doing your audit, you're paying your legal fees, like it is the things you need to do to run your fund and it just got us thinking about, well, if you have this particular orientation and your assessment is that as the GP, you are not able to gather the data to Kelly's point to know whether or not you're achieving these goals. Like that actually seems like the place that you go. Now, to your point, what the words say, no one wants to surprise the LPs, right? What your LPs expect and what the norms are, are obviously gonna have a major influence on this. So it's not only a legal question, I'm certainly not a lawyer, so you shouldn't listen to me. But that said, our hypothesis was if that became a more normed thing, then that will free up not all the space, but will free up some additional space, both as you say, to have the conversation upfront with your LPs saying, this is really what we mean, we're really serious about this. And to your point, not everybody's gonna have the explicit value proposition of a social finance, but for you guys also Kelly, et cetera, like it's super clear, right? And to just say, look, this is part of what we do, because I do feel like as an industry, it has been a kind of an after the fact thing, of like, we didn't really think this through, oh, maybe we should do something here. And then everybody's scrounging and it just undermines the rigor, the quality, the thoughtfulness, all these sorts of things. So I'm just curious, any reactions on this point? I mean, Leslie just said that so perfectly, I hope everybody was fiercely taking notes, cause that's like exactly, yeah, I mean, I don't have anything to add just, yes. I mean, do we want, I think the, I mean, I can start to get into the challenges of doing so, which is, you know, one of those is that financial reporting audits, these are known quantities, these are things that people expect, they know how much they cost, they know what exactly they're getting and impact measurement doesn't have that kind of standardization at this point. And so the ability to define what your impact measurement is, that's why I think that you really need that explicit disclosure of exactly what you're trying to incorporate and how. And then we can create those norms. And then once those norms are created and there's more expectation of what impact measurement is anticipated to be passed through to your investors, not only is that good for making sure that that's paid for and that that's part of the fund expenses that are typical in the space, but I think that I like to think that it ultimately will lead to more standardization of the impact measurement and data that are expected across funds, across sectors. That way you have, if you know what costs you're allocating for it and that's a norm and that's expectation that your LPs have, that means that you have a better consistency and standardization of the data that you're going to get. At just to touch on this point, because we did talk about smaller funds before and it is very much my personal opinion that larger funds can lead the way in this respect. So to those who have resources, same like taxes, if those who have the resources should be paying their fair share and I think there could be a similar structure for these fees such that it's not, such an issue for smaller funds as they grow, as they try to identify these key performance indicators that are relevant to their business for the long term. It costs time and money and it'd be ideal if there were larger funds who could lead the way. So as long as we, we'll go back then to the tick off. So we just ticked off the LP fund structure. So if you go out from here and say, not only was I so, not only was so diligent that I went to panel after lunch on the last day of SoCAP, but on top of that, here's this idea, you could pay for impact management in the LP agreement and it was gonna be like really impressed with your technical knowledge. So go do that. But there's these other categories we talked about. So just quickly, like it sounds like, and I'll just summarize from before, management fees is a way to pay for this. Leslie, you mentioned that you guys are doing that. I'll just, I'll share my perspective, which is we talked to lots of clients. It's really hard for them. And of clients of a reasonable size and what struck me once was we were talking to a client who was managing a new kind of 180 million dollar fund and I sort of thought, oh well they only really have the space and they were really, really clear that that was really hard. So maybe we can skip that buck but I'm curious about in, and maybe this is for you Kelly to start, which is indiligence, right? Because you also wanna talk about norms, like a typical deal will have six figure diligence costs without a bad of an eye. So the idea that you might spend whatever amount, 5,000, 30,000, I don't know what, and also similarly by the way, like doing some customer discovery in just regular old deals is all, you pay 50 grand to market research from all the time, indiligence. So my observation would be that happens very rarely with respect to impact measurement work but I just sort of curious, it sounds like you guys are doing that a lot so I just want to have a few comments on that. We definitely are doing that a lot. So that's kind of what I was trying to get at was when you think about the list, I mean basically at the end of the day, right? Every investor wants to have the best information they can in the beginning to have the most insight into how they can make money and create impact in our case before they make an investment. They want to have as much certainty as they possibly can. So, you spend money in a bunch of different buckets, whether that might be doing, like looking at compliance issues, you're gonna probably bring in, someone to look at like legal, any sort of legal records, any compliance issues, you're gonna have somebody that comes in and helps you look at the market, you're gonna have somebody, you're gonna bring in a bunch of vendors at the beginning, probably have your in-house expertise as well. But we do the same. So I mean, we have in this year, we've been really rolling this out in a lot more effect, but we have kind of an upfront sort of screening process and scoring process and assessment process to think about, again, current state and potential future state on the impact front. Again, going back to my input output model, what would we need to put into the company? Again, remember that we're a buyout fund. So when we make an investment, it's typically a control situation and then we're working with the management team on a bunch of different areas of their business to grow that business. And it's not necessarily just scale, it could be a lot of different factors, it could be quality, it could be geographical, it could be a whole bunch of different things. But we're looking at what are all those ingredients. And so again, to this point, we will partner with folks who are smarter than us on particular issues, if we think that's something that is worth unpacking a little bit further during the diligence phase before we make that investment just so that we're as smart as we possibly can be. So. And I think it's a great observation. And again, we have seen that there's a lot more willingness to pay at that moment. Everyone's motivated in getting a deal done, but I would also observe that, that also seems to be the exception rather than the rule. But I would say just try to draw this thread. It's not just like making that really educated guess, because at that same point, we set that impact thesis. And I just kind of want to underscore, underscore, bold, bold, bold. That's at the same point where you're like, well, how am I going to know after I make the investment if we're actually tracking towards? So you have to bake those assumptions and those expectations into you can't just, this is what I think we're going to do. And here we go, off to the races and cross your fingers and hope it works. So, again. I'll go, I don't know if we'll agree. I would say the last sentence you just said is the predominant behavior. Yes, I think so too. Yeah. So, you're looking thoughtful. Okay, these questions are like so broad. We're not supposed to start questions yet, but the questions are so broad that I'm going to change that. So one, this is just like interesting. And so the question sort of reads, are clients pay from revenues from sale of impact credits? I think this is W plus credits. I don't know what that means for women's empowerment using W plus standard, similar to carbon credits. What do you think could be, could this be replicated as a market for outcome credits grows? I don't know if anybody in this panel, I don't feel knowledgeable in the outcomes credits other than I think it's very, very, very nascent. So we could either just, that's information for everybody, including for me. But if anybody knows about outcomes, credits markets and wants to comment, or the person, yeah. Can you tell us what's, what, please? Yeah. So our W plus standard is out there and being used to measure women's empowerment, generating credits, and your trade a little assets like the carbon credit history. Amazing. So corporates buy it, and so through the sale of that credit, and right now the recent sale, for example, is $20 and credit is pretty high. And from that, a project then can, I'm sorry, a project can then from that revenue pay for the expense of the measurement, and also it shares, there's a benefit sharing of 20% of that revenue gets shared with the community itself. So there's enough money as a profit orientation for the project developer or the company as well. Amazing. I'd be curious where the supply of those, the credits are, thinking about the carbon credits, the California carbon credit board and how they're, removing supply from the market to help bolster the price. Curious how that plays into the W plus credits. Seems like a larger discussion. Okay. Anyway, so good information. Okay. This person close to my heart says, information is power. We use IMM for accountability strategy, marketing and fundraising. If we set to regular businesses, they should not do any of these things. It would be crazy. Why is it still so hard to get investors, others to pay for it? I agree. Anybody want to take that? Why is it hard? I mean, we have a little bit of an economy here in our panel. Kelly's more optimistic that people are paying, but I'm curious overall, like, why is it hard? Can I just, maybe this is, I don't know, I'm just gonna say what's on my mind. We keep talking about it as a cost center. Like literally we're talking about it as a cost center right now. And if we keep talking about it as a cost center instead of a value creation driver, we are going to continue to think about it as this, oh, you know, I don't know. I'll just like see if I got some money over here to pay for this little nice to have thing. And I really, I mean, I don't want to like belittle it, but I think one big part of it is we all have to be part of a narrative shift here and start to actually like literally underscore, I mean, a lot of the points that you were making about, you know, just like the way to think about an illegal agreement, you know, that can extend through to just this narrative, like we will create value on top, like these services are necessary for us to be smarter, understand how your money is being spent, where it's going, what it's doing, just like everything else. Yeah, and I mean, for me, I couldn't agree more. And I think that one of the things we have to acknowledge as a backdrop to this conversation is collectively, we haven't done a particularly good job of proving that this does create value, right? And I think there's new energy behind high quality impact measurement across the spectrum, which probably didn't exist five years ago and certainly didn't exist 10 years ago. So the brand, if you will, the measurement of impact is like, ah, really, right? So that idea of it's energized, you know, for us when we focus on customers, it's, you know, we kind of pitch this as, this is as much as anything customer intelligence and that does shift people's orientation. So I think it's an important point, but Leslie, or Ej, I was just gonna say, this is also during the backdrop of a challenging time for impact investors in general, where there's legislation and over attacks, you know, downplaying the validity of these data. So with that context, you know, I think I would agree even more that you have to have advocates. I would again, employ the leaders and the larger asset managers to be, you know, front and center in this conversation because they're representing a lot more than themselves. I think, I mean, just interestingly in the world that I'm in and I, as I said, you know, part of the reason I think that investors come to social finance is the value proposition that we offer and the impact that we, they know is embedded into the funds then projects that we're creating. So the, there is no way to really separate that from what we're doing and we don't have then the questions that they're coming to and are uninterested in paying. What is, I think, a question is what impact reporting and questions that they're asking for us to then give back to them and whether that's substantive and whether that actually is getting us at the outputs and the impacts that we really are trying to have, whether the intervention has actually been successful. And so there is still, I think, a mismatch between what our investors and LPs think of as impact measurement and what we think of as impact measurement and what we're actually trying to achieve with those costs that are part of the value proposition of the day-to-day operation and management of the funds. I just fell into blanks that there's a level of depth of granularity that you see that they may not see. Absolutely. Just stress the ongoing cost of this, too. To be able to measure something, you gotta go back to it eventually and it's not just one year. You're gonna have to devote costs to this over time, so. So I'll have two questions and you all can pick which one you wanna answer. One is, does the impact reporting pay for their manager fee, or I would say more broadly, cover metrics that are meaningful to the beneficiaries and meaningful, helpful to assess the logic model, which is kind of related to what you just said. So basically, are we measuring things that actually matter, either to the human beings involved or to the planet in a substantive way, or is there just a fundamental mismatch between the dialogue that's going on between LPs and GPs and what actually matters at the company and customer level? I mean, I'll start, cause I do think there is a fundamental difference between, I mean, impact measurement is a continuum. There is outcome validation and data collection at one end and there is communities of practice, focus groups, user research, I'm sorry, Sasha could get much further into some of that and how some of that plays out, but it is on a continuum and how we're paying for it. Some of it is necessary for the operation and management of effective operation and management of a fund and some of it is additive. It's complimentary, it adds to the overall knowledge about the intervention that you're trying to deploy, about the population and how they would like to be and should be served based on whatever social challenge that you're trying to accompany. So what is definitely true is impact measurement doesn't mean one thing and therefore it is difficult sometimes to determine where in that spectrum you are and where you should then allocate your costs. And there's a related question if you both want to chime in, but there was just a very factual, are we talking about output or outcome metrics was asked? So if you can just signal that as you're chiming in, that'd be great. Yeah, so I love the discussion about inputs, outputs and outcomes because that's exactly how we think about this discussion. We're focused on the inputs with our clients. We spend a lot of time understanding what is important to them, what they're focused on so that we can be crystal clear when asking the question to managers or to end users of products, if the service or product is a net positive. I'm gonna pause there because I think there are other comments today. Kelly, do you wanna add a post cough? That's fine, keep coughing up here. I mean, I would just say, I'm trying to understand the question a little bit more like the cost of impact reporting or the impact report, can you actually? We've got a few floating around. One was around outputs or outcomes. One was does, I think I would paraphrase this one saying, are you collecting data that are meaningful to you investor and your LP or are you collecting data that's meaningful to the beneficiaries and data that will actually help you deliver more value to them? I mean, it is so across the spectrum. So I would agree this is across the spectrum. I mean, let's show outputs and outcomes. I mean, you love it or hate it. Like you do have to collect output metrics to understand changes over time. There are certain things that just help you directionally know if you are making progress and those are typically things that can be measured at the output level. In terms of what is requested or reported, I mean, what we try to do and it's so no surprise coming from where I come from, we follow Iris Plus very closely. We use it, total shocker, but also what is embedded in Iris Plus and if you don't, if you haven't or not familiar with the five dimensions of impact, totally get familiar with that because it helps kind of bucket all of this stuff. But one of the core components of that is thinking about who are you benefiting and the degree to which this matters to them or is sustainable in terms of the impact that is being provided. The way that we structure how we think about it is very aligned with that as well. For us, and again, I can't take credit for this because I just joined the firm. This is very much in the DNA, but I've been so pleasantly surprised that I inherited LPs that want to be as educated about what we do. So it is a dialogue. It's not just like this, hey, we need all this information with no context. There's a lot of dialogue, like a ton of dialogue. We're learning, we're sharing, they're learning, they're sharing. We have one LP who has been asking us a lot of questions about how they can actually structure some of their questions back to us better. And so I would just say, I think that's awesome because we're aligning incentives, we're aligning, reporting, but it's as much about us. I mean, I want to decouple something. It's as much about what we are doing as the manager. So how are we doing this as it is and what is the company doing? How are they relating to the end beneficiary? So there's a sort of golden thread of information and to the point that I think you were making, there's differences there. Like there's different use cases and different needs for that type of information, but it all kind of falls under this massive umbrella that's called impact measurement and management. Cool, we have very interesting long questions that we're not all gonna get to. I'm gonna try to weave in, there was a question around basically should the company pay the investing? And so I'm gonna weave that into a magic wand poll. So if you had a magic wand and the last option that you get to vote for would be some messy mix of all the above. So you can opt out and do that. But where should it be paid for? That's what this panel is about. So you get to vote for, I'll tell you what you gotta vote for. You get to vote for management expense, TA philanthropy something, deal fees. So in the deal fees, the LP agreement or the company. Like what's the right answer? I'm just curious what this audience thinks. And then you get to say a messy mix of all of them, which is our current state. So who votes for, it should be in mostly paid for by management expense of a fund. Interesting. Who thinks it should be a sidecar, philanthropic, TA something or other? That was good branding by me. Who thinks it should be in the transaction and deal fees? Interesting. Who thinks it should be in the LP agreement? Oh, we've convinced some people of that idea. And who thinks ultimately the company should pay for this? And who thinks it should be all these things because it's all heterogeneous? Wow, we're all equally divided. That was so interesting. Does anyone have any strong views on like, this is the magic wand. This is not what's actually gonna happen, which is the next poll, maybe. My only. Yes, please. Question. Are you raising your hand to, please. I've never seen passion around how it should be paid for. This is the best panel ever, please. Well, I fully think it's not a one size fits all approach, especially when you're looking at a diversified field, multiple stakeholders, organizations, different parts of the world. I fully think that it's not one size fits all and some, I would actually say, it's then all of the above, with regard to a specific use case. And yeah. Wonderful, that's very helpful. I just saw one minute, which I think means one minute. So I close. 15 seconds. I will just say that as long as the process, whichever stakeholder is bearing this cost, as long as it's driving, it's not just a transparency and reporting out vehicle that we're looking for here. It should be driving accountability and a level of transparency and just engagement. And as long as that's happening, I think whoever's paying for it right on because it's nice and stages. Kelly, closing thoughts? I mean, I would just say, we're bucketing so many different use cases under this broad umbrella that unfortunately, I would have to say it's all of the above because it really is situational in terms of what you're trying to accomplish, how you're set up. I mean, sorry. Yeah. Absolutely. That's the wrong answers. What you're investing in can make a huge difference on whether you can, whether you can even implement one of those options. And so it doesn't, there is not a one size fits all, but that does not mean that I wouldn't encourage more passing through fund expenses. And I also, I don't know the answer, but I do think I would just return to this point of norms and I'll just relay a story of one of our clients who was talking to us. And this is an operating company who has used us across seven companies annually that they pay for themselves, even though they have a bunch of investors for the past four or five years. And I was talking specifically about pricing because I had just gotten finished with talking to a fund manager who's managing nearly a billion dollars worth of assets and was complaining to me about how he didn't have any money to pay for any of this stuff. And I found that discouraging. And then this woman said to me, here's what we pay you guys, we pay for each operating entity three to four times that amount annually for their audit. And it's not a question of whether or not that's good or that's bad. That's just, of course, you can't exist, we can't run if we don't have audited books. And so I do think to me that speaks to two things though. There's no question fundamentally to the value of the audit to give you confidence that these are reliable numbers and a reliable business. That's the reason it's required. Even if, as the person running the company, you may not feel like you can't get into next year without your audit getting done, you just have to do it. But it's providing values, providing trust, it's providing confidence. So I think it's incumbent about all of us who are involved in this and care enough about this question to be here to say whatever measurement work we do with respect to the impacts we're having has to have that kind of value. Whether it has to do with trust, whether it has to do with value to end beneficiaries, whether it has to do with driving action, it has to create value. But if we do create that value, then there, I think the reason, you know, it's maybe going back to what you were saying, Kelly. When we create real value, the resources are there. And so the fact that we're having this conversation in some way is a chicken and egg problem of have we created enough value, but are we stuck in kind of a bad spot because we haven't created enough value? You know, and then conversely, I do think some of these mechanical questions of how this is going to be done, like it needs to be a little bit easier for folks to do these things. And the amount, and I would just observe, the amount of advocacy, you know, person acts who's trying to do it the right way. You know, Kelly, the amount of alignment you guys have in your firm, I would say is amazing and I would describe as exceptional. You know, so what often seems to happen day to day is the amount of advocacy somebody needs to do to say, we're going to do this well, we're going to do this the right way. It's a lot of contorting. It's a lot of special cases. And I do think it's when you look at other services that are known to be essential like an audit, they have none of those characteristics. So I think, you know, the goal of this panel was to explore some of that, but also deposit that somewhere between here and there, there will be a normal way. That will be more clear, that will be more understood. And then you can do things on top of that, you can change that, but it won't be, you know, one size fits, you know, sorry, special use case every single time. And I would just argue having been in the field for a long time that that specialness of this is one of the problems, not the only problem. And if we can find a way collectively to socialize kind of more standards frankly and more standard behaviors, that may help us.