 Welcome. We're so happy to have you here. One of the great things about Socap is that we don't have to introduce you to each other. You seem to be ready to go to work talking to each other the second you get here. I'm Rosalie Hardin. I'm the producer of Socap, and I am here to give a very brief welcome and a little bit of details about where you can find things. And there are two things that you need to know that will be the most helpful for you. And one is how to find a volunteer who can help you if you don't know where something is. And so I'd like for all the green-shirted people to wave at you right now, could all the volunteers give a big wave? We have a stand-up wave, get up, stand up and wave. Those are the people who are here to help you find your way around. And Michael, can you stand up and show your blue badge? People who are wearing blue badges are on staff, and they are ready and willing to help you as well. Thank you. I know you found the food because we had to work real hard to get you to come over here and leave the food. That's always a great thing with Acre Gourmet here at Socap, and we're thrilled to have them back with us again this year. Yesterday we had about 400 people, 300, 400 people in our newcomer session, and they're all ready to get to know you, the folks who have been here many years before. Please look around for strangers, people you have not met before. They may be the most valuable person for you to know at this event. And with no further ado, we are going to get started, and my husband and co-founder of Socap, Kevin Jones, is going to come and talk to you about what's happening with this year's igniting vibrant communities. Kevin. Thank you. Welcome to Socap. This is our largest conference, 2,500 people when we were 1900 last year, and 40% of you have never been to Socap, and we've done no outbound communication to you. People have found us. There's something happening here. So those numbers are amazing for a conference in its eighth year, but that says something is happening, that more people are starting to get the idea that there is a market at the intersection of money and meaning, the space between giving and investing. Now, we're also validated this year by having people that speak that we've been asking to come for seven years. People like Sir Ronald Cohen, the father of British venture capital and social investing in the UK. And until yesterday we had Rod Shaw, the head of USAID, but now he's flying to Liberia because of Ebola. So we have a lot of AID folks, but apparently Ebola takes precedence, so I can see that. But they have a huge announcement that really changes things, that makes things different. They're subsidizing the management fees of small funds. That sounds like a technical detail, but it means it makes early stage investing far easier. You can have a small fund and actually have it work. That could solve the problem of what's called the valley of death. That's the gap where promising accelerator startups hit a wall before they get a track record to justify traditional venture financing. That's indicative of something really far larger. It's important infrastructure is coming online that fills important gaps in the market that lets you put your heart into your investments and get your money back. Markets go through three stages. They go from discovery where you figure some things out and you have to figure out who's doing what. And then there's the second stage of a market where it's cooperation. One off things where train tracks. And then finally the third stage where train tracks are interoperable and financial exchanges work. We're in the third stage of this market, but it's in the early stages. I'm going to use an analogy from American innovation to point out what that is like. We're at the stages of this social capital market, this impact investing social enterprise market where in the U.S. regional railroads were cropping up and they opened up markets. It was really good news, but there was no coordination between the rail lines. So at each rail system they would have to offload everything, sometimes put it on carts and take it to the next railroad system. Until they got to the stage where they agreed on the gauges between the railroads. What we're having now is a lot of innovation and infrastructure cropping up, but there's no interoperability much. What AID does is bridges the railroads. So the widths of the tracks are being equalized and standardized. Like AID is a crucial bridge between the railroads. It eliminates a huge friction with that vital connection. So we're connecting the railroads, the pieces of infrastructure that are cropping up. That's a really good sign in a market. And it's in that light that we're also excited to continue exploring our partnership with Sandkelp. They're the group from India that puts on the largest social enterprise impact investor conferences in the global south in India and Sub-Saharan Africa. And we're beginning to come to a great age of our railroads. What we call it, what they call it, what works in India, what works in Kenya, what works in the U.S. and what we can learn from each other. A North-South global learning partnership, another piece of the infrastructure that's coming online as we move into the coordination phase, the third stage, the maturation stage of this market at the intersection of money and meaning. Another important railroad linking coming up is professional education. There's been enough research now that we know what a good impact investor does and what bad ones don't do. And we hope to partner with Kathy Clark of Case at Duke and ICAP partners, Ben Thornley's new startup, to bring professional education to funds, to financial service companies, to the payment providers, to the investment banks who are putting new staffers into this new space looking at financial inclusion and trying to figure out what's different about this finance than other kinds of finance. They need to learn. Wall Street folks don't really get it. They need to learn wherever they're from. So CELCAP was built and owes its growth to focusing intentionally on bringing in the valuable stranger, the unlikely ally. In that light, we have some new valuable strangers in the room here. We have sessions with indigenous investors and entrepreneurs where we're going to explore how to use risk capital in a non-extractive way that's consonant with indigenous values. I think we can do that. We've been in conversation for a while. Some of those conversations will be really interesting at this conference. And we're going to talk with an African-American activist and historian about how social enterprise can help a place like Ferguson, Missouri. One of the valuable strangers that is here in force this year are what would have been an unlikely ally just a few years ago, are the corporates, specifically the financial service companies, like American Express and a lot of other financial service companies and investment banks. And the good news is that we don't just have the CSR folks this year, the public affairs-funded folks. They have real revenue targets in financial inclusion here in the U.S. That's making money reducing the cost of being poor. That's not making money off the core poor, but reducing the cost of being poor, the cost of payday lending and other kinds of things where the poor are victimized. Thanks to smartphones and big data, financial inclusion is one of those sweet spots where the market and justice overlap. Those don't come along all the time. We have some things around Obamacare and mHealth where the working poor are actually the most valuable customers in the American healthcare system. And we're going to be looking at those places where the market and justice overlap, and we'll be looking at places where there's still a cost of doing good, where the market doesn't always overlap and you have to subsidize or have some reduced return. We're a blended value market. You can do well and do good. Sometimes there's a cost. Sometimes we work with government. Sometimes we work with nonprofits. We're figuring out how to do all those things in partner much bigger and much more coherently than we've done in the past. It's building the bridges between the railroads and making the gauges standard just like we did when we made the railroad system work. We have more than 100 sessions where you can learn and meet your peers and potential partners here at SoCAP. But if you're going to some session and you find it interesting, look at the list of attendees. It could be that the, and if you look at their profiles, you can find that the experts are actually sitting next to you and not up on stage. Pay attention to the people that you're in line with at lunch or coffee. Look for the unlikely allies and the valuable strangers that you can find at SoCAP. The power is in the crowd. The power is in the community. We're glad to convene it. I think we have a lot of great content, but also listen to each other. So thank you for coming. This is the biggest crowd we've had, and welcome to SoCAP. Thank you for being here. Thank you. Thank you, Kevin. Kevin is staying here on the stage, and he is going to be joined by the board chair of Mission Hub, which is the parent company of SoCAP, and by Tim Freundlich, who's the board president of Mission Hub and SoCAP for a special presentation about the founding of SoCAP. Kevin, if you'll come back. Right. Thank you. So I'm happy to honor Harry Halloran, who was our first sponsor. In fact, the sponsor that allowed SoCAP to become a reality. He put up the money that allowed SoCAP to become a reality. When our sponsor proposal was just in a word doc, it wasn't even baked enough to be in a PDF. And the title, Social Capital Markets, had a little parentheses after it that said Working Title. But when we said there needs to be a big tent convening, not another siloed, fragmented convening where you try to get quotes the right people in the room, which frustrated everybody, he got it. Nobody else was getting it. Harry got it. And it was this intuitive way that he got it when nobody else did that allowed us to hire our first two staffers eight and a half years ago to make this thing a reality. Now, if Harry had used the MBA type market analysis thinking he wouldn't have done it because the accepted wisdom was that you needed the right people in the room. But he used his intuitive gut instinct of the successful entrepreneur that he is and he caused this thing to happen. It's the instinct to skate where the puck is going to be and also to not listen to the people that say the puck is not going there. Harry has this intuitive way, early guts thinking entrepreneur that caused this to be a reality. And that's what's caused hallowed and philanthropies to be the intuitive early stage investor in funding things that other people might not look at, other people might not think make sense. But Harry and Helen Fransperies caused that to happen. So, Harry, thank you, this wouldn't have happened without you taking a chance on somebody who had a proposal that was not even baked enough to be in a PDF. So, thank you to come up. Give Harry a big hand round of applause. Harry! You can stand up. There you go. I get to hug you. And I get to give you... Thanks, ma'am. It's a sow cap, right? Pretty clever. And I also actually have sow caps for Mark and Tony if you would like to please take these with my appreciation. They're actually monogrammed. Harry, do you want anything you'd like to share briefly before we roll you offstage for the next event? The operable word is brief. But I want to tell you the real story. It was a little different than what Kevin said. Kevin interpreted my actions as if it was an intelligent, well thought out, entrepreneurial thing. Well, the real truth is... And I'd like Tony and Mark to come up here beside me while I tell the real story of how sow cap got funded. So, Mark is one of the founders, too, and Tony. And so what really happened was that Mark and Tony said, you know, Harry, there's this really cool thing happening. It's called sow cap. And I said, well, that sounds interesting. What's it all about? Well, we're going to be getting hopefully 300 or 400 people here and we're going to have interface. It's different than the skull form in London, you know. It's really going to be exciting. And we're looking for sponsors. And they have platinum sponsors and they have gold sponsors. And they're trying to get quite a few platinum sponsors and we would like you to be the platinum sponsor. So I said, wow, how much is that going to cost? What was it? 100,000. 100,000. Yeah, I thought it was more than that. 100,000. So for only 100,000, then I found out that we were the only platinum sponsor. I said, Tony, you didn't tell me. I thought the Rockefeller, I mean, you know, people with real money, I mean, a lot more money than we have. And they didn't become a platinum sponsor. I don't know where they are now. They are now. Good. Well, that's good. So anyway, it was, it's been, it's just wow, right? It started very humbly. The timing in a way couldn't have been on the one hand worse at the start of the, the recession was just collapsing. And, you know, the work of the founders really made this all happen. So again, a little bit of applause again for Kevin and Rosa. Thank you. Thank you. I have to tell you all. Anyway, so the best thing is to say is, wow, this is, you know, a dream come true. It was articulated as something that might happen and grow and it's grown from five or 600 people, I think was the first one. They were trying for 300 or 400. They got five or 600. It was an indication it was going to grow now to 2500. Thanks for the recognition folks. Thank you. Thanks. That's great. Yeah. You always have to tell me. It's now a pleasure to introduce Judith Rodin, the president of the Rockefeller Foundation and former president of the University of Pennsylvania. Judith is also, I asked Judith this morning if she could share something fun from her recent, her current life, things she's been working on. And she said, well, of course there's my new book. So I want to mention that coauthored with Margot Brandenburg. Judith has just completed a new book called The Power of Impact Investing. The Rockefeller Foundation has been a wonderful partner as well to us here at Socap. And as many of us know, particularly those of us who are branded with the word pioneer, which means basically we're very old, that the Rockefeller Foundation has been very much part of building the impact investing field. So I'm greatly delighted really to bring Judith back this year for a talk on our stage. Thank you, Judith. Thank you, Judith. Hi, everyone. I'm thrilled to be back at Socap. I last spoke here in 2012. Many of you remember I said that the Rockefeller Foundation was preparing for its Centennial year at that time. Now it's 2014. We're just recovering from our Centennial year. At 101 years old, we're not maybe quite old enough to remember the San Francisco earthquake of 1906. But our founder, John D. Rockefeller, gave more than $100,000 to help the city get back on its feet. But it was another businessman who stepped up to save the city more profoundly. When E.H. Harrowman, the president of the Southern Pacific Railroad, heard the news about the earthquake, he led the first train west to assess how the railroad might assist in the recovery. When he arrived in Oakland, he immediately ordered tracks to be laid down into the most devastated parts of town to carry out people and debris. He met with local officials to kickstart the rebuilding process and sent telegrams across the country pleading for both private and public funds. And he gave $200,000 of his own fortune directly to the cause. The rich and poor have to be cared for alike, he wrote in a telegram home. I begin with this story not only because it's relevant obviously to last week's earthquake, which serves as a reminder of the shocks and stresses we continue to face, but also importantly because it reflects the kind of spirit that brings each of us here today. The belief that we all share with Harrowman and that his friend John Muir put best when he wrote that Harrowman cared for money as a tool like a locomotive or a ship. Indeed, private capital is a powerful tool for helping to solve humanity's greatest challenges, which is critical because philanthropy and government simply only have billions between us, yet private markets hold an estimated $210 trillion in capital, $80 trillion in pension and institutional funds alone. Seven years ago, a group of philanthropists and investors convened at the Rockefeller Foundation's Bellagio Center where they coined the term impact investing. They began to build the field to unlock greater amounts of private capital to do public good. We at Rockefeller have invested nearly 50 million over the last seven years into building the architecture and the infrastructure for impact investing. The launching and incubating of Jim, one of the global networks that's been so important, the development of reporting and performance standards like Iris and Gears. We've worked on trying to help align the policy environment and we've been helping to develop an evidence base of what works and what does not. We've also invested millions of our own PRI dollars to pioneer new investment structures and financial models and as you can see it takes all these elements of that ecosystem in order for this to work. Of course we haven't acted alone. The Bill and Melinda Gates Foundation and the Omidyar Network are creatively using PRIs and other financial structures in very exciting new ways. New funds beginning with the early pioneering work of Bridges Ventures and old line pension funds such as TIA Kreff are building greater opportunities for social and environmental impact in their investment funds. Financial institutions like JPMorgan Chase and Morgan Stanley have created impact investing units within their corporate structure while Bank of America, Merrill Lynch and Goldman Sachs have led on investing in and making the markets for social impact bonds. And under the hard work of the G8 Impact Investing Working Group under the leadership of Sir Ronald Cohen, with the U.S. team led by Matt Bannock, we will see an enormously important step to further systematize and globalize this movement. Thanks to all of these contributions and so many more, impact investing has surely moved from the margins to the mainstream. Here are a few pieces of notable empirical evidence. JP Morgan and JIN's most recent survey of 125 major impact fund managers showed more than $46 billion worth of impact investments under management, a 20% increase from 2013 to 14. 91% of those investors reported financial returns in line or above their expectations and 99%, 99% reported social or environmental impact above or in line with their expectations. At this summer's White House Round Table on impact investing, more than $1.5 billion in new capital for impact investing was committed by a group of investors, spanning corporations, banks, foundations and individuals. The Omidia Network, the Macknife Foundation, the Rockefeller Brothers Fund and Prudential Financial among them. There is really tremendous progress in building out this ecosystem. All of you in this room who were involved should give yourselves a big round of applause for how far we've come. For me, this is that moment that field builders hope will come one day. The time when we can step back and see the field mature and come into its own. But just as innovation propelled capital on the scale needed to stimulate markets for social purpose, which brings me to the reason I'm here today, not just to applaud the successes we have had together that we have created, but to challenge us to look to the future. Because if there is anyone who can create the next big innovation in the social capital markets, we are going to need a continuing focus, I believe, on financial innovation. In the social capital markets, it is the people in this room. Let me tell you how our innovative finance team at Rockefeller has been working and what we've been imagining. While continuing, we hope, to help develop the field of impact investing, we see two new opportunities, distinct opportunities for expanding the tools for innovative finance. Innovations in the kinds of financial mechanisms that provide new investment opportunities. And innovations in new models that align actors in new ways that leverage each partner's unique strengths, while meeting their respective risk return expectations and needs. We believe that the goals of the next wave of the social financing innovation movement are three-fold. First, to bring in new sources of capital, often from new actors who are not already mobilizing capital for social or environmental purpose. Second, to increase the amount of the capital that's marked for those purposes from existing sources from current investors. And third, deploy existing capital in more effective and impactful ways. Take, for example, the social impact bonds. The original innovation of the SIB was its straightforward value proposition for each of the actors involved. It offered governments a way to fund proven preventive services without putting their tax dollars at risk. It offered nonprofits running a successful evidence-based intervention, a way of accessing new streams of revenue to scale their services. And it provided funds and private investors with more investment opportunities. Since Rockefeller and others started funding Social Finance UK to develop this very seedling of an innovation, it has now been adopted in more than a dozen countries, and 19 states across the United States are in the process of either closing or exploring deals. In California, bonds have been launched focusing on recidivism, homelessness, and asthma. In many cases, including New York State's first SIB to reduce juvenile recidivism, we at the Rockefeller Foundation have been both an investor and a guarantor. But what has made the SIB such a breakthrough innovation has been its real capacity, its ability to be repositioned, to be repurposed, to fit different applications. For example, development impact bonds are almost identical to the structure of SIBs, except instead of the local or the national government repaying the investors, its development institutions along with international donors and foundations. These can be used in the developing world to aid in the prevention of disease or increase in food security, for example, where greater support for evidence-based interventions would surely improve outcomes. SIBs and their many offshoots are just one example of innovations in the kinds of financial mechanisms that will provide new investment opportunities. There are also new kinds of mechanisms developing for evolving these land-based structures to the plight of the world's oceans, which are incredibly underfunded, even relative to other conservation and environmental efforts. More than 80 percent of fish stocks are at near or beyond exploitation, threatening both marine ecosystems and the vast numbers of people around the world who depend on them for food and for livelihoods. Echo Asset Management Partners, in a collaboration with Oceana and Rare, funded by Bloomberg Philanthropies and Rockefeller, has now proposed new financial mechanisms that could dramatically accelerate the sustainability of the world's fisheries. Here's just one example. A microfinance or enterprise root-to-market vehicle which will finance improvements to processing and distribution all along the value chain, including packaging and interim storage to increase the sourcing of sustainable seafood in developing countries. This innovative structure also gives small fishers themselves an ownership stake and extra incentive to use sustainable practices and it will help us achieve Rockefeller's goal of protecting ecosystems and building more inclusive economies. Those are some of the examples of new financial mechanisms but we know there are so many others waiting to be developed. A second area we believe is really ripe for innovation is in the development and testing of new models for instruments that partner disparate interests or disparate actors to collaborate and share risk and increase leverage. One example is a new partnership that we and the overseas private investment cooperation have created to increase impact investments for solving development challenges. Here, Rockefeller will be the flexible capital partner providing certain early-stage risk capital that will allow OPIC to do certain high-impact deals that their suite of investment products does not allow them to do now. In return, OPIC will bring to bear their expansive operational capacity and deal origination and conducting due diligence. The innovation we're piloting is whether this approach for structuring impact investing deals by deploying together risk capital from a philanthropy and large source of capital from a DFI impact and de-risk investment capital from commercial investors. This kind of model could then be applied to a wide variety of development challenges. But there are other models that are tailored to a more specific problem and I'll give you one example. In India, we're doing work to reduce rural poverty which is exacerbated by the reality that large swaths of rural India are not yet connected to the electric grid and they will not be connected for a very, very long time. It is one of the major causes of significant rural poverty and you can see on this map the overlay of rural poverty and the lack of electrification. Through our initiative, Smart Power for Rural Development we're pursuing a model that would use a new mini-grid technology powered by clean alternative energy sources. The innovation is bringing together three types of customers. An anchor tenant, telecommunication companies that need electricity to run their mobile phone towers and who are currently relying on expensive and environmentally polluting diesel. Small enterprises such as carpenters or little agro businesses that need electricity to operate and grow and will pay for reliable electricity and villagers who can only pay some tiny amount but they only need a tiny amount of electricity and then their households stand to gain major economic and education benefits and the data are very strong there. Our hypothesis is that securing the telecom as a contractually guaranteed customer can finally make it profitable for smaller scale energy services companies to bring electricity to rural parts of the developing world where so many efforts have previously failed. While it's not yet a proven model that can attract commercial investors again the Rockefeller Foundation is working to de-risk these investments for impact investors and prove that this model can be profitable and scaled first across India and then across the developing world. This could be truly transformative but to solve challenges as complex as those facing humanity today we often need the combination of innovations both in models and in mechanisms. That's what we're learning through our work on resilience and I'm so thrilled that SOCAP has featured resilience as a track at this year's conference. In today's world shocks, earthquakes, droughts floods, pandemics as well as slower burning stresses such as joblessness and civil unrest are coming faster and they're staying longer. Through our resilience work which over the course of the last decade has funded or committed more than half a billion dollars we've learned that investing in resilience not only mitigates the damage caused by disasters and stresses but also creates benefits for people in good times as well. We call this the resilience dividend and this graphic shows some of the benefits that we've seen already including more job opportunities lower operating risks for business, better coordination among government silos and greater social cohesion. To help more cities and rural communities achieve the resilience dividend we're pursuing innovations in both financial mechanisms and models. One is our 100 Resilience Cities Challenge 100 million dollar Rockefeller commitment which focuses on building urban resilience in 100 cities worldwide. We've leveraged our 100 million and created a platform of resilience goods and services for the cities that are actually providing hundreds of millions of dollars more from entities as diverse as Palantir, the World Bank Group Ushahidi Sandhya National Laboratories and Swiss Re with several others to be announced in the next few weeks. I encourage you to attend the session later if you're interested in learning more. In addition to changing the way entities approach financing resilience we're also exploring mechanisms that could be developed to make this easier including infrastructure exchanges or resilience impact bonds. Let me conclude as follows. We've seen the power and we've seen the results of using our risk capital to test or scale a new financial mechanism or model. We have also seen over and over again that the best ideas come from many people in many places. And so in our search for the next leapfrog advance in innovative finance we are asking you the entrepreneurial community to think about some of the innovations you've come across in your work and the new idea that you would like to test. Tell us by using the SoCAP 2014 and Big Ideas hashtags does it bring in more capital private capital to the social sector? Does it focus on new ways to catalyze social entrepreneurship? Can it promote new and exciting types of partnerships? Or might it build resilience and more inclusive economies? So if you have one big idea we want to hear it. Members of our innovative finance team will be monitoring the conversation so will many others and for many of those we will follow up directly. But we'll also if you would like, promote your ideas through our deep and expansive network of enterprises, innovators and funders who share your passion for achieving social good. We are absolutely confident that with the collective wisdom of the SoCAP community we can help transform and change today's new ideas into tomorrow's next great transformation. Thank you all. Thank you Judith. It's always great to hear what Rockefeller is doing. And now that we've heard about the powerful potential of impact investing and been given some ideas about how to accelerate that even more through what Rockefeller is working on we're going to turn to three people who are great friends of SoCAP. These three folks have gone under the hood to get the real scoop of what's going on in this field and they're co-authors of a new book that just about everybody here is going to want to copy of. That book coming out in October is called The Impact Investor A Practitioner's Guide on How to Succeed in Impact Investing. Sound good? They are going to talk to us about what they think we need to truly ignite the social capital markets. Please join me in welcoming longtime SoCAP veterans and our partners, Kathy Clark, Ben Thornley and Jed Emerson. Good morning. Thank you for having us. Thanks Rosalie. Thanks Kevin. Liz, Lindsay, everyone at SoCAP. Do an incredible job. Now I have the best job here of the three of us this morning because I get to share some good news with you that you don't already know. And that is that you are special. Did we not know that already? So why are we special? Because social entrepreneurship and impact investing are inherently about cross-sector collaboration. They're about using the tools, the practices and the languages of the non-profit sector, of business and finance and of public policy. Think of revolution foods, for example. A fantastic business that works within a highly regulated, heavily constrained environment of school lunch programs. Or living cities, which is a collaboration of over 20 of the largest foundations and financial institutions concerned about development in low-income communities in the United States. Or microvests, which describes the social ballast of its non-profit owners and the commercial sale of an institutional, extremely innovative approach to the way that it invests in microfinance institutions. And this multilingual leadership is the future. Hillary Clinton talking at the State Department's Impact Economy Initiative. We were over the separation mentality. Paul Pullman from Unilever being less bad corporate social responsibility is not good enough anymore. We need partnerships that probably haven't been done before. This is Dominic Barton, the Global Managing Director of McKinsey talking about the need for corporate leaders to be tri-sector athletes. And finally, from the non-profit world Leslie Crutchfield and Heather McLeod Grant talking about collective impact being about partnership across sectors. Millennials are talking about this as being for improving society. This is the future in their eyes. And Audrey Choi at Morgan Stanley talks about millennials not investing the same way again. Thank you so much. Thank you. That was very insightful. So before we go on with this stick, I just want to say I always love coming to SoCAP because it's kind of like a gathering of the tribes and kind of like a large extended family reunion. And in working with Ben and Kathy over the past two years doing this research, we've also kind of become our own little family. You know, as you just experienced, Ben is kind of like the mom telling you how special you are and attractive and intelligent. Kathy's kind of like the kind of slightly bossy but still very sweet older sister who kind of like makes things happen and make sure you stay on track and you'll experience that. And I'm kind of more like the crazy slightly drunk uncle who makes inappropriate comments. So I just want to kind of brace yourself for that. So 15 years ago the blended value papers started talking about this idea of mutant managers. And that we needed 21st century leaders who could rise up out of their silo and see across the space and then take us to a different, somewhere better, somewhere integrated, somewhere more whole as opposed to bifurcated. And Ben just walked you through a number of very smart and intelligent folks who have also come to that same conclusion that it's time for a different way to think about leadership and a way to think about how we're moving forward. And we termed the phrase multilingual leadership because in our research what we found was that those funds that really were outperforming as impact investing funds, those funds that did best on both a financial basis and a social and environmental basis were funds that were led by individuals and teams that could also kind of cross cut. And what we've realized is we've kind of talked this through over time is that these people, if you'll excuse the phrase, kind of dumb fuck their way to the top. Because they started at Goldman Sachs and they did five years and then they went to the IFC and they did five years and they went to Ghana and they ran a microfinance fund and then they came back and they worked for a foundation and then they wrote a book or a paper and article. They basically found their way through this process over five, ten or twenty years of a career. And the problem is as a community we are all basically winging it. We are basically making it up as we go and that's cool. That's how you get innovation, that's just the reality that we're playing with, but it really is time that we move from winging it to a more structured approach to thinking about leadership development for impact investing. Now the problem that we have is that foundations, even in things that they claim to care about such as nonprofit management invest less than 1% of their annual giving budgets in leadership development initiatives. To say nothing to the fact that things that they talk about caring about like impact investing they virtually invest zero and this is why we go to family offices and pension funds and others to really move money into impact investing vehicles. But if that weren't enough, if you think about the offerings that are available to young leaders coming up to the millennials that Ben talked about while there's been a doubling of the offerings of dual degree programs at the master's level where you could in fact be trained in a both ends kind of mindset and set of practices the actual uptake of those offerings is less than 1%. And so as we think about it we're talking about leaders that are coming into this space and we're talking about those of you in this room who spent a lot of time grappling with the fundamentals of what is impact investing. What is it that we really should be focused on and thinking about and so we spend all this time talking about impact investing as very idiosyncratic and it's very subjective and it's this and it's that and so we're finding our way through the process if you will as opposed to leading ourselves into a process of mutual edification and guidance of sharing of collaboration of really learning the new skill skill sets that will need for the future and the future really is a function of leaders who understand that successful impact investing is a function of alignment of stakeholder and investor interests. It's a function of a focus on outcomes and performance and impact. It's a function of transparency and being clear on what it is that we're doing and disseminating that to others so we can all grow together into this new role of leadership of the whole. So what can we do about this? How can we develop ourselves and our teams to be better multi-lingual leaders? Well the first thing we can do is actually elevate the discussion of this concept and commit to it. What does it mean to assess your own skills? What does it mean to assess the skills of your teams and what can you then put in action to be intentional about developing those skills and talents? What we are excited to invite you to do this year since the theme of SOCAP is ignition is to invite you to take an ignite pledge to think about these issues for yourselves and within your organizations. So first is innovate. How can you decide this year to do something innovative around multi-lingual leadership within your organization? The second is to guide to support other organizations who are thinking about doing this. It takes two to be cross sector so you can be the recipient of this kind of partnership network. How often do you attend a conference in a different sector on the area that you are working on? Can you do that more? Include. Invite people from other sectors into your work, onto your advisory board, into your work in other ways. Talk. Talk about what this is like and the last is educate. Which is really to think about how can you cultivate a culture within your organization that supports people with different mindsets and different backgrounds feeling comfortable and contributing to a better whole. We are really excited this year at SOCAP we're trying a few new things around this idea of multi-lingual leadership and we're really inviting you to join with us in figuring that out. The first thing is we released a survey last week. Many people in the room have already taken it. It's about a 10 minute online quiz at bit.ly . It's about a 10 minute online quiz at bit.ly . When you take it it assesses your skills and knowledge across the three sectors and gives you a score. You can get a sense of where you fall. On Thursday we're going to run an experimental workshop for two hours at 11 o'clock. We have 12 expert impact investors who are going to serve as coaches and walk people through what we're doing. We are also really excited that we have been able to get a preview PDF version of our new book that's coming out next month but the publisher has allowed us to share one with everyone at SOCAP and you're going to be getting that through Pathable later today. Hope you take a look at it. A lot of the deeper ideas that we have led to this notion of multi-lingual leadership are in that book. And then last I'm really excited to say that the new book that we're going to be talking about is the Center for the Advancement of Social Entrepreneurship at the Fuqua School of Business at Duke is going to make this a year of multi-lingual leadership. We're going to be delving into this issue, publishing blogs, connecting what other people are doing and we'd really like to invite you to be part of this so that we can learn from you. So please follow us at our Twitter hashtag at case at Duke or if you want to tweet about this issue we have a wonderful friend of ours who I got to meet a few months ago at our home in Asheville and to hear about her work. Shirley Sharkey, the CEO of St. Elizabeth Health Care in Canada has a great story. It's an amazing story of how Indigenous work and local communities has grown to a $300 million health care system under Shirley's leadership. Please welcome to the SOCAP stage, Shirley Sharkey. O-M-G we are all here at SOCAP 2014 and in San Francisco which is a wonderful vibrant place that's about neighborhoods and actually I was reading that it's described as 49 square miles of endless possibilities. Isn't that so aligned with the theme of igniting vibrant communities. I want to talk to you about St. Elizabeth and our story and journey over the last few years. St. Elizabeth is a little different as an organization and some people think we actually have multiple personalities. We are a non-profit charity some describe us as Canada's largest social enterprise some view us as an investor others as an investee we have an army of 7,000 workers personal support workers nurses rehab staff, physicians who care for people primarily in their homes and in their communities. Our revenues and resources hover around $300 million and on any given day we are servicing 11,000 clients. But to our core it's all about hope and happiness for society and for the world at large. That is St. Elizabeth today. But in 1992 it was a little different as an organization. We were in fact much smaller about 300 staff very geographically dispersed we had some interesting and challenging governments we had a friendly culture but a little quirky a lot of challenges dealing with multi-cultural populations and our finances were really shaky. So we said well alright how can we make a change and what can we do? What I hope for this morning in a few minutes I can encourage you and help you as you all know and understand that social impact and purpose can be a perfect marriage with business and it can continue to be a loving relationship. So on to the journey of St. Elizabeth in my early days as CEO and I started in 1992 we had as a health organization very traditional success a lot of government contracts primarily in the home care space and started to move into servicing some of the marginalized groups the first nations populations, homeless populations they were very small we were growing and diversifying primarily in government fund initiatives but I kept thinking there should be more with the success that we are having with our growth we should be doing more for society and then in 2012 I read a great article by Michael Porter and Mark Kramer creating shared value and for me it was one of those sort of eureka moments it was as if Porter and Kramer had got inside my brain and started to organize the disjointed thoughts I had about social impact purpose and the success of a business and their article really was all about the fact that capitalism was broken and they saw how companies could knit society and companies back together by using shared value that connected social issues and economic issues and that would unleash a powerful force and the engine would be turbo charged for social impact and innovation would be the gasoline so it occurred to us at Santa Liz well it doesn't need to be all or nothing why can't we as a non-profit in fact be a social ecosystem why can't we rise to this occasion so we took on the challenge of a somewhat painful process to embed more fully in our organization social value and what that would really mean as we continue to further our business success and it's been a work in progress as an organization just as I am a work in progress and we continue to learn along the way but I wanted to share with you three key themes that I think have helped us in this journey for success in the global enterprise space and they are stick to your commitment lots and lots of little mistakes and scale and size from a commitment point of view Santa Liz certainly had a head start because our origins 106 years ago was to heal the sick and it was to in fact actually birth babies in their home environment so we were very clear about our social purpose but it took commitment over the last few years with a very successful primarily government funded organization at every level including the board level to go why are you looking for trouble your business model works just keep growing and expanding but I think that helped us commit even more to the conviction no we want to do more about the strength of St. Elizabeth and more about how we are going to impact society but it was a journey with a lot of commitment and a lot of confusion which needed a lot of courage to move forward and of course there were a lot of mistakes and continued to be mistakes and our mantra has always been act implement the mistake is there, fail quickly that is the only way we are moving forward and I think you can really define what an organization is all about by how they celebrate the mistakes versus necessarily how they celebrate the successes our key mistakes I think fell into two categories and one was timing, some things were way too fast what we were expecting to do and as we know you can't hurry love other things were slow and we started to see new ideas and new solutions and we said wow we should have been there and understanding that innovation to move it forward into the next space said we have got to make sure we structure the organization to allow that to happen thirdly we underestimated the confusion for our organization when we said we are going to be a social enterprise and many said well aren't you already that what have you been doing and to really work through what we were striving for from a societal impact was very interesting size and scale has probably been I think the most significant learning lesson for us in that we had to be patient with our organic growth and also through acquisitions to begin to understand how we could use our weight and our brand to actually benefit society and we conduct now 6.4 million visits or exchanges to people throughout the year and our thought was this could be a tremendous test bed that we could allow people to use so we could begin to actually harness the power of people and get changed to happen get transformation to happen for tomorrow and it was a leap of faith today it's not just our size but the fact that the organization is very committed to innovation that has moved us to use that size and space very very differently internally with our 7000 staff we are using a social media platform called Soapbox which allows all of our staff at any time to provide their ideas to us so how we can spread that hope and happiness which you've got to be ready to listen to those ideas and respond to them and that's been a really interesting insight for us to see how the power of people both internally and externally can help you achieve the heights you're trying to move into so thankfully as I stand here today on the stage we have had I think some very positive outcomes firstly innovation is embedded in the DNA of our organization and it's not just innovation for change but social innovation and what I've done is really cocooned an incredible motivated workforce that has been charged to go outside of the healthcare world and see where we're doing things better and to bring in those ideas and resource those ideas within the organization we have very interesting titles for these positions and they report directly to me and it is allowed the organization to understand how this is so important as a priority and it's the gasoline that will make us successful Ventures is another area that has been really important to us and we have put a lot of money into this and we have put money aside to fund other ventures other initiatives amazing entrepreneurs and help them to help themselves to create the kinds of solutions that will help society at large improve and we've been part of accelerator programs that are bringing the inside outside in to St. Elizabeth lastly collaboration has been another outcome where we've been partnering with very different players than a traditional 100 year old health organization typically partners with and they've been everything from technology labs to colleges of arts and design to again help us come up with new ideas and new solutions to help service marginalized groups help transform care that we're providing and help people in fact improve their lives and improve the outcome so in conclusion as I reflect the story sounds like it was very linear and predictable but it's really only been in hindsight that I've been able to put them into themes and compartmentalize the journey what's been clear from the beginning however is the speed the sprint the space we're in that requires a huge pace of activity and like the title of today's talk OMG Here's Tomorrow what I think is most important is we all remember how relentless we must be to get the changes that are necessary no matter where our beginnings are as organizations as investors as inventies it's all a part of an ecosystem to get the solutions and I hope in these few brief remarks I've given you encouragement to in fact imagine the possibilities and move forward on your dreams because like the wonderful quote from the very wise Dr. Seuss unless someone like you cares a whole awful lot nothing is going to get better it's not let's make sure it does get better thank you very much Hey everybody I am a person who always likes to find out what those who are coming on stage would like me to tell you about them so I asked our next two speakers to help me to say and they said just tell everybody how dashing we are so I'm here to introduce the dashing Anthony Buglevin and the dashing Willie Foote who are actually going to have a conversation here on stage what the conversation is about really is about the doing of it these are two fellows who spend every day boots on the ground doing deals practicing our work and they have some reflections that are there with us so I hope you will help me welcome them thank you yes so we're just really excited to be here I know many of you have been here for a few years some of you are new but for us it's really amazing to be here leading organizations that have been doing this work for in the kind of my organization more than 30 years and Willie more than a decade to talk to us for a few minutes about what it really takes to make impact investing work and specifically we just wanted to talk about what it takes for it to work and then most importantly what are we learning from the doing of it many of us for many years have been talking a lot writing, listening but it's a rare opportunity to learn from a doer like Willie and I'll talk about what my team does as well my sense is that at Socap there's always three kinds of people in impact investing there's haters who really believe that what we're doing either is crazy or destructive there are hypers who say that everything about impact investing is amazing is going to work really simply and then there are doers and I really think of Willie as an amazing example of a doer from whom we can learn and I know you guys have been sitting for a while so that's when I want to stand up and it's really quickly if you characterize yourself as a doer stay standing if you're a hyper or a hater or hopefully something else have a seat I know none of the haters are going to coming here and being a hater is like going to Yankee stadium as a Red Sox fan which I've done so you're not going to own it but if you're a doer stay standing and if not take a seat great so we have a lot of self ascribed doers so maybe we don't have a lot to teach you guys but hopefully we'll be able to share some insights from what we're doing so just wanted to start and we're a little bit rushed to talk briefly about what we do I said to Willie early that anyone who comes to Socap and doesn't know what Willie Foote does and what Root Capital is about maybe should do a little bit more research but he's not as presumptuous as I am so he insists I'm telling you a little bit about what he does at Root Capital then I'll talk a little bit about what I do at Nonprofit Finance Fund and then we'll talk about what it takes to succeed and most importantly what it is we've learned from the doing since we were last year good morning everybody speaking of haters my mother, well my wife hates the jacket I'm wearing now because it's fake leather but I've worn it virtually every single time I've been on stage or hung out with Anthony so that's why it's here, thank you for indulging me super excited but he left his guitar at home so those of you who know about that will be appreciative excited to be back at Socap and what a wonderful theme igniting vibrant communities looking at what we do at Root Capital so we're an impact first agricultural lender enterprise accelerator if you will we mission is to grow prosperity in rural areas in poor environmentally vulnerable places and we do that by investing in agricultural businesses that build sustainable livelihoods for small scale farmers who often lack the very basics clean water, electricity medicine so specifically we're a capital we deliver financial training and we strengthen market connections for small and growing agricultural businesses so we're a social purpose ag lender really the combination of a non-bank financial institution and an NGO that we founded 15 years ago to address the missing middle of real finance businesses that might aggregate or serve hundreds or thousands of farmers but they get stuck in that missing middle too big for too small too risky too remote for the banks and really we start from the conviction that these agricultural businesses whether they're a farmer association or a private entrepreneur that's working with small holders through say outgrower schemes or a seed company or an agro processor they're an economic engine that drives prosperity in rural areas and the challenge is they get stuck in the missing middle so they can access capital or qualified employees or markets that they need to grow their operation or invest in infrastructure or merely pay the farmers on time so they're missing out on good business opportunities and too often they fail to flourish so we've grown pretty quickly in recent years and a lot of challenges there but this year we're on track to lend $155 million to an active portfolio of nearly 300 businesses that reach roughly 500,000 farm households across 33 countries and so including for instance 2.5 million dollars that'll go to four businesses representing 18,000 coffee farmers in the Congo in the eastern DRC and so just maybe to wrap regardless of how much we lend or where we lend the larger vision is really to try to catalyze a small holder agricultural finance industry that serves all 500,000, I'm sorry 500 million small scale farm households in the world and we'll do that by demonstrating business opportunities in the countryside with many others and crowding and competition and this is a more recent thing and awkward but very powerful working with our peer institutions aka our competitors to blueprint this nascent industry of small holder agricultural finance and create the kind of standards and best practices that will underpin a thriving agricultural finance market that is stable, that's sustainable, that's responsible, that's inclusive hopefully that ignites vibrant communities. So what Willy's been doing for 15 years at Root Capital which is really combining capital and expertise to unlock the potential of his clients who are these cooperatives and other organizations that are ableing farmers to get the most value out of their work is a real parallel for what we at the nonprofit finance fund have been doing for 34 years here in the U.S. where our clients are nonprofit organizations, they are health clinics, homeless shelters, soup kitchens, charter schools performing arts centers all of whom similarly are being hampered by their inability to access the right combination of the right kind of resources and the expertise that they need to run their organization as an effective business and so we began in 1980 in New York City and you probably figured out that I'm young enough that when I say this it's with a bit of a wink but I always say you remember in the late 1970s that the oil price had spiked I don't but I think some people in this room do, not too many people though looking out but the oil price had spiked in 1970 and a lot of the old homeless shelters and settlement houses in New York City were built in the 20s and 30s by the first wave of philanthropy that had come to New York and those were old hulking buildings that were incredibly energy inefficient in 1980 they came to their funder the New York Community Trust who had funded them for years and said our heating oil bills have gone up we need a bigger grant to cover our increased costs because that's what nonprofits did they covered their costs by going to foundations getting grant money that was born out of a very simple but powerful idea that rather than going and getting another grant from the foundation what those organizations really needed was a loan to do two things put a new boiler in their basements that could be more energy efficient and put new windows in the buildings that would trap their heat and with that loan they would be able to reduce the amount of heating oil they needed to the extent that they could repay the loan and end up with a better capitalized organization that's a really simple idea and now we call it green retrofit finance and everyone's excited about it back then it didn't have a name but it was something we started doing but it was also a really radical idea because the premise was that a non-profit organization could access finance and think of itself as a business that had revenues and cash flows that could ultimately support a loan and that's the idea we were born out of in 1980 and since then we haven't grown as quickly as Willie has and it was worth of lending we've made 700 loans never lost a dollar of our investors' money and last year lent across the country to a wide range of organizations pursuing that basic understanding that as a non-profit organization that's mission oriented you don't need to be excluded from the capital markets and from the opportunities that investment capital has and on the other hand as investors are the people we borrow from who we are paying back the social purpose they care about as well as their financial return so that's what we do and Willie and I over the years have had many conversations about the surprising parallels between our work despite it being on the face quite different in terms of the kinds of clients we fund and specifically where we work and so we just wanted to talk briefly about what have we learned from all this doing about what it takes and what does it take to make this work and why can it be powerful so yeah, for us success factors maybe we could go into I think a whole host of success factors about our own shops that for us would be for instance embedding deeply in local talent and local markets and local culture being as close as possible to your clients building deep industry expertise but I want to share I think the most important point that's relevant for SOCAP is following that for us success has been all about identifying the early stage agricultural businesses that have huge potential for impact economic, social, environmental but that face a ton of challenges that if addressed they become an engine of prosperity for countless rural kind of households and the challenges are daunting if you take Sub-Saharan Africa governments on average spend 5% of national budgets on agriculture even though it's the primary economic activity of 70% of the population so massive under investment in agriculture has left the continent in Africa decades behind other developing regions so as much as anything our journey at Root Capital has been kind of a process of continual discovery and understanding of the constraints to business growth and success and it's not just at say the firm level weak financial management for instance but weak sourcing channels from farmers dependent on NGOs for inputs and technical assistance poor infrastructure bad roads unreliable electricity crappy cold chain the usual host of inhibitory laws and regulations and subsidies and taxes so in short it's really tough to serve that lower segment the lower end of the agriculture finance market and I would say over the years in this probably the most relevant comment maybe I have to share today in terms of our, if not success factors our experience is that critical thing has been not over promising and not overselling that lots of good and lots of deep impact will happen without real risk and cost even in some cases significant subsidy and we like to joke on our team that we're at the high risk low return sweet spot of small holder agricultural finance and what we mean by that is that on the continuum of where mainstream markets meet clients needs efficiently on one side and on the other where economic realities dictate exclusive reliance on charity we are squarely positioned in a preservation camp like paying a small coupon combined with rigorous impact measurement but also raising enterprise philanthropy to build a balance sheet and for capacity building and for industry facilitation and always always with the view toward reaching those earlier stage businesses and helping to unlock their growth and their impact in spite of all the challenges and just one last point on this and maybe this is like a call to action but for those of you who aspire for those least served market segments and I hope many of us do consider what we call the cross subsidy model where in our case we are building the pipeline of early stage businesses for ourselves and for the larger industry knowing that those early stage clients are going to be typically lost leaders at first and then we accompany their growth right over time to the point where we achieve operational sustainability through a cross subsidy from the larger clients that are profitable to serve and so we are not maximizing return necessarily at root capital but what we are doing is helping to ensure that this agricultural finance market is inclusive in addition to being stable and sustainable and responsible I think it's really true and I've heard Willie say this before that knowing who you are and being clear about that is a really important success factor in the process of getting people engaged it's a really important to know who they are what you do in your wedding those who've been at Socap for a few years will know that earlier we were in this weird phase after the ceremony when everyone's passing around but you don't know who's in the Brides party, who's in the grooms party and it's quite chaotic and in that moment everyone presents where you get to look underneath your name tag and you see table one and table one you're sitting with Willie and Willie's about I'll preserve your capital I'll deliver incredibly strong impact and I'll do the really hard things and that's where we are in the US side over in table eight are people who are managing fiduciary money with the RISA compliant pension funds who are doing something different we need it all and you wouldn't have a wedding party under that tent if you didn't have everyone but I think being really clear and not trying to deal with that confusing period by trying to pitch yourself in too many ways too many people has been very helpful for us in our work we are absolutely in that same camp as Willie we haven't lost our investors money and we can't because of who we borrow from we borrow a little bit of our investors money just a little yeah okay yes he has better investors than I do or more lenient but I think certainly for us it's you know it's a similar story in the US and we don't have our clients don't have problems with roads and they don't have problems with the power going off all the time that really hampers their ability to operate but they do operate in a crazy system it's a system where the best of times nonprofits are delivering one or two percent margins we do a survey every year of the state of the nonprofit sector in the US and we can tell you that half of all nonprofits have less than 90 days of cash on hand at any time that's who are lending to in the good years if they manage their contracts well they're maybe making a slim margin those contracts are often getting upturned for very strange reasons so I think so similar we are finding that in our work to be successful creates you can't just simply put the money out there and say well come to us people who want deals and it's not just about finding the deals but it's what my team does is not take more risk but work much harder and be much more creative to turn what a regular banker would look at as a completely unviable deal and work to make it happen and subsidies often a big part of that but there's no substitute we've also found and this is for me transitioning from being a hyper of impact investing and understanding it theoretically to running an investment fund one of the biggest things I've learned is how important it is to get into what I call the black box of the clients rather than just saying we create the investment fund and there's clearly a capital need those two things will meet they don't meet in a marketplace they meet in the context of a very specific investment you make into a very specific for profit or nonprofit entity and understanding how that entity works and the pressures that are on that team is the starting point for us to be successful in what we do so I see we're running out of time and I wanted to make sure that we got to what I think is the most exciting thing to be here talking about and that is what are we actually learning from doing so what I ask really to think about and I'll offer my thoughts is since we were last it's so cap and were you here last year no so he has two years I have one year what do we now know about this work that we did not know in his case two years ago in my case one year ago because of the doing we've been doing over the last year so what are the few things you've learned since last year you're willing okay so I have a tendency to overshare so I'm gonna overshare a little bit I think what I have learned what we have learned as an organization is how much trouble you can get into if you don't have clear expectations up front with your investors and your donors about one really key thing which is that you can't decode everything up front in the face of market failure that we have to dive into this work but with our supporters we need to have room and license to adapt and iterate and if you don't set that expectation very clearly up front you can you can be serious misalignment so I'll just start quick story we hit serious headwinds in 2013 as an organization first time ever we didn't grow largely managing kind of macro forces that were beyond our control but that can threaten even the best late strategies so for instance market externalities collapse of the coffee price in 2013 coffee leaf rust disease a biblical scourge that many of you will have read about that's hitting the Americas with the ventures tied to climate change the rising competition from other social lenders God bless them moving into our space a great thing for market creation meanwhile we had recently undertaken a large multi-year pre-raise of capital for a debt and grant funding for a five-year strategic plan which was pretty successful the pre-raise but we didn't hit our targets last year in terms of volume credit volume in terms of revenue in terms of risk not radically off but we didn't hit our targets as a result of managing these headwinds and some got spooked and and and pulled out even as others kind of deepened their engagement but the end are kind of successful pre-raise kind of unraveled so here's what we did quickly right so we did just because I don't want to my communications person is glowering at me right now what we did right last year was we very aggressively communicated and shared our learnings throughout the headwinds with our investors and our donors and our board and everyone else we we implemented lean cost controls but being very careful not to undermine our productive capability in the field where most of our team are local Africans and Latin Americans spread across eight regional offices we focused on voice of customer business initiatives to manage the situation and I think actually got better much better at serving our clients and then this year the market certainly in coffee the market rebounded and albeit with a lot higher volatility in the commodity markets in general that we need to manage and we were there ready and standing by to resume growth kind of together together with our clients so two key learnings and I'll wrap first one I mentioned it again you cannot decode everything up front and you really need to have kind of like in Silicon Valley is a tech company you need to have the license and the room to iterate and to adapt to changing circumstances we should have done a better job of setting those expectations up front and we certainly intend to do that going forward second key learning and this is kind of picking up on some of the themes that Anthony just mentioned and I'll close here we appreciate now that impact investing is much more specialized with a lot more segments within it than even just a few years ago so you've got government agencies and corporates and foundations and religious pension funds and high net worth individuals and family offices and so on and so forth and with that comes many different theories of change right everybody has their own theory of change and so you have to and that's not a problem but you have to be very careful about aligning your theory of change even if it's artfully adaptive but not bleeding into chameleon like your theory of change with a theory of change of your of your of your investors and so for instance finding alignment around in our case financial what's your philosophy behind financial performance right in our case operating self-sufficiency or OSS or break even is a very key driver of internal operational efficiency right and it's an important indicator for achieving a demonstration effect but it's not the most important one it's not the only one and you have to weigh it against mission tradeoffs in terms of maximizing financial turn versus as I mentioned earlier creating a very inclusive market as a catalyst kind of pipeline builder for our industry another one is in our case we are absolutely in the school of a multi pronged strategy to achieve impact at scale and so it's inextricably linked finance advise catalyze lend capital build local capacity through financial management training so folks can better compete in global or local markets and then catalyze an industry thought leadership field building impact measurement and so on all three together are the three legs of the school my father by the way said to me once please don't call it a strategic stool but now the less those three together do you have alignment or people like I don't care about the advice stuff I don't care about the catalyze says they're they're inextricably linked and lastly within the factory gates what's your direct service delivery what about outside your factory gates like what do you do through partnerships how do you engage the landscape level how do you leverage the ecosystem all these things in the face of what is a multi-dimensional very complex thing called poverty so what I can promise is this year coming back next year we will have learned a lot more and we want to apologetically continue to adapt and to iterate into next year that's great and I would recommend I think Willie and his team are a gold standard in communication and it's all on his website root capital dot org really great quarterly reporting and are able to convey both the metrics as well as the stories what they do I'll just talk about what we've learned in the last year I think we've come here and you're going to hear in a minute about a big policy initiative that some of us have been a part of one of my biggest learnings is the role of government and impact investing and last year when I said don't ignore the role of government because government creates the conditions under which we can operate I've really come to appreciate even more it's not just the government creates the conditions but if you are going to do impact investing especially in a developed market where you are trying to assess or to address issues of real poverty and social inequality and justice ultimately you are going to be investing in organizations that rely on government funding to pay you back that's a huge insight that I've had my team probably had it 20 years ago but a real understanding it's not just that we need government to create the conditions of which we as private investors can make a difference almost all the work we do at some point down the chain we are getting repaid because government is helping to fund a service it's true in the US it's even more true in Europe and in the developed parts of Asia so if you are operating in developed markets let's give you three quick examples we've helped finance a 200 bed homeless shelter on 25th Street in Manhattan a 20 million dollar project we were able to lend two million dollars into it we are paid back because the city of New York and the state of New York are committed to funding those services we are ultimately financing government through the financing of a nonprofit just out there in Los Angeles we've been financing an amazing charter school that sends a huge percentage of kids not just to college but gets them to graduate from college out of a high school they set up they needed money from us to rehab a building and start their new school ultimately I'm going to get repaid when the state of California provides that charter school with the revenues they need to do the education and pay us back we see this in sector after sector there's a health clinic in rural Hawaii serving a population that previously had no access to primary health care in their community we were able to make that loan help that facility get started ultimately it's government Medicare and Medicaid payments are going to make that happen so government and the role of government you cannot be an impact investor and make a difference on real issues of deep poverty and social justice and inequality in a developed market if you do not get really smart about understanding and supporting the flows of government into your bar into your borrowers the second thing we learned again I think the investors in this room with more experience than me would say this is a no-brainer it's about the management team when I'm trying to get it I just we got a three and a half million dollar loan approved through our committees and the loan is going to enable an amazing nonprofit to take a state contract and massively expand this delivery of health care in to certain population the state they operate to make that happen they have to go from a 700 person team to a 1400 person team and that's what they needed the loan for they needed upfront money to put in the IT systems the recruiting practices and get that engine going ultimately I only got that loan through my committees because we were able to convince the committee that we absolutely believed in the management team of this organization if you are not backing management teams and you're backing real estate collateral and you can do some great things but ultimately to do amazing work as an investor you have to understand the management teams and the last thing I'll say and we've been pulled to wrap is my biggest learning last year and I think Willie certainly knows this is true this is hard and this is why I think the the hyper is out there are constantly looking for information that affirms their hypothesis that this is easy and inevitable and the haters out there look at any kind of hiccup and say see we were right this is impossible you can't do it the main thing I've learned is that this is just really hard to do and there's a lot of ways Elizabeth Littlefield is mentioned earlier at OPIC she's a great line she says you know there are a lot easier ways for me to make money I do what I do at the simplest level what we do we do because we aren't the kinds of people who are trying to do the easy thing that's easy to say and it's a lot hard to live with you know I think Willie talked about root capital doing cost alignment and that's a euphemism for an absolutely traumatic and emotional thing that goes through an organization that is trying to do something hard and it's not about you know you feel like you have a failure of leadership but what we do is really hard and I just learned again that's why I just going back to accept that this is hard and what Willie said earlier we are not going to learn by sitting and talking we're going to learn by doing and doing with a humility that comes from knowing that what we do is hard and what we do is supremely worth it so I'm just really excited to be able to share these thoughts and it's always great to be on stage with Willie and very much look forward to hopefully being able to work with many of you in the in the coming years as you take on this journey and grow with us thank you thank you hi everyone first of all I want to make an important announcement particularly for those of you who might be feeling a little panicked about where you're going next and what time it is we are celebrating Latin American time today and therefore are running a little bit behind schedule at the end of this program Rosalie will come out and give us all information about how we'll be running the rest of the day but please don't worry if you want to sit in for the rest of these sessions and you think you also want to be at something that starts at 1045 for example I also now am introducing a woman that I've respected for all of my adult career her name is Judy Wicks she is the founder of the White Dog Cafe in Philadelphia she's a pioneer in the local food movement and if you're interested in her book she's just completed her memoirs which are called Good Morning Beautiful Business and she's doing a book signing this afternoon at 1.15 over at our Impact Hub space so please welcome Judy Wicks thank you Penelope and thank you to Rosalie and Kevin for putting on SoCAP this is my first time here and I'm having a ball that's a great party so during my years that I lived above my business the White Dog Cafe in Philadelphia I had a sign in my bedroom closet that I would see each morning that said good morning beautiful business and it was a reminder to me of just how beautiful business is when we put our creativity and our care and our energy into producing a product or service that our community needs and I just realized that I don't have a clicker here there it is so I would also take that time in the morning to think about our farmers out in the fields picking fresh organic fruits and vegetables to bring into town that day and I would think of the farm animals out on pasture enjoying fresh air and sunshine and of our goat herder Dougie who said that when she kissed her goat's ears it made the cheese better and I think that's true so for me business is about relationships money is simply a tool business is about relationships with everyone that we buy from and sell to and work with and about our relationship with Earth itself and all the species who live here with us my business was the way that I expressed my love of life and that's what made it a thing of beauty so this is a photo of Judy and Mark Dornstrike from Branch Creek Farm a supplier of the White Dog Cafe and Mark once told me that successful farming is the balance of masculine and effeminate energy of efficiency and nurturing too much efficiency and not enough nurturing you might have a well-run farm but a poor produce on the other hand too much nurturing may produce great tomatoes but you'll have a failed business in the end our industrial food system is all about efficiency and no nurturing whatsoever it's about how much can we ring out of the soil and the workers and the animals and give as little back as possible how little space do we give that egg laying hen how little light in there how little food and water to get the cheapest egg possible no nurturing there in windowless factory farms mother pigs are kept in crate so small that they can't take a step forward or backward or turn around or lie down almost their entire lives they never feel a ray of sunshine or have a breath of fresh air they never get to socialize with other pigs that they're very social creatures they're artificially inseminated the babies taken away prematurely artificially inseminated again as though there are pieces of equipment in a factory but pigs are mammals like our dogs like us they're intelligent beings with a capacity for friendship and the range of emotions that all of our mammal mammals share from joy to despair when I first learned of these pig factories in 1999 I was horrified of the idea that I was serving this pig a product in my restaurant that came from this cruel system so I finally went into the kitchen and said take all the pork off the menu the ham the bacon the pork chops that we cannot be a part of this system that we had to find a humane source so we contacted our supplier of free-range chickens and eggs and he led us to a farmer that raised pigs on pasture and we were able to purchase two two pigs a week we bought the whole pig and learned how to use all the parts on our menu then I learned about the plight of the cow cows are herbivores are supposed to eat grass but they're taken off pasture and fed grain subsidized with our tox dollars through the farm dull so whoops that's not right oh we skipped a slide here oh well sorry about that so we found a source for grass fed beef and grass fed dairy cows and finally I looked at my menu and thought to myself well you finally done it we have a humane menu all of our dairy and poultry come from small family farmers where there's plenty of nurturing this is going to be our market niche this is our competitive advantage this is all about us but then my transformational moment came and I said to myself Judy if you really do care about those pigs if you really care about the small farmers being driven out by these big corporate farms if you care about the environment that's being polluted by the concentration of 10,000 pigs in one barn that's polluting our air and our rivers if you care about the consumers that are eating this meatful antibiotics and hormones then you will instead of keeping this as your competitive advantage you will share this information with your competitors up until that point I had thought that the best I could do is responsible business person was to have good business practices within my company to recycle and compost and pay a living wage and use renewable energy and so on but I realized that there's no such thing as one sustainable business that we can only be part of a sustainable system and that we need to cooperate with each other including our competitors to build a whole economy that shares our values for fairness compassion and alignment with natural systems so I asked the farmer who is bringing us two pigs a week would you like to expand your business and he said yes and I said what's holding you back and he said he needed $30,000 to buy a refrigerated truck so that he could deliver to more restaurants in town so I loaned them the money and he bought the truck to increase the supply of pasture pork to our city then I started a nonprofit with projects to increase the demand for local to build our local and regional food systems and economy using 20% of the profits from my own business our first project was a wholesale directory that listed the farm products available to our area including all the farmers that the white dog purchased from with their contact information and handed it out to the other restaurants and stores in town through this work we gradually expanded the network of farmers supplying my own restaurant to a much larger network of farmers and small businesses supplying our region it didn't take long before I realized that our local economy was a network within a still larger network the global economy and it occurred to me that a sustainable global economy one that's socially environmentally and financially sustainable must be comprised of a network of sustainable local economies rather than a global network monopolized by long-distance shipping routes supplying basic needs from far away places I envisioned an intricate network global network of small fair trade relationships connecting local economies that are self-reliant in basic needs which exchange excess production and unique local products for what is not available locally this vision led me in 2001 to co-found Bali the business alliance for local living economies a network of over 50,000 local entrepreneurs community leaders and local economy funders and self-organizing communities throughout North America Bali is connecting leaders spreading solutions and driving capital to build a network of local economies that serve the needs of all people while restoring our environments our local ecosystems and creating more joyful community life for more on Bali executive director Michelle Long will be speaking at noon today so all this began with compassion for pigs my decision to share my supply sources and lose my competitive edge did not come easily I was afraid I was afraid my sales would go down my profits would go down but I did not make that decision because I decided in my head that it was the right thing to do I made the decision because I loved the pigs because I felt it in my heart my love for the pigs for my community for healthy food and family farms for the beauty of nature were greater than my fear so what lessons do I learn from this experience a decentralized the decentralization of our food and energy systems and other production of basic needs creates more owners and broad-based ownership increases equality and strengthens our democracy now a great risk from the concentration of wealth and power when we increase local production build local supply chains distribution systems and support our main street retailers we shift economic power to our communities provide more meaningful jobs and increase community wealth local ownership ignites vibrant communities when we invest locally we not only received a financial return but also a living return the benefit of living in a more self-reliant happy and healthy community investing locally ignites vibrant communities when firms and other businesses grow larger and larger they go beyond human scale and beyond humane scale and diminish community life both in rural and urban communities chain stores and national brands are like invasive species smothering indigenous local businesses but we can reimagine growth and grow in the way that nature grows deeper in place local business networks including impact hubs can function like healthy ecosystems sharing cooperating using each other's waste growing deeper in place to become diverse more complex and more adaptive to the needs of our community growing deeper in our places ignites vibrant communities it is not about belongings but our sense of belonging that brings us happiness and security when we know who grows our food who bakes our bread who makes our clothes who builds our furniture who brews our bill who distills our gin we build and increase the community and increase our happiness when we overcome separation and reconnect producers and consumers borrowers and lenders work life and community life and make decisions to maximize relationships rather than maximize profits we build vibrant communities building a new economy begins in the heart of the entrepreneur and the heart of the investor and consumer as well when we understand that life is interconnected and we are able to feel our connection to the struggling farmers to the suffering pigs to the polluted waterways and dying fish when we love our places and take responsibility for them when we open our hearts and lead with love we build vibrant communities the ultimate vibrant community is our earth community the web of life that includes and supports all life there is urgency in the work ahead to stop climate change and environmental decline before this vibrant community of life on earth is damaged beyond repair we in the localist movement have seen what works in our communities and we are scaling up we are pursuing small scale on a large scale and we hope you will join us but strategy and tactics are secondary importance if we succeed in leaving a positive future for our children and for the children of all species it will because mankind has evolved to take our place in the vibrant community of love not as exploiters but as lovers thank you go ahead gentlemen that was an example of quickly setting up chairs hi everybody I'm very pleased to welcome to the stage for our closing part of this morning session three very distinguished colleagues on my immediate left is Matt Bannock who is the managing partner of the Omidyar network but also has been the co-chair of the U.S. National Advisory Board on impact investing next to him is Jonathan Greenblatt a great friend and colleague who is also special assistant to the president and director of the White House Office of Social Innovation and Civic Participation and from the farthest away and farthest away from me is Ronald Cohen who my first met when I was a young leader starting my own community investment organization and Ronald today is the chair of the social in sorry the social impact investment task force established by the G8 countries so we're here actually to reflect on what's happened between last year and this year when Matt was on stage and was talking to us about the development of this task force and so my first questions are for you you've had a very interesting role you were telling us last year at this time what what might happen in the 12 months that have occurred since then so tell us about what's evolved and what are the what are the recommendations that have come out of the advisory task force yeah so we first of all good morning everybody and it's it's great to share the the stage here however briefly with with Sir Ronald with with with Jonathan who been kind of instrumental in this process but as Penelope was saying I was here last year talking about the launch of the National Advisory Board on impact investing and our task was to work together as a community of impact investors and come up with a set of policy recommendations for government that we were hopeful would help kind of move the needle and help government become a true partner in the quest to really accelerate the growth of impact investing and I've been privileged to be co-chair of the National Advisory Board with Tracy Flange on of social finance and I think we've made I'm here to say we've made tremendous progress we've launched a report it's always good to come with a prop here we've launched a report it's a I assure you it's fascinating read of some 51 pages chock full of fabulous recommendations about what can be done what government can do to help us accelerate the the sector and their recommendations basically fall into three buckets one is about removing regulatory barriers and here there are a whole host of things for example foundations currently are investing more and more in for-profit entities with a social purpose through what are called program related investments or mission related investments but there more more can be done to clarify and enhance the regulations so the additional money can flow into PR eyes and MRIs and this is one example that can be is really important in terms of reducing regulatory barriers the second area is about making existing programs more efficient more effective and here again there are a whole host of examples of things that we can do one thing one organization I'm pretty familiar with and we work with at the media network is opaque the overseas private investment corporation and opaque has done a tremendous job in providing debt to us companies who are doing fabulous work overseas but there are also constraints within opax charter for example they can't provide equity which can be the most catalytic of capital types so in a recommendations in the report we call upon greater flexibility on giving providing greater flexibility for opaque and and and finding other ways to make government programs more effective and finally there's a set of recommendations in the report about ways in which government can continue to catalyze impact investing market it's so interesting that people sometimes shy away from government and see it as an impediment the reality is government plays a critical role in so many industries you know think of energy think of the internet right great example is venture capital industry with which many of us here in in in the Bay Area are familiar the venture capital industry really took off when government promulgated more inclusive recommendations around how pension funds make their investments and again here there are a number of specific recommendations we make for example we encourage the development of the global development innovation fund which is being pioneered by USAID and different in the UK and we think there are a number of other examples of where government can really help catalyze market so those are the big three we think are reducing the regulatory barriers increasing the effectiveness of programs and catalyzing more investment and impact investment thank you very much this is going to be tough we're limited on time and I know I already have a million questions and I'm sure you do too but I'm actually going to switch order a little bit Ronald when you listen to Matt and you think about this audience out here you've got entrepreneurs investors a quite a diverse audience why should they care about what Matt just said thank you Penelope and now I say it's just do you mind if I stand just do whatever you wish yeah it's great to be here with you in Silicon Valley I started out to the age of 26 as an entrepreneur and a venture capitalist used to have an office in Silicon Valley and I'd like to answer Penny's question by saying what brought me to this area is when the British government 14 years ago asked me to look at the issue of poverty and look more entrepreneurially at how we could cope with it and what I realized is that a social entrepreneur somebody who wants to devote their career and their effort and their resources to helping others can't access capital in the way that the business entrepreneur can and that's what impact investment is about enabling social entrepreneurs whether they're working through not for profits or for profits to raise the capital they need in order to improve the lives of others or the environment which improves the lives of all of us and I guess that's the reason why all of you are here and when you listen to what Matt was saying what Matt is saying is there have been some evolutions in thinking which bring us to a tipping point today and government has to push us over the tipping point the evolution of thinking is 19th century talked about financial return 20th century talked about risk and return 21st century talks about risk return and impact next evolution in thinking we've all assumed that you can't measure impact forever but through the development of social impact bonds and in other ways we've begun to realize that you can measure social impact and that if you set clear impact objectives and you measure their achievement it helps you to raise your game and if government is prepared to pay for success or if foundations we heard you deferred in very eloquent explanation of all the things the pioneering things that Rockefeller Foundation have been doing if foundations are prepared to step in and pay for success then we begin to have a world where those who achieve a social performance can get remunerated for it and they can access capital the same way a business entrepreneur that delivers profit can in order to make that happen we need to big enabling moves by government and that's what the task force report is going to be pushing when it emerges in two weeks time on September 15th and I want you please all of you to watch out for it and we want a clamorous response to the report thank you what the report basically will say is beyond what I have said already government needs to look at the fiduciary duties of trustees of foundations and of pension funds in the same way that Arisa legislation got money to flow into venture capital into my first venture capital funds and others in that same way we want money to begin to flow from foundations and pension funds using their endowments this involves a redefinition or a clarification of their duties that the returns they're trying to achieve are not just financial returns their financial and social return and in my country the law commission has been working on clarifying this so I'm hopeful that the United States can lead in this area the second area is for government to make it much easier to enter into the sort of pay for success arrangements that Judith was talking about this morning whether it be for international aid whether it be domestically whether it be for social issues or for environmental issues if government is prepared to sign or if a foundation or a corporation is prepared to sign a contract that says if you improve the dropout rate from school if you improve the homelessness rate if you improve the rate of recidivism if you improve the attainment levels in underprivileged neighborhoods then we will pay you for it and the amount we pay you will enable your investors to get a return but it'll be a fraction of the saving and the saving itself will be a fraction of the value created for society so Penelope that's what I take from what Matt is saying that was eloquent and brilliant I'm in it I'm in a terrible bind our clock is running down here you know and I have so much to say to these fellows and want them to say to us but Jonathan thinking about how this becomes real this policy becomes real what's your sense of the climate for making these kinds of policy changes that Matt and Ron are alluding to here in the US anyway well so first of all I think I would say that the climate is pretty good and I'm pretty encouraged I think for all of you to know you know Washington is a long way away from the Bay Area and from Silicon Valley but the fact of the matter is something very significant happened with the creation of the task force that Sir Ronald chairs and with the establishment of the advisory board that Matt co-chairs you had a blue chip group that came together with representation from Goldman Sachs and Morgan Stanley and the Rockefeller Foundation and the Ford Foundation and entrepreneurs like Seth Goldman from Honest T and academics like Kathy Clark who is up here earlier she had this remarkable non-political group that came together and said you know what White House government this is what we need you to do in order to lead the good news is that the president deeply believes in impact investing he believes in social innovation more broadly it's why he created the office of social innovation why he launched the social innovation fund why he's pioneered paper success in social impact bonds why he's champion cross-sector leadership and this he believes impact investing is part of a strategy of accelerating economic recovery and boosting job creation so this book this report has some great recommendations in it and they're all we are already starting to see some progress so this summer on the Hill there was bipartisan legislation proposed in the House and the Senate to create a 300 million dollar fund at Treasury a paper success fund that will basically create the the credit enhancements the outcome payments and will essentially be for the social impact bond field what the CDFI fund was at Treasury for community development finance or what the SBIC program has been for venture capital so it can be tremendously powerful to unlock the kind of leverage that you see in those programs think 10 acts think 20 acts on that 300 million dollar proposal the fact that again republicans and democrats are behind it is really good news the second thing I would say why I'm encouraged is this summer as Judith mentioned we hosted a roundtable at the White House on impact investing and we had investors many of whom came out here from San Francisco from venture capital firms from asset management firms some foundations who stepped forward and said we're going to make commitments because we see impact investing not as a trade-off between you know impact and returns there's a way to drive alpha as a way to deploy capital as a way to create value they made over 1.5 billion dollars worth of new commitments this summer it wasn't the fact that they were Dems or Republicans it was this is where the market is headed so I think they're very encouraging political currents which we can look at they're very very interesting developments on the investment side which we can look at which give us great great confidence that there's a lot of opportunity moving forward it's just so heartening for me to be on this stage you know and listen to the the idea of these kinds of systems solutions emerging you know it's really so excited the other thing I would add Penelope is so cap has been at this now for what eight years yeah this intersection of money and money and meaning and so many of us certainly on the stage in the audience are committed to using all tools we have to have a positive impact in the world and this report and this effort with the task force this is all about marshaling that same ethos that same energy that so cap has helped bring along for so many years into the public sector as well and getting government as a partner so that we can take this to the next stage so it's completely resonant with your work here and again I've just been delighted to serve with these two gentlemen and trying to push this forward a little bit well we're gonna do something amazing as a group these fellows and I are gonna actually end on time but one thing that I want to make sure that I have a chance to ask one of you so I'm gonna make it Jonathan is in 30 seconds if you were a reporter for the rest of the morning and you're gonna go out with your mic and interview this audience what would be the one question you'd want to ask them what would be the question that I would want to ask yeah you're a reporter you got a mic you got the rest of the morning and you've got this audience right that's a hard question I think I guess what I would say is what are you gonna do to make an impact on these issues great so are you gonna write your congressman are you gonna write your senator are you gonna write me and tell me what are the issues that you think matter to you that you want to see the administration undertake and so not only will I ask that question on behalf of everyone in the room I'll give you an answer so my email address is innovation at who.eop.gov right so there's the question you should email me with what you think the White House and the president should be doing to move this ball forward or you should tell me what you are going to do to advance the recommendation and I want you to do this I really really want us to do this because that's the power of SoCAP and so you've had an invitation from from Jonathan to do that and for all of these people and the amazing work that this this these committees have been doing it's it's our job to advocate and so I hope you'll do that with me so let's celebrate the end of our morning session with a round of applause for the wonderful men just just a little bit of quick information for you here we you'll see in your program that Ed Edmo was going to do was going to tell a story right now which we're really excited about his presence with us but because we got a little bit of a late start today stop talking to each other and get in here quicker okay anyway we he will be joining us at 6 10 at the closing plenary session that you don't want to miss our youngest entrepreneur Vivian who from make a stand lemonade will be with us and Van Jones talking about yes we code will be at 6 10 back in this room we're going to start the next session the parallel sessions 100 resilient cities will be in this room and you can use about page 32 and 33 in your program book about what's going on all over the campus their 10 concurrent sessions or 12 they will start in 10 minutes and then the next set of concurrent sessions will start at 12 just like advertised in the schedule book so we've got some catching up to do we'll see you at lunch thank you