 All right, so hopefully you've enjoyed the session so far. That big panel with Bain and BlackRock is going to be followed now by some folks that you expect to see at SoCAP. You may be expect to see a lot of places where you're looking at social change. Ford Foundation, MacArthur Foundation, and the Gates Foundation have all been doing amazing work for years. And they've all redoubled their efforts around impact investing and understanding the power of using these markets for change. They're also re-understanding their role, and they're here to tell you a little bit more about that. So I'm welcoming Greg Ratliff from the Gates Foundation, Deborah Schwartz from the MacArthur Foundation, and Christine Looney from the Ford Foundation. Well, good morning, everyone. I'm Greg Ratliff with the Bill and Melinda Gates Foundation, and I'm here with Deborah Schwartz from the MacArthur Foundation, Christine Looney with the Ford Foundation. And we want to talk to you about impact investing and the history we've had. And this has been a great conference for me because I ran the impact investment portfolio at MacArthur in the 90s and have been working in higher education for the last 10 years, so I'm sort of coming back in. And it's interesting to see a lot of things change, a lot of issues like exits stay the same. And I thought we might start off with some reflections from Christine about the current state of the field, where we are. You've just done, I know, a landscape analysis. So maybe tell us what you've learned. Sure. Well, first of all, it's great to be here and I'm excited to see so many people in the room. I think Ford started this market scan, but probably before I talk about that, it might be good to give some history and context for our involvement in the market, which started really in the late 60s when we started making PRIs, worked with the IRS to allow private foundations to make them. And since then, we've had almost 50 years of investment experience, which in and of itself has given us a lot of lessons and practical experiences in the field. I think as importantly, when I think and being on a panel with Deborah, especially has been such a partner to Ford in all of our work over the years, it's important to kind of reflect on what some of our most important or most meaningful investments have taken to kind of get to the stage they're at today. And if I reflect on markets like the community development finance market in the United States or the microfinance market overseas, Ford and MacArthur and others were early, early stage investors in these organizations. And it wasn't just the investment capital though that made this field grow to where it was today. It was a combination of investments plus grants, a lot of support to things like trade associations and ratings agencies and measurement tools and just even capacity building for these institutions. And so if you look at the self helps for one example who started small and it's now almost a billion dollar organization, two billion dollar organization. I think it's important to kind of look at to see kind of what it took to get them there. We found ourselves about a year and a half ago under with a new president, Darren Walker and we were looking at the growth of this space and looking at the role that we had in it and we'd been investing at that point really to support our own programs. We'd been doing some grants, but once again to really support our own programmatic initiatives and we were kind of reflecting on the amazing growth that was taking on in the impact investing market, the number of new investors and kind of step back and said, what role should philanthropy be playing in this and is there a role for Ford within this? And so we engaged monitor Deloitte to really help us do a scan of the market to really just kind of level that where we thought the market was at. And I think for those of you who are practitioners in this space, what we found won't be alarming to you. It was, one thing that came out was that there was a lot of hype in the market, that this was the solution for all solutions and that everyone can make tons of money and deliver the impact. I think there was a level of huge investor appetite, but maybe a lot more work needs to be done in terms of investor preparedness. On the demand side, we saw just a huge growth in the sophistication of the types of products and organizations and funds that were emerging, but a continued need for more organization to help investors not only find them or them to find investors for general marketing and communications of those products. And then in the middle, some very nascent and emerging market infrastructure but that needed to be developed further to help connect those two. And I think Deborah will really speak to that. And so that was kind of the first stage of almost our level setting of the market. And the second was really a dive into, well, Ford could enter this, but in and of itself, we could do little. So what would it look like if we took a collaborative approach to this work? And so I'd say the next phase of this for us has really been speaking with so many of you to see where there are opportunities for collaboration and to develop kind of partners for us as we kind of start this initiative. No, that's great. Deborah, do you have anything further to add in terms of the state of the field? Thanks. And I would just build off what Christine says that. I think Ford and MacArthur and Packard and many others have been at this for a long time, but I think that was for a set of challenges and enterprises that don't look like the full scope of the social sector today. We have a much wider spectrum of everything from pure nonprofits that are looking to build what the Heron Foundation calls philanthropic equity to hybrid models. And we've worked a lot in the affordable housing space with joint ventures and LLCs. There's all of those kinds of things to public private partnerships, special purpose vehicles. So what's really wonderful is there's this incredible spectrum in the social sector. And now there's also this incredible spectrum of investors. Everything from the mainstream investors we just heard from, the Black Rocks and Bain and others, Morgan Stanley, Goldman, and it's a long list, a whole emerging class of specialty advisors and also mainstream advisors who are building mission into their practice, high net worth individuals, and then retail investors, and you heard from Calvert, which has been in that retail end of the spectrum, as well as an incredible array of foundations. And the Mission Investors Exchange, which Christine and I were part of when it first began 12 some odd years ago, has 250 foundations, the Global Impact Investors Network, Global Confluence Philanthropy, US CIF. So there is an incredible, wonderful, vibrant community, but to Christine's point, the next challenge is really how do we, as foundations, that have significant capital to put to work? And we have 300 million dedicated 100% to impact. We also have a 30-year track record, so not quite as long, but we've deployed about a half a billion dollars, and we've learned a lot, as Christine said. And so I think the next generation of our work is how to bring those assets, our risk tolerance, our capacity to do dogged problem solving, and how to take all of that, as well as the kind of ingenuity that it's taken to really build up individual sectors and individual enterprises, and how do we help build a marketplace that really, in a fluid and meaningful way, connects the flow of capital, making it easier for those who are trying to raise the capital to get it on the terms that really work, capital that's suitable, not just capital, the capital that's suitable, how do we make it easier and more suitable for investors of all kinds to play together? And I think, I'll just leave it with saying, the G8 Task Force report last year, the Global Task Force talked about this next generation being about risk, return, and impact. I would say that the work that our foundations and others have done for the last 30 to 50 years has been all about creatively applying tools of various kinds to meld risk, return, and impact. Our next generation of work needs to really be about ease, suitability, liquidity, because we've got to get to a much more efficient ecosystem so entrepreneurs don't end up struggling so hard and so long to cobble together the resources they need for the invention and innovation work for the growth in scale and for their long-term success. It's just too hard and too slow. No, that's really great. So you guys talk a lot about the proliferation of actors and players in the space, the kinds of transactions that are being done. I mean, it's a really dynamic time and I'm curious, you mentioned risk, what are the challenges in that new space? You've got all these new people coming in, they're trying to figure out how to work together. What are the issues you're most concerned about as you move forward? Maybe I'll start. So I think for me, there are a couple. I think one is with new entrants and new energy, people may be starting to almost recreate the wheel when others have been kind of working on things for quite a long time and it's out there but we just haven't done a good enough job marketing. Some of this and some people are sharing the models. The second, it's come up quite a bit but is this kind of fear of greenwashing that we have new investors coming in who are almost selling their products with impact as a selling point but maybe it's not as front and center to what they actually really wanna do and so is this market an in jeopardy of that? And maybe the third is maybe around just overall complexity. It's complexity of language and the perpetuation of that, how many different ways we're kind of all describing what we're doing, I think it makes it pretty confusing for new entrants coming in the space and then the second is this complexity of product development. We've worked on many transactions together where we're one of up to 20 investors all with very boutique interests in transactions and it's costly and time consuming and I'm not even sure at the end of the day we're all even extremely satisfied with where we got so we need to really simplify not only the language but the products we're putting out there to make it easier for capital to flow more effectively. I mean when we think about the global kind of risks within the marketplace, I agree, I think there's a very healthy discussion at this venue and others about this issue of quote unquote impact or goodwashing. I would put it a little differently. I think that we have to be honest that not all kinds of capital are gonna be right for certain kinds of problems and that when you're looking at certain kinds of enterprises really honing in on deep challenging social environmental issues, enterprises that may be very untested, very innovative, unusual markets. The truth is we need to be very actively making the capital work for them and that's what I would call deep impact. It's not just enough to have money and motivation. You actually have to be prepared to look at how to blend the public, the private, the philanthropic capital and make the solution work. Those kinds of investments I've often said are not just made, they're not just lying around. They're made, not found. The problem I see is that as large flows of capital come into the space, if we don't build some products to Christine's point that make the connection, I think it's unreasonable to expect that the large deployment of capital is gonna be able to do that artisanal finance. And so I think we'll get a lot of shallow impact which will be okay, it'll be good, it'll be better than it is today but it may leave out the ability to really continue scaling things that are incredibly valuable to solving some of the biggest problems in our world and so our challenge is how to go to deep impact and not just shallow impact and I think that's one, the other is sort of the shadow of subprime and also some things that happened in the microcredit world. I think when investors' expectations are inflated or hyped and you get a lot of money rushing in, you get very smart people who say, there's money for me to make if I wrap myself in the impact mantle. And so there is a job for foundations, I think, but for all of us to be good stewards of mission and that's never gonna be cut and dried. No, those are great, great comments, thank you guys. So let's get to the good stuff. So you mentioned, Deborah, you're 300 million compared to the 75 trillion of the mainstream investors, right? And so increasingly foundations are a smaller part of the capital in the impact investment space. So I'd love to hear you talk a little bit about how you see your role shifting and how it needs to shift and then maybe transition into, based on your sense of the landscape, what are the specific things you're planning to do going forward? What kinds of projects? How are you gonna position yourself? How are you gonna collaborate? Well, again, I wanna echo what Christine said. I think that we're just like forward very mindful and we started about two years ago looking at this exact question around the same time that Christine and Darren and Frank and Zav, other colleagues at Ford were looking at this because we're mindful of this incredible opportunity, right? More capital than ever, wanting to find ways to be meaningful. And we've learned how to knit together the deals that unlock impact on a transaction by transaction by transaction basis and that's powerful, right? I mean, we have 15 years of working on one issue alone, rental housing in the United States and our $200 million investment in that field building up a set of enterprises and intermediaries has unlocked $15 billion in new capital and hundreds of thousands of lives and homes have been transformed and that's great. But we can't be the only source of that $200 million. Ford can't be the only source of the capital it's provided to microcredit. So one of the first steps is the collaboration and Darren Walker convened a set of presidents from foundations that make impact investments earlier this year and that's an ongoing conversation and I think that's an important part of the future for all of us is that the institutions themselves that have the most flexibility, that have the greatest ability to take risk and innovate that we work together to create a real community of support that fosters innovation and a next generation of marketplace capacity. So a couple of specific examples would be the new products that Jen just announced. So in addition to Raisis, a fund called Age Strong, another one that she announced with President Obama around investment in India, MacArthur was able to provide a modest amount of grant support but it helped them do the legal and technical work involved in a new structure. Another is Impact US, or Impact Us, excuse me Liz, and both Ford and MacArthur have provided seed capital to build a new online marketplace and Liz will be talking, she's somewhere in the room I think at 12.15 today, she'll be talking about that. Another to the point that Christine made is documenting what we already know about creative solutions and Bruce Campbell will be talking about the innovative term sheet project which Ford and Heron and Peton and Sorenson and Blue Haven have all funded because we can provide a library, a playbook, and people both entrepreneurs and investors will not be stuck having to figure this all out from scratch. So those are just some examples. I have one more but why don't we shift over to Christine? Yeah, so I think to your first point in terms of the role of philanthropy, this was a question that came out in our market scan and I think resoundingly, whoever we interviewed kind of voiced that there is a big role for philanthropy to play in this growing market and I think for foundations it's kind of looking at all the resources we have available to contribute and they're beyond, I mean grants are an important piece the investment capital and our ability to be flexible with that and as catalytic as possible in terms of supporting growth in the market will be really important. There are also things like convening power, there are things like the leadership that these foundation presidents can bring to the conversation both in terms of really bringing home this notion of impact and being a standard for good practice in the market. So I think there are many, many opportunities in terms of philanthropy's ability to engage. For Ford going forward, I think for us we're looking at something that will be almost a three part strategy that will include a grant component as part of a new impact investing initiative that will be very market facing. I mean, I think to Debra's point we're going to try to support as many things as we can that will be catalytic to the market and better connect the investors and the demand side. We will be engaging quite a bit in terms of supporting public policy and I think we've had an important win with the recent treasury guidance. There's a lot of positive moments from around ERISA but bringing I think alongside these movements in public policy, the really necessary communications and education that will really make these policies not just move forward but actually effective and so that we can implement them and actually have more capital flow to the issues we care about. And the third will be within our own investment fund strategy and there, I think for Ford, we're really looking at how we can engage in markets and make markets more effective versus looking at particular transactions and individual investments. So the more effective we can be at that in being a real catalyst and being flexible, I think the better and more of a contribution we'll be able to make to the market. Deborah? Yeah, so Echo and Christine, I think we're gonna be putting grant dollars to work to help share innovations that exist, new ones that are coming into being and be a resource in that way to help again foster kind of a community of collaboration and product innovation and market building. I think it is important to recognize that matchmaking in this world is important, right? And there's some really exciting platforms emerging but matchmaking itself, the matching, is not gonna be sufficient that if we really want to connect the supply and the demand sides of this marketplace, we actually need to do true market making and that means putting our capital at risk and finding others who are willing to put capital at risk in a completely different way. So I'll give you an example of a product innovation because I think we are not going to get to a liquid, suitable set of products that really allow large flows of capital to come into the deep end of the pool if we don't actually make that happen. So for example, this summer we completed a transaction where the foundation instead of just providing risk mitigation, we've done that for many, many years where we will provide just enough first loss or guarantee protection to help an investor say, okay, it's a little bit unusual or I'm a little bit uncomfortable but now I'm okay or to basically get the risk return equation to work. In this transaction we did something called a liquidity facility and for those of you who don't come out of investment banking, that is not, a liquidity facility is not a glass of wine, it is not a room in your house or the kitchen sink, a liquidity facility is a way of standing behind an investment and saying when you investor are ready to exit, we over here the market maker will buy you out and we will buy you out and take the risk that nobody will ever want that security and then hopefully what we will actually do is be able to then be the bridge to the next investor and the reason we did this was a large social enterprise that it hit what we all know as the valley of death. We had helped launch it together with Ford two years before it had scaled up to a certain point but the equity that it had wasn't sufficient to get to the next level of growth and it needed to get to that next level to start to really tap in to more mainstream investors. So here's this classic gap and what we were able to do is to bring two financial institutions to the table who really didn't wanna do equity, that was not their thing and they really didn't like the idea that this was an investment that had a 10 year horizon and actually no real mechanism for exit. This was not a fund and the equity does not have a life on it. It's indefinite life. So we provided a 25% promise that a quarter of that equity would be something we would be willing at MacArthur to buy at a later date and it worked. So that's just an example of what we mean by trying to actually inject liquidity to this next stage of the market and we have other projects underway and we really look forward to conversations because we think there are ways to engineer new models. So I'm wondering if you guys to the degree you're willing to name names could say a little more about the kinds of financial institutions and partners you think you need to sort of realize this vision because listening to you, I'm gonna play a little devil's advocate. I hear you meeting with each other, foundations and foundations talking and to pull this off, that can't be the case and so how do you include more mainstream financial actors in the dialogue and the structuring and design? Well, I'll just tell you, I mean we have five or six big projects underway we're talking to investment banks, to family offices, to RIAs, and that's one of the things that's so exciting for us is that the real explosion of interest and impact investing means that we have a much wider array of potential partners but at the end of the day there are a set of players and big foundations are among them who bring important kinds of resources into the mix so we are I think necessary but not gonna be sufficient and to use Christine's word we need to catalyze this community of market building it'll not be any one of us cannot do this we need talent and expertise, traditional capital markets, tools and expertise all of that's gonna be required. Yeah, I mean I would completely agree I think just partnering with foundations would have been the easier play but as you said we're such a small percentage of this market and so like Debra, I mean we're in our conversations they've expanded much well beyond philanthropy we've really been attempting to be strategic in terms of where are the big pots of capital and what will it really take over time to unlock that and so having conversations with like CIO investor roundtables and people like that who donor advice funds and government importantly as a huge kind of catalyst beyond philanthropy in this market and so I think it's gonna take all many, many different types of institutions to kind of make this as effective as we like it to be so we're open to those partnerships. That's great, well we are out of time so we'll have to come back next year to hear how it all goes but please join me in thanking our panelists. Thank you.