 Good afternoon. Thank you for being here. I'm Deborah Schwartz. I'm the Managing Director for Impact Investments for the John D. and Catherine T. MacArthur Foundation and I am thrilled to be here with three amazing colleagues from the world of philanthropy to talk with you about the topic of innovation and philanthropy and impact investing. I first want to just do some quick introductions and then we will get right to hearing from the panelists and have a little conversation and we'll leave plenty of time to take Q&A from everybody in the audience. So first I want to introduce Jamie. He's been leading the Lumina Foundation since 2008. Lumina is an independent private foundation in Indianapolis and it's committed to making opportunities for learning beyond high school available to all. Jamie is also the author of a widely acclaimed book America Needs Talent and it was named a top 10 business book of 2016 by Booklist and he proposes bold new ideas for building a pipeline to 21st century jobs. Next is a great book. Next to Jamie is Kelly Ryan, CEO of Encourage. Kelly has led Encourage for 20 years realizing his vision of a community that works well for all people. In working towards their mission to advance an inclusive and sustainable economy in Central Wisconsin, Encourage has developed an approach that is values-led and user-centered. Kelly is leading Encourage in its commitment to align all forms of capital with organizational values and the foundation's mission and it's going to be really fun to hear you talk Kelly a little bit more about what makes you not your grandfather's philanthropy as this panel is built. And to my right is Tracy, Tracy Palangian and she is a trustee of the Sirdna Foundation and she's here today wearing that trustee hat but her day job is as co-founder and CEO of Social Finance. For over a decade Tracy has worked to reimagine the role of capital markets in enabling social progress and she co-founded Social Finance US in 2011 to develop the pay-for-success model in the US. Sirdna Foundation is a family foundation founded a hundred years ago. Its mission is to seek to foster sustainable communities in the United States guided by principles of social justice and distinguished by healthy environments strong local economies and thriving cultures. So that is the A-list crew that we have here to talk with you today about foundations and innovation. I'm going to say just a little bit about the MacArthur Foundation which is where I work and then we'll turn it over to you Jamie first. So when I think about what makes us innovative at the MacArthur Foundation and some of you will know about hundred and change big competition that we unveiled earlier this year that will pick one organization to receive $100 million to work on one big problem and I would say it's safe to consider that a hallmark of an innovative philanthropy approach but in the impact investing realm where I have been had the opportunity to lead for now 17 years think what's made us innovative are five things I'll say them really quickly one is just that we've been doing it a long time and that is actually unusual and has given us a lot of experience and a lot of opportunity to try different things so we've been doing impact investing for 30 years. The second is that we've done it big we set aside a half a billion dollars for our impact investing and again that has allowed us to make bigger investments and engage with bigger players than we might otherwise otherwise ever have been able to do. I think a critical thing for us is a kind of ruthless commitment to what we call additionality that we want to do transactions where but for the foundation's engagement the transaction that the innovation the scale would not have been possible additionality and a close partner to that and forth that additionality is possible because we've been privileged to have an extraordinary degree of flexibility to be more patient to be more risk-taking to be lower cost if that's what it if that what is what it takes and then finally and fifth I think where we're also unusual is that we've made a real commitment not just to use impact investments to drive the success of our own programs and that is still paramount for us for a long time that was a initiative around affordable housing using impact investments and now we're rolling out a big initiative in climate but what also we've been able to do in the last few years is to really think about market making market building and how to get out of our own program silos to transcend those program specific interests and do some things where what we're just trying to do is make this marketplace work better create more on ramps for more kinds of investors and solve more problems for more kinds of social entrepreneurs nonprofits and purpose-driven businesses so those are sort of our my quick you know speed reflection on what's made us different I want to turn to you Jamie and ask you know since 2008 how have things changed at Lumina how have you been thinking about impact investing yeah thanks Debra so you know a lot of people understandably see private foundations foundations more broadly as grant-making organizations organizations that make grants to support social change through nonprofit organizations and of course that's an important part of what we do it's part of our of our social mission but many private foundations are coming to realize that they're not just good grant-making organizations they're also very important leadership organizations that in fact they've got to contribute to the social progress that they're investing in in new and different ways because societally increasingly is calling upon us as private foundations to contribute to that change private foundations have a capacity to take risk that many other societal enterprises don't have right so we don't have shareholders who will revolt on us if they don't like our decisions we don't have voters who will vote us out of office if they don't like the decisions that we make so our accountability structures are internal and therefore our responsibility to take risk to actually improve social progress is very important and we take that responsibility seriously at Lumina Foundation because we're a very mission driven organization we're one of the largest private foundations in the country but our mission is focused very specifically on increasing high quality post high school attainment educational attainment our interest is in dramatically increasing the number of Americans who have high quality degrees certificates certifications and other credentials that might be developed in colleges and universities or through workforce based programs or through direct-to-consumer contacts and in order to be able to get there we've got to use all of the tools in our toolbox in order to be able to achieve our objective so grants are certainly one way to do that we also are a large scale convener we're an organization that's highly invested in public policy but beginning actually in 2010 we began investing much more seriously in the space of impact investing first by actually investing in and in one case creating a fund a venture fund with fund managers that are focused on education oriented investing so we've committed a portion of our endowment to mission related investments through fund managers we've committed about 30 million dollars of our portfolio to date to mission related funds and those funds are a very important part of what we've done from a mission perspective but in the last few years we've come to realize that impact can also be achieved in other ways and one of the ways that we've started to do that in the last couple of years is through direct investment in a portfolio of companies that we are investing in so we're heavily engaged in early stage and investing in companies that we think can actually contribute at scale to our goal of dramatically increasing high-quality post-secondary educational attainment it's a fairly unusual thing I think we would all agree for private foundations to do in part because foundations have a legal hurdle they have to get over when they invest in in individual companies we have to actually have to demonstrate legally that our primary interest in the investment is not to make money if we make money that's incidental to our interest in the social benefit that you're getting that's fine but we actually have to demonstrate that it's not our primary interest and in the last few years we've built a portfolio that is now seven companies we're on a trajectory to add two to four companies per year to our investment portfolio but our objective really is to invest in companies that we think can produce 10 and 20x outcomes compared to the grant investments we might make through our other strategies and our interest is a far and wide in other words we've invested in companies that are not only dealing with traditional learners but people that you might call college students today but also people who have no prior experience in the post-secondary learning system one company we're investing in for example called Care Academy is training home healthcare aids and getting them on the pathway to their first credential so that in this one of the fastest growing areas of work in the country home health care aids we can actually help those individuals who are primarily low-income and first-generation populations get on the pathway to long-term success so so our approach to impact investing is that it's added a tool to our toolbox at Lumina Foundation in a way that we think can achieve large-scale impact and be consistent with our mission. I'm gonna turn to Tracy in just a second but I'm just curious could you say a little bit about your board of directors and kind of where they fit in on this journey that you just described as you've become you know further gotten further out there on the risk spectrum and really yeah yeah you know our board of directors is a diverse board you know we're a dozen people I'm a voting member of the board and our interests are aligned we come from different professional and ideological perspectives but our interests are aligned in dramatically increasing this high-quality post-high school attainment and the board came to realize early out that with an endowment in excess of a billion dollars with capital that we can deploy in many different ways that we should take that risk that I was talking about to achieve the the greater outcomes and so our board has been heavily engaged in supporting and encouraging us to do this there's an old joke in philanthropy that if you've seen one foundation you've seen one foundation that there are really no two foundations that are alike and in our case my board actually does not vote on grants so it therefore does not vote on the impact investments either the board is there to set policy and frankly to hold us to a very high standard of accountability when it comes to our our outcomes were very metrics driven as an organization and they are watching the impact investments very closely to look not only at the financial returns but also on the social returns and those social returns which is increasing the credentials that are awarded focusing heavily on equity because racial and ethnic equity are very important components of our work ensuring that we are actually contributing to system-wide change in post-secondary learning that's a key element of what the board is doing but but they are they recognize that this work is happening in real time and they are not engaged in the actual approval of the deals which is given me and my colleagues led by John DeWong who leads Lumen Impact Ventures the flexibility to actually get a lot done quickly and it's definitely an innovation Tracy tell us a little bit with Sirdna which is a hundred years old which is really extraordinary what what really prompted the foundation to take on the impact investing journey and it's been quite a journey so tell us a little bit about what's unfolded yeah so as Jamie said if you've seen one foundation you've seen one foundation and the Sirdna journey was dramatically different to that of Lumen us so for context as Deborah mentioned we are a hundred year old still family governed foundation and they're three non family members on the board and I'm one of them and the downman is a little bit over a billion dollars and as Deborah mentioned we work on sustainable environment strong local economies which is basically you know good jobs fair jobs and arts and culture and around two years ago the board wanted to wrestle with whether or not to get into impact investing and because Sirdna is such a high touch both on the grant making side as well as on just general kind of decision-making very much a learning organization decided to form a working group which I chaired to explore the the possibilities we went into the journey with no preconceived notions that we would do anything and and I was very careful given my day job was very much you know a public advocate of impact investing but was we were really there to understand the possibilities the various strategies across different asset classes from the public markets the private markets fund investing direct investments all the tools that Jamie mentioned as well as really doing an audit of the existing endowment to see you know what do we own today know what you own that journey took around nine months and we emerged from that journey with just a greater sense of clarity around what we wanted to do and the ultimate decision was that we would have a hundred million dollar impact investing allocation broadly focused on everything from a program related investment should might seek below market returns all the way to something that would generate alpha but something in service of these values and our programmatic areas broadly defined we also decided to adopt a couple of strategies which would affect the entire endowment so the the the nine hundred million plus and those two strategies include and and I'll have a you know asterisk after this if folks wanted to hear more about it to be an active shareholder of the securities that we own through through our managers so you know and you know implicit in that is that we decided not to screen out negatively or divest from from any industries as well as just being very intentional every single time we look at a new manager ask ourselves the question all things being equal are we looking at all the woman and minority own managers out out in the marketplace to fill that asset class so it's been an amazing journey at the end of it we hired the amazing Shweb Siddiqui who is I think in the room to to lead that work we also organizationally decided to have one investment committee to overlook both the you know quote unquote traditional endowment as well as the impact strategy so it's a work in progress we just got started and really excited for the journey ahead thank you Tracy can you just double back for one second one of the things you mentioned is that you decided not to do negative screening and I kind of want to call that out because you wouldn't think of that as an innovation because in fact for most foundations or for many the path starts with negative screening positive screening impact investment and yet you're saying that was something you really decided some would know it by the term divestment can you say a little more about why you reached that decision I think it's very natural as human beings when the whole impetus of this journey was actually to align your values with your endowment and with all the tools in the toolbox so the instinct is to get out of stuff that is not aligned with your values but then as you peel back the onion it's actually not that straightforward and and and what we tried really hard is to remove all those implicit biases you know just speaking of behavioral economics and I'm so excited that Richard Taylor won the Nobel this week that you know what problem are you trying to solve and what is the lever to try to solve that problem and by the way you know if one were to think about you know divestment to you know the theory of change would be that you would affect the cost of capital for a company because you would either be buying more of it or selling it down so unless it kind of reaches you know a certain tipping point that theory is actually you know really difficult to play out and I think there was a lot of resonance among the board that we would rather be you know as the Hamilton those musical would say be in the room be at the table to change the conversation to influence company behavior and you know not to borrow a cold war analogy like be use a strategy of engagement rather than withdraw to amplify your voice and and to to make change that way so we decided not to do it and and another quick point Deborah is that it's not simple to just divest like what exactly you divesting from right say guns is it you know rifles military systems is it handguns and is it just the manufacturers is it distribution as well like it the ripple effects keep going out also we do most of our investing through managers so you know that would also mean pulling out from a lot of great managers that deliver great return to us over the years so at the end of the day we decided to be active shareholders use our voice and revisit this question is not a done deal we can revisit it in the future and that's where we ended thank you so Kelly your foundation is kind of the new kid on the block right a little bit 25 years not quite very deeply deeply rooted in a place and I think it would be really fantastic to hear first what is it that is driving you as this deeply place-based foundation what is driving you to innovate and also if you have any observations about community foundations more generally that you think that you think distinguish you from community foundations love to hear that thank you so yes deeply embedded in place and encourage is located in central Wisconsin in the Midwest we serve a fairly small area about 45,000 people and what motivates and drives us to innovate really was prompted and born out of crisis and that crisis would be that we were at one time the smallest city in the US to be home to a Fortune 500 company whose headquarters was located in our region until 2000 and the headquarters of this paper company Seoul who moved to Finland and within three years we lost 40% of our total employment and that same paper industry or paper company had been in the region as the primary employer for over 100 years so not only did we lose the the jobs what was left behind was an embedded culture of dependency on a single industry of insularity of aversion to risk and and we were a fairly traditional community foundation at the time money in and money out and it was clear to us really that that us remaining as a traditional model money in money out was not going to transform that community and that in fact we had to transform ourselves and rethink what what was it that was going to help this community it was going to be about a lot more than money and the other experience I would say that influenced our driver my personal drive to innovate was spending time just about a year after that with the support of the Ford Foundation in Northern Ireland to see how other organizations that weren't so focused on money on finance the frame over there was in fact money was not going to solve deep-seated conflict that it was going to be social capital it was going to be focusing on human potential on love relationships and forgiveness right in in in Northern Ireland and for us that gave context to what we could do in central Wisconsin and so our focus for 17 years since the sale of that company has been on a community and an economy that works well for all people so at the time we had no idea what that meant we knew that that's what we wanted we being encouraged but we also felt that creating the cultural shift needed we needed the people that lived in our community to have a sense of agency of ownership and control over their future which was not what was embedded in that place so we embarked on a process of articulating values what was important to us and to the people in the community we talk about holding the community and each other in trust and we have a platform around which we think of ourselves as more than a community foundation really a community steward a steward of all resources and capitals we committed to 100% alignment of all capitals and that was about four years ago we are not at 100% like you heard Clara perhaps this morning talk about at Heron but we are committed to it and we're on the journey to achieving 100% deployment of all capitals so we think about human resources we think about our financial resources natural resources etc and one example of that so it's just one example that I think is taking a traditional tool and customizing it to have local impact in place was born out of the sale of that paper company so the paper company sold for a value of 4.8 billion dollars think about that in that small community 4.8 billion sold to a company in Finland from that sale then about two years later it was sold to a private equity firm in the U.S. another paper company and within two years after that that private equity firm declared bankruptcy but during that time period really stripped natural resources from the community further reductions in jobs left bankruptcy and debt in the community including actually debt to us for retraining paper workers and then just two years ago that next sale was to another private equity Verso paper corporation actually owned by Apollo venture capital so another private equity and within 12 months of that sale they declared bankruptcy after they had taken a large amount of capital out of the company so there was this pattern of extraction and when we were working with our investment advisors so we have a traditional advisor in colonial consulting like them very much and have been working with them for a long time impact advisors in Aviv are and then we also started working with a perio your California in Chicago in starting to think about how could we have a voice on behalf of the community in terms of what happens there right so that pattern of corporate disinvestment so we took direct ownership positions in not only every paper company in the region but we also thought about what other publicly traded firms are actually employing our people in that in that area of central Wisconsin as in like a Walmart as an example so Walmart is the number three employer in the state of Wisconsin we took direct positions and then felt perhaps we could do more and we could create our own public equities fund that was focused on Wisconsin and so that's what we've done we spent the last this is just very very recent we spent the last 18 months working diligently to construct a Wisconsin shared stewardship equities fund and it's really interesting that a lot of the data took a lot of time and research to find we employed MIT Sloan School students or CFO would have been easy for us to go to Bloomberg and just take corporations that had headquarters in Wisconsin but that was not what we wanted to do we wanted to wait that portfolio based on which companies had headquarters in our region and then beyond that which corporations actually employed Wisconsinites and then who else did we need in certain sectors like clean tech to balance out that that fund this passive index it's benchmarked against the Russell 3000 and we have screens on it and screens that are important to us around labor and workforce practices governance practices and sustainability and our foundation is not a billion dollars we're 30 million dollars and we just funded that shared stewardship equities fund last week with six million dollars so we're very very proud of that and we're going to practice active ownership even happier about that right so that the community has a voice the next time a public equity firm decides to sell a corporation in our community and the other side and then I'll stop the other side of that is not just agitating for bad practice but also supporting good practices in business and corporations and I called Walmart earlier and you talk about frontline workers and lower income but in communities of our size Walmart employs a good number of people we do a lot of work and have for the last decade in workforce investment workforce strategies and have watched Walmart make investments and improvements around job quality and how they're thinking about training frontline workers so when they raise their base rate we support that as a shareholder because it's good for our community and when they're training frontline workers in terms of essential skills it helps the rest of our community our manufacturers and others because it's a pipeline of of talent if you will and workforce thank you so much Kelly that's an extraordinary story and shows a lot of just tenacity and creativity and how you've approached this work Jamie I wonder if we could go back to you for second for maybe another example and Kelly thank you for sharing some things that have really you know made concrete the the kind of innovation that you're bringing to bear you mentioned some of the investing that you're doing at Lumina is aimed at getting really big multiples in terms of outcomes that you're not doing them necessarily to make a fortune for the foundation but really that the driver is the idea that you could get bigger impact than otherwise is there a company that you would have invested in that you think has that kind of promise yeah you know it's worth underscoring the point that you're making now here which is that and I think we've been through this the the journey the evolution of our thinking here which is so you know I've been at the foundation ten years and when I got to the foundation I would say what kind of impact are we having with the work and people would say well we're making grants of 50 to 70 million dollars per year and I'd say no no what kind of impact are we having with in the work and so there's this mentality that I think was largely present for in philanthropy which has clearly evolved in that decade that what you spend is what your outcomes are and to me that never made any sense the point is what kind of social impact are you having and so this idea of being too lagnostic of saying well it could be a grant it could be a mission related investment it could be a program related investment that's the important thing to think through here and as we've approached our direct investment strategy we've got working with obvious our capital as well to source and and do do diligence on these deals we've had several objectives in mind one is that we're trying to support entrepreneurs of color very important element of our work so our our portfolio of seven companies which is growing very dramatically we're on the pathway to the hundred million that that Serna is on five of the seven entrepreneurs are people of color and I was talking to a large investor a few months ago who's got over a hundred companies in their portfolio and they said they don't have five in their portfolio of over a hundred so we've made that a priority and some of these companies I think are really pressing the idea that you can actually achieve large-scale impact by actually transforming the learning system so I mentioned care Academy earlier as an example of training home health care aids we've got an investment in a company called Idovo which is essentially providing education to incarcerated populations using technology in order to dramatically scale the impact that you could have and we're even working with a company called credly which is essentially a digital platform a provider that's actually verifying digital badges and other kinds of digital credentials to dramatically scale the number of people who have and can demonstrate that that they can do something with these digital credentials so the idea is to swing from the fences in terms of impact to be less concerned about what the tool is whether it's a grant or something else but actually focus on what is the impact are we going to dramatically increase credentials are we going to bend the curve on equity are we going to increase prosperity in American society through talent those are the things that we're really focused on really exciting has the as you've ramped up or kind of intensified the impact investing practice has it had any effects on the grant making practice absolutely and I think you know I keep saying we're agnostic about the tool and it's literally true that the the grant makers and and John who leads the the impact investing team are really sort of seamless and in fact it was just talking earlier today with one of my colleagues we have a presentation for our board next month and we're going to talk about our investments in incarcerated populations and it was very easy to say oh we're going to talk about this grantee here and we're going to talk about it dovo and we're going to talk about that partner over there that's doing a more contract oriented work it was all seamless it was all it was not what are the grants what are the impact investments what are the other things it was what are we doing to increase educational attainment for incarcerated populations because that's what we need to move the needle on American talent and you know I think that the intersection of of the two the fact that they are working together in a very seamless way is very important because what should matter ultimately is not where you sit but what impact you're having and to me you know to go back to the Hamilton reference you know we can't throw away our shot here we've got one shot to actually use a large investment portfolio you know a large endowment to build an investment portfolio of impact investees and grantees etc to move the needle on our mission oriented goals and we're going to try to use all those tools in our toolbox to actually get there it's really remarkable because I think for a lot of foundations there's a very different culture around grant making different mindset different educational background and experience work experience so that seamlessness that you say you've been able to achieve I think is is quite remarkable and just curious Tracy as you're watching things roll out as you said Schwab is a phenomenal leader for certain congratulations for bringing him on board how's that going and do you anticipate that same kind of seamless quality yeah we've we've seen it it's happening and and that is one of the greatest by products and also an intentional strategy of ours to bring the two sides of the shop much more closely together and I would also underscore and we have much to learn from you Jamie just being so clear-eyed about outcomes and having your mission as your North Star and actually you know measuring outcomes and knowing the impact of your grant making strategy or your impact in that missing strategy is actually no easy task and and we're trying to apply that same outcomes focus and impact focus to to to the work that we do through both the grant making and the impact investing and I would also expand the holistic dimension beyond that of the investment staff and the grant making staff in the sense that we've also brought the investment committee together we've seen foundations where you might have you know a subcommittee dealing with impact investing and then a more traditional investment committee we actually is one we're one and the same is the same group of people and we're also using the same investment advisor in Cambridge Associates that oversees the entire thing so again it'll take time to kind of have everything sink in but it's it's been you know Shrebson off to a great start and are there particular program areas that you think out of certain as portfolio that are going to be more likely to lend themselves to impact investment elements than others yeah clearly the sustainable environment you know grant making strategy has just a lot of exciting both program related investment opportunities and mission related investment opportunities and a recent one and I have to write down this acronym because this is so long which we're really excited about it doesn't sound so exciting but it's a new energy capital infrastructure credit fund apparently kind of small to mid-sized renewable infrastructure project they have a harder time accessing debt financing so this vehicle is actually focused on that sized participant in the marketplace and providing capital to renewable energy and solar power projects so you know we think we can get market rate return out of this fund and so we're excited about this and many others that were putting to walk Kelly can we switch back to you for a second something that is used as a phrase to describe how your foundation works is user-centered do I have that right I wondered if you could say a little bit about what user-centered philanthropy or user-centered impact investing what what is that sure so with the commitment to people at the center of place right that if we think about pipeline of opportunity for capital as an example pipeline in a place or community begins and ends with people and people that live in that community really need to have a sense of agency ownership and control and in order for us to foster that we had to be very authentic in asking for participation not just for voice but for authentic ownership so we actually do have five principles around how we operate with user-centered and applies to our grant making practice how we prioritize our investment portfolio but in practice when we work in the community we talk about sharing power with community with residents prioritizing relationships between and among individuals and institutions including all points of view in the process using all kinds of knowledge so thinking about traditional measurement but also non-traditional sources of native wisdom of intuition etc and then testing solutions early and often so that idea of not too dissimilar from human-centered design and some of what we hear them talking about with the good capital project but in our in our case it really begins and ends with people that call a place home so is there an example of either an impact investment activity or grant activity that you think would kind of sure so to one is 2012 we did a very broad community outreach community survey we called it but it was really boots on the ground also and an extensive canvassing about what was important to the people that lived in our community what were the priorities from those priorities we did two things one was we looked at what kind of CDFI investments were we going to make in the community to advance the four priorities that the residents came up with and we aligned our CDFI investments accordingly and then the other was we bought a building we bought a building in the middle of our downtown so small community on Wisconsin River running through the center of it and that river really is beautiful and it had only been used predominantly to make paper for a very long time and what we wanted to do because one of the priorities that residents said was a greater sense of ownership around our place we bought the good it was a vacant Gannett newspaper building bought it and turned over the decision-making to the community and said what is it that you want in this place and really spent two years with a firm out of New Orleans Concordia their commitment after Hurricane Katrina was working in parishes with residents to have residents identify what kind of housing did they need to be rebuilt in those parishes not what the federal government decided needed to be built and they worked with us and our residents to say what is it that you want in this building and to their credit our residents said we feel like we need something that's going to grow business it's going to grow entrepreneurship and seed innovation and creativity in a community in which all of our children were raised for the most part to be paper workers right so it's not yet realized we're raising capital for it and it will house a micro brewery that will apprentice home brewers it'll be the first apprenticeship program in Wisconsin for home brewers it will also have makerspace entrepreneurship training and local food in the form of a culinary test kitchen and a local cafe this concept of user-centered investing in philanthropy does that have any resonance for you could you think of ways that it applies to either your institutions I can talk about it with my social finance hat on which is you know that the paper success projects that we build really start with the person the vulnerable populations and everything flows out from there so you know as we build this type of impact investment instrument starting whether it's you know a person recently released from prison what exactly this person needs not just in terms of the intervention but actually the operational handoffs when he leaves and walks out of the gates what needs to happen to enable this person to transition into a program because there's a lot of leakage between someone actually being released from prison and actually signing up to a program all the way to making sure that this person is supported all the way through the you know the new trajectory is something that you know we found to be very important in designing the right projects for for pay for success it's the outcomes it's the user centrality and obviously the cost-benefit analysis to go with them yeah there's an interesting element of the back to the you know if you've seen one foundation you've seen one foundation but many of us that are working on system change have tended to be focused on investing in institutions that are going to contribute to the to the system change and while that's good over time what you convince yourself of is the fact that the institutions are the most important things that you should be investing in and you forget that it's the users it's the people in our case it's the learners and the workers that are trying to make that transition from learning to work that are the most important things or a unit of analysis is people we're not investing in individuals we're investing in organizations and strategies that will help us get that 10 and 20 x scale but unless you have a user-centered strategy what you're gonna ultimately convince yourself of is the fact that if the institutions are good the people are good and that may not be the case in higher education for example we have what would some people would argue is still a robust higher education sector we still have the largest or close to the largest system of higher education in the world but the output of that system is not sufficient to meet our talent needs as a country so we've spent so much time thinking about how do we create more colleges and universities how do we build the system of higher education to do more we stop thinking about whether they're serving the right people and whether they're serving enough of those people in the right way in other words giving them the knowledge skills and abilities the talent that they need to be successful in working in life so unless you have a user-centered model unless you think about the individuals that you're impacting you can convince yourself that the sector is doing fine because the institutions the providers are doing fine and that's clearly not the case and if you think about our impact invest investments and the investees the investees are crystal clear that luminous investment is about moving the needle for individuals creating change so that we do get more of those people through the through the prison to work pipelines that we get more of those people into those jobs that will move them from home health care aids to other opportunities in the health care sector that's the key for us it's making sure that the users the individuals are the focus of the work so what I built from that is really really interesting to hear how this concept which you know Kelly your foundation has put into such deep practice and but in a very specific way in place that that has resonance across other kinds of institutions something else that I wanted to just touch on before we maybe ask you for some prognostication about the future and no more Hamilton you'll have to come up with or Richard Taylor you'll come up with something else let's talk a little bit about how you capture impact Jamie let's start with you because you think about it a lot you really it sounds like your foundation really considers it a great priority in fact to be metric driven in how you approach the work how have you come to your current system of measuring or capturing impact and is it a really major investment that you've had to make so our our unit of analysis as I said as individuals and to articulate our our goals in a simple way we have a time limited quantitative goal for our work we think that 60% of Americans should have a high quality degree certificate or other credential by 2025 so literally all of our efforts are aimed as a national foundation in trying to be a catalyst for the country to get to that goal so our basic unit of analysis is do more people do a higher proportion of Americans have high quality post-secondary credentials than they did last year and the good news is since we started this work in 2008 we've gone from a little under 38% of Americans to a little over 45% of Americans who have achieved that threshold so we have made made progress and hopefully Lumina has been one of the catalysts that's helped it to get us there but our metrics for our grant work of the same exact metrics as our metrics for our impact investing work and I think that's the important thing to understand is that the impact investments just like the grants have to demonstrate that they are going to lead to more credentials that they are going to make equity a priority that they are going to focus on high quality credentials not just you know sort of production of credentials that have no labor market value don't contribute to our our our a democratic system or or in other ways so and we have this measurement system that is entirely transparent so our metrics are fully transparent you can go and look at our website right now and find something called a stronger nation and our stronger nation metrics used to be an annual report but now we update them as data becomes available and you could disaggregate by state by county by race and ethnicity and a lot of other factors so that you can understand how the country is doing on the core metric of increasing attainment but I think that absent the use of metrics and being clear having this time limited quantitative goal you can end up in a position where your where your outcomes are really just directional more and better are good how much more and how much better that I think is demonstrating that you're exercising your leadership potential as a foundation thank you do either of you want to comment on your perspectives on this issue such an important dimension of both just philanthropy in general but impact investing and how you capture impact in a way that's useful to you as a as a foundation leader I think broadly we need to expand the definition of what impact is right and what kind of returns we're looking for that are non-financial as well so we're very transparent in terms of outcomes and we do capture traditional outcome measures but when we're thinking about deploying all capitals how do we measure social capital how do we measure human capital etc and we've been working with a cultural anthropologist we use an evaluation frame from Boston an evaluation frame for the last six years looking at networks so networks of relationships between and among individuals and institutions and how do they contribute to what we call the enabling conditions for change to happen right because when we're talking about working in culture and relationships between and among human beings it's one thing to measure the financial capital investment it's another to understand the conditions of readiness in place in that community are people actually working together are their levels of trust those things are difficult to measure they're easier to notice and document and tell stories about but in terms of traditional outcomes I would tell you that's what we're wrestling with right now for two years with support from the Knight Foundation another front of innovation Tracy how would how would certain to think about if you're to look ahead ten years from now if you're a shareholder engagement this activist approach to ownership that you described if that's successful what will that change look like or how will you know it's an excellent question I actually had a quick exchange with Shweb on what we hope to see ten years from now I think we hope to have many experiences on the shareholder advocacy front so that we can refine what we bring to the table for each of these conversations we hope to have demonstrated some change behavior but more broadly we hope that we can begin to demonstrate on the journey that impact investing and taking non-financial factors into account and really thinking about impact across the investment portfolio is the new normal is smart investing is the mainstream way of doing things and and that is our hope and in that forward-looking spirit just love to get some final thoughts from either you Kelly or Jamie or both as to looking ahead you know either do you have a view of what you think philanthropy needs to keep doing to innovate and to be relevant and in particular on the impact investing front yeah I think I do and I think that well in our case in ten years hopefully we'll have gotten the 60% goal so that since our goal is is 2025 but I think more broadly in philanthropy I think there's a few things that I I hope we will have achieved in the coming decade one is that we'll continue to innovate and the tools that we're using to help us achieve the social outcomes so Tracy's that you know in my view the leading expert on paper performance tools like social innovation bonds and we're doing feasibility studies right now in our own space around social innovation bonds which there's been very little deal flow in our space there so that's an example of where you got to continue to expand the tools that you're that you're developing to achieve impact but you also have to I think invest in expanding the network of the people doing the work the entrepreneurs and we've worked with partners like Camelback Ventures and Village Capital and others to both expand the pool and the diversity of the pool of entrepreneurs we've supported innovation prize so we're trying to grow the sector and then fund the growth of that sector through our impact investments so that we can create a more dynamic ecosystem that can actually contribute to what we're trying to do as one foundation and as a private foundation part of a broader sort of network of philanthropic organizations I think it's going to be very important for us to learn from each other about these different models I do think that that joke about philanthropy is an asset in one way which is that we have the opportunity to learn from each other in each of our unique ways to actually enhance the success of our individual efforts in in service to the greater good in service to the idea that philanthropy can increase social and economic prosperity thank you Kelly do you have any I do I have two points I just I think are important and one is relevant to what Clara Miller said this morning in terms of foundations needing to be the change and to be the change requires inner work and introspection on the foundation itself on foundations culture on the structure and one of the speakers last night talked about an incessant examination of privilege and I think that that's what we need to do as institutions is really have a persistent examination of the privilege that we have and how or how is it being deployed to advance mission but the other thing I would say is the idea of pipeline in communities beginning and ending with human beings and the need to steward moral capital of communities and I need Jamie and others to build impact infrastructure I would say you need me and others like me to hold the moral capital of community and foster moderation, civility and compromise not just in communities I think we need more entities like that as a nation but it costs money to tend moral capital and philanthropy and foundations I think we need to see and do better do a better job of funding those that are tending the moral capital of place because that's we need each other. Thank you. I just I hope that all of you like me have been just wowed by this the story of these three organizations and you can see that innovation and philanthropy is taking shape in all kinds of ways and all different all different fronts but I think for sure you're all bound together by being extraordinarily thoughtful and intentional by being brave and taking on things that in thinking in your own way and above all being free to think differently and to think and put names to things and talk about moral capital and so forth and to really push the envelope and to push all of us to think harder about what we're doing. So with that we're going to close our session I wanted to let you know that mission investors exchange which guest curated today's panel has a few more sessions that will be before closing out the day. One of them will feature a collaborative that I'm very proud of called Benefit Chicago which we launched a year and a half ago in collaboration with our community foundation and the Calvert Foundation so I hope you'll think about staying around for that and there'll be another forum that will describe the steps of a simple deal so something practical and how to please join me in thanking our panelists.