Blended Value, Capital Investing

front and for making the investment into the into the foundation so right there and suspicious some type of they wait a minute you get a tax break on the front that's your financial consideration but those dollars the ninety five percent create seven dollar if you will is always managed only with reference to financial performance to return so here's the business model that you really have to accept and if you do what product leader university kind of small businesses what this is the june bested if the entrepreneur kamphuis said your speakers has great idea i'm really passionate about it we're going to really change marketing consumers and the whole nine yards and here's here's the deal here's the term sheet for every dollar you give me i take ninety five cents on the put it on the shelf annotated nickel out of every dollar i take my administrative costs out of that so i get like two or three percent have been overhead so i'm gonna take two or three cents and i use that to execute the business strategy but that's what we do a plan to be we think of that is how to did philanthropic practice then the problem of course is that it raises a really uncomfortable question what percent of your assets they're actually driving to advancing your institutional mission and i would argue that if it's two or three percent that's probably not enough i would not argue that it's got to be a hundred percent all the time i don't have an answer because i think as a screwball investing different *** have different priorities and goals an intense and everybody has the kind of find their own appropriate allocation but the fact is two or three percent is not enough first month in my mind and i think that the the new golden rule is basically one that says something along the lines that portfolio size doesn't define the breath of your vision or that the tools that you can apply in creating the fusion is our and that's the key thing who's that it's about much more than grants and social impact it's about maximizing total performance in value and so we think about and investment strategy the tribe multiple returns we're talking about is a strategy that looks at the whole but basically it's more of a new fighting the symptoms and you can adjust the secondary ticked off the scope some roses started talking uh... and so there's a couple of parts of this actually put more than a couple minutes will let's start with a couple and what i'm saying here is that if you think about portfolio allocation what we usually do is we think about this part here we think about that in terms of financial performance in return and then we think about pay out here in terms of grants that are pursuing social value and what i would argue is that when we're making our grants we need to understand that there is a a social resting return equations and plan and we need to structure our grants on terms that really are in fact a philanthropic portfolio and oftentimes what we do we think about printmaking we just kinda have terrible gibson and their deaths email you cut a check it's going to drive by forrester p write a check to get over forty year later to hope something good happened then if your strategic error tactical you get more engagement basically it's a trans active peace it's not an investment approach if we take a vessel approach to pleasurep you can see something that says that the program grant is really like kind of low-risk if you think about making a program grants or homeless organizations feeding folks we pretty much know how much is going to cost a few hundred people here's a thousand bucks in here's x_ number of people get bad you pretty much know that equation so it's a pretty easy transaction of it if you're wanting to invest the collaboration of five non-profits that are creating affordable housing within a given neighborhood and you need to build the organizational infrastructure to be able to execute that strategy over let's say a five to ten your time horizon that's much higher risk possible exposure and so the combination of these two are important that you don't it's not like you you don't do one but you do the other if you are you doing both and thank you but if u really want to quote solved the problem maybe you decide what you need to do is move into public policy work and so you start looking at doing more r_n_c_ doing seed funding of innovative programs and strategies and again it's this combination of philanthropic investments in a portfolio management style that creates the impact of the value of doing philanthropy but the trek years again this represents a really that three to five percent we're talking about earlier whereas and i'd also say this represents money out the door revolving funds coming back to you whereas if you're dealing with again let's say housing and you can structure republic around for a program related investment that says that all right we're going to buy down the interest with our you know social license if you will and were to take on great arrests than a commercial banking institution might be able to do given the profile of its capital that has to work with they were to combine that with the grantees and you've got a situation where you can actually leveraged funds and not only are you leveraging funds in terms of the dollar value if you put five and you can let us a hundred dollars later kind of thing but you're also leveraging your own investments lurid begin to incrementally increase the amount of return performance you get for the assets under management maybe a movie over here to this side in the in the public equity side and let's say the treasury note side we have a set of instruments you actually can buy into that that really mirror in some part in some way mainstream traditional investment products one of which is the the community investment note which knocked albert and are assessed finance in the u_s_ iv and lot of work around and which the auto if new loan fund is going to be rolling out of the next i think three to six months as an offer here in canada but basically is a note that says you can select interest returns they wrote a three-day zero two four percent and and it's in essence you're buying a perfect snow is essentially what it looks like and instead of buying that instrument from the government you buy it from a community finance institution and they use that capital then to finance lol business development housing in that community and in that region and one of my biggest pet peeves about the non-profit sector is that if all we did with manage our cash flow better ali did was match our cash and cash equivalents quadruple if not create by a hundred times the impact the leverage of the assets we have been for some reason that i i'm not quite clear on were more comfortable buying cds from bank of america now we are from a few development bank even if the seat both cds have the same profile and both of them are secure in our case the stakes by f_d_i_c_ so your risk exposure despite genital and yet for some reason we like hain more money for the wall street folks that we do for the mainstream folks like and understand that the best of the pet peeve soldiers but that out there and move on beta and so the ideas that increasingly they're a whole host of the polls strategies of funds that investors are able to move their investments into in order to be maximizing the greatest value in walls matthews rapidly growing field of social financing whatever we want to call me i'm i'm with you on the on the dot and because it's really frustrating have this kind of like you know catherine e of terms we have to work through so it's very exciting at one level because it's at their the fact helped enormously by the financial crisis we don't have to sell ethics and more it's experiment to supply side story what we're looking at finance uh. and increasingly nosey or or building a social capital market from the san supply-side perspective and there's a couple of the very important missing tools or links their and the biggest ones that didn't have courts you know we talk they do diligence and so on and yes of course a free investors going to do the due diligence waited social investor whether it's it and mainstream investors n i don't know that lose their shirts in one case and they want to make sure that they make their social return it on in the other and into your reference all the time to constituted to risk mitigation one of the ways to mitigating risk is to be to work in a more coordinated manner with those on the finance and as a legacy for that as well you know your work with the i_r_a_ d_f_ goes back to the nineties you know if you would have you wouldn't have dreamed that you would have had this kind of me uh... utah today's no at that time i was working at the time and very early nineties and michael credit and and and i think that make a because your gripped by the people founded the first like a cousin station canada uh... and you know we were really was baby steps configured to keep you saw