Welcome to the Social Edge Building Blended Value event series! Here you will find the community discussing the overall concept of "blended value." The Blended Value Proposition states that all organizations, whether for-profit or not, create value that consists of economic, social and environmental value components-and that investors (whether market-rate, charitable or some mix of the two) simultaneously generate all three forms of value through providing capital to organizations. More information about this concept can be found on the Blended Value Website where the executive summary is available.

We have invited several special guests to address the issues surrounding blended value: what it means, how it is relevant to different people and organizations across different silos, how it can be applied, and what challenges exist in implementing it.

To spark the discussion, Mario Morino (Venture Philanthropy Partners) has conducted a special interview with Jed Emerson and Sheila Bonini, who have been leading the development of the Blended Value Map. The interview is an excellent introduction to the concept.

Click here to visit the blended value web site

Let's begin by posting a message below:

Introduce yourself and share your interest in the topic.

What is your reaction to the blended value concept? How does it relate to your work?

Discussion Resources

1. The Blended Value Map (.pdf download 2,600 kb)
2. "A New World Order" by Jon Gertner, Money Magazine.
3. "Bridging the Silos - An idea too far?", Alliance Magazine.
4. "60 Seconds with Jed Emerson" by Cheryl Dahle, Fast Company.

Tip: Post a message by typing in the blue box below. Receive email updates with a digest of the event by clicking on "subscribe." To tell a friend about this page, click "Tell a Friend" below.

Monty Montoya - Mar 23, 2004 11:37 am (#1 Total: 70)
Northwest Lions Foundation


I just returned from a trip to Vietnam where I was working to help establish a corneal transplantation infrastructure beginning in Hanoi. As I worked with doctors and government officials I tried to teach them the idea of blended value but did not seem to get through. Any tips on how to communicate these principals in the developing world?

This question may seem like a silly one since it is obvious (at least to me) that blended value organizations are desparately needed in the developing world but I was honestly stumped at getting the point across. The seem to want the end result of enterprise whether it be cornea (a part of the eye) transplants or revenues from from widget making but have a hard time considering how the means might also create adverse effects if not managed well.

Thanks for hosting this discussion.

Monty M. Montoya President/CEO Northwest Lions Foundation Seattle, WA

Michael Chertok - Aug 26, 2003 9:33 am (#2 Total: 70)


Welcome, Monty, and everyone else joining the conversation,

I'll be helping to moderate this dialog on Building Blended Value. It will be a great start to our conversation if you can jump in and introduce yourself, just as Monty did...and also write about your specific interests and questions about blended value.

Don't be afraid to try to answer others' question as well. One of the wonderful things about Social Edge is how much knowledge resides in the community.

As for me, I have a particular interest in social enterprise (see Social Edge the Glossary Building Project at http://www.socialedge.org/?13@859.STUeawvITp2.738@.3c3ea152/0 and especially in how social enterprise can begin to tap into new financing markets across the public, private and philanthropic sectors.

I look forward to our conversation!

Michael

Bob Dunn - Mar 23, 2004 3:36 pm (#3 Total: 70)
CEO, Business for Social Responsibility


--I want to go back to Michael's question about sources of financing and make a suggestion.

BSR works with a lot of global companies who are increasingly expanding the locations where they source and sell and recognizing the need and value of supporting sustainable development.

In this context alliances between large companies and social enterprises are a natural. The company identifies an effective and cost efficient way to learn more about the community, meet community needs, explore possible business opportunities and establish good will. This model enables companies to look at business and philanthropic resources, as well as other assets to promote the success of social enterprises.

One such example that comes to mind is the relationship that's developing with Global Giving, HP and Visa.

Bob

Bill Shireman - Mar 23, 2004 4:09 pm (#4 Total: 70)
The Future 500


To respond to Monty's observation ...

I just returned from Beijing and Malaysia, where I met with business leaders on blended value issues. Two thoughts:

1. These companies became interested in blended value when they realized their CUSTOMERS needed them to focus on it. In this case, their customers were often global corporations that were under the watchful eye of social investors and media in Europe and the U.S.

2. There is often a suspicion - sometimes justified - that assertions by rich countries about the need to protect the environment or social assets in poor countries will simply impose a barrier to economic development there.

It is important for us to realize that much of the world is poor, and some billions are desperately poor. Because of this, social betterment and even environmental protection is highly reliant on economic improvement. We need to make this point first, so that the developing world knows we realize the primacy of economic improvement. If the message is that they need to compromise on economics in order to protect social or environmental assets, this message will seldom find a receptive audience. Much better to point out how the RIGHT KIND of economic development can leapfrog over the depletive excesses of the developed world, and provide better economic development ALONG WITH social cohesion and environmental protection.

Bill Shireman - Mar 23, 2004 4:15 pm (#5 Total: 70)
The Future 500


I neglected to follow instruction #1 and introduce myself ...

I am with The Future 500, a global network of major corporations. Our core competence is Stakeholder Engagement - forming dialogues, explorations and alliances between corporations and stakeholder groups such as NGO activists. We are an outgrowth of Global Futures Foundation, and are based in SF and Tokyo.

Keely Stevenson - Mar 23, 2004 4:24 pm (#6 Total: 70)
Royal Bafokeng Economic Board


Monty, Michael, Bill and Bob- good to see you on The Edge! By way of introduction, my name is Keely Stevenson, and I am on the Social Edge team. I want to start by thanking Sheila, Jed, Steve and all of our special guests and sponsors who have worked hard to make this happen! This is a topic that is very exciting and important to me, so I'm anxious to see how the Social Edge community can help mold and further develop this concept of blended value. Feel free to share your ideas, challenge various assumptions and statements and give examples in your own life's work that parallel the topic.

Mario Morino's interview is a great overview, so if Blended Value is new to you, start here: http://www.socialedge.org/?293@@.3c3e907c

Cynthia Gair - Mar 23, 2004 4:36 pm (#7 Total: 70)
REDF, Director, Portfolio and Field Advancement (www.redf.org)


At REDF we work with nonprofit social service agencies running job-creation businesses. The businesses need to employ folks with severe employment barriers, and they also need to be financially viable. Managers in these businesses constantly face financial mission versus social mission challenges. Decisions between action that best supports financial objectives, and action that best supports social mission objectives can be tough. Bill brings up this dynamic in his description of the economic development versus environmental stewardship conflict.

This creative (and often painful) tension between multiple goals is what all of us (struggling along in our lonely silos) have in common.

Cynthia Gair Portfolio Director REDF San Francisco, CA

Ernie Ting - Mar 23, 2004 6:32 pm (#8 Total: 70)
est/a


hi everyone...

Just a quick note -- in the discussion of silos, I'd like to make a pitch not to leave governmental organizations out of cross-sector learning and collaboration. Most of the BV conversation seems to only include for-profit and non-profit organizations and view government organizations as black boxes to be dealt with, lobbied, etc. -- as opposed to interested actors that seek to address the same broad goals as social venture enterprises or socially-aware businesses and that consciously "control" or influence vast economic resources to those ends. There can be much more to creating blended value through a partnership with government actors than lobbying and advocacy on legislation...

As far as introducing myself, I contribute occasionally to Social Edge discussions and work with various kinds of business, non-profit and governmental organizations as a consultant on public policy, strategic planning, financial management -- often focusing on how the sectors interact to build (or destroy) value in the public interest.

E

sally osberg - Mar 23, 2004 7:18 pm (#9 Total: 70)
CEO of Skoll Foundation


Hi everyone,

I'm Sally Osberg, CEO of the Skoll Foundation, which advances systemic change to benefit communities around the world by investing in, connecting and celebrating social entrepreneurs.

Over my 25+ years in the sector, I've come to the conclusion that it's psychic equity that keeps us all going. Pssst: it's a big secret, but really smart people love their own ideas! The social entrepreneur is much less interested in the meta-system of sustainable development,social enterprise, and corporate social responsibility silos...than in realizing his or her big idea AND making real change happen.

Take GlobalGiving (cited in the opening interview)--created by a pair of social entrepreneurs to channel resources to social entrepreneurs working in the developing world--which has built partnerships with HP, Visa, and yes, the Skoll Foundation, too! Blended value? or just savvy business development?

My point: Social entrepreneurs are already boundary crossing. Big ideas won't stay locked up in silos. The network is lighting up, and social entrepreneurs are its electric current.

Sally Osberg

mmorino - Mar 23, 2004 8:38 pm (#10 Total: 70)
Chairman of Venture Philanthropy Partners


I'm checking in after a day on the road and glad to see the discussion off to a good start. Sally's note on the network effects is very real. Peter Drucker had a great saying, that "knowledge leaks" and that was even before the Internet. And, I think its safe to say that the knowledge (and enthusiasm) of social entrepreneurs leaks as well, as it spreads quickly thanks to the network effects Sally highlights. The point that Ernie Ting makes though, is one, that perhaps should be given more discussion. As much as we admire philanthropic funding, social investments and other sources of capital and financing, governments still represent a formidable percent of the funding for social efforts and one thing that we can try to do more of is to use leverage social and philanthropic investment to leverage government funding -- thereby leveraging our investments. My thanks to the Skoll Foundation for hosting this forum and to Jed Emerson for encouraging me to get involved. My best, Mario Morino

Steve Rudolph - Mar 23, 2004 8:52 pm (#11 Total: 70)
Director, Jiva


I'm Steven Rudolph, President of Jiva International. Over the past few years, I've realized the power and potential of social enterprise on development, especially in developing countries like India (where I spent 10 years).

We have been witnessing convergence in so many areas--especially in globalization and technology. We are now entering into an era of convergence among the different sectors/silos. I believe the philosophy underlying the Blended Value Map can help liberate social entrepreneurs and others, so that they don't limit themselves to silos, but rather see themselves as free agents who can draw together resources in order to create organizations and programs that deliver "blended value".


This event will be the first time these thoughts are discussed by a global community of this type, and while it might be fair to expect only awareness be raised about the issues, I do hope by the end of the series that the delieberations result in some real action. At the end of the 5 months, I want to be able to point to tangible evidence of how I was able to apply the principles of blended value in my organization, or how a new partnership was formed as a result of the interactions here on line. Let not the blended value proposition remain only a map on paper, but a chart that guides exploration and discovery.


Here on Social Edge, I am playing a role in helping to coordinate the Building Blended Value event. I would like to thank Jed and Sheila for their excellent work in bringing together incredible ideas and people. I'd also like to thank Keely and Phil for all their hard work in getting the event together, and would also like to thank the Skoll Foundation for standing behind this effort, which I believe will be prodigiously instrumental in shaping the future of cross-sector collaboration.

Best,

Steve

Steven Rudolph | President, Jiva International | www.jiva.org
My blog on social enterprise http://steve.populog.com

David Rankin - Mar 24, 2004 9:27 am (#12 Total: 70)


I'm David Rankin, Vice President for Programs at the Great Lakes Protection Fund. We are a funding organization that is very interested in various techniques to value the impact of the work we support. The Fund is not a charity (under the IRC) so we are not well measured by the number and size of grants or PRIs.

I am trained as an MBA, have an undergraduate science degree, and have spent the last 23 years leading teams to improve the health of our environment.

I am here to listen, learn and share.

Thanks to the organizers for putting this together!

Dave

Roy King III - Mar 24, 2004 11:13 am (#13 Total: 70)
Social Enterprise Group


Sally,

I certainly agree with your point that Social Entrepreneurs are boundary crossing and driven to realize his/her big ideas. However, I also believe that more social entrepreneurs are becoming interested in and focused on affecting change at the global 'meta-system' level. For some, that is the big idea.

No worries,
Roy

Brief Intro
-------------
I am currently a Director at the Social Enterprise Group, a consulting firm based in Seattle. I've co-founded and managed both for-profit and non-profit social enterprises in Bulgaria, London and San Francisco. My background is in business and technology strategy although I really just love working with social entrepreneurs and helping them achieve their dreams (the bigger, the better).

jkhor - Mar 24, 2004 11:40 am (#14 Total: 70)


Hello, I am Jackie Khor. I run a philanthropically-driven investment fund within the Rockefeller Foundation (the "RF") known as ProVenEx. ProVenex is the mechanism through which the RF invests in businesses to address health, food security & employment problems facing poor people globally...areas that directly relate to the foundation's grant activities. In other words, we invest for both financial and specific social returns.

As Jed knows, this discussion is very timely for us on a number of different fronts. As an investor in this broad "space", I have two themes that I would like to put on the table:

1) Making blended value investments & running successful blended value ventures is much harder than doing the straight commercial version...especially in markets where the primary beneficiaries are poor people.

There is a need to: a) Expand existing succesful or develop new modalities for providing the entrepreneurs and managers of these ventures with the right value-added networks and business management assistance to go to scale. b) Have disciplines and standards that are rigorous in terms of financial and social accountability....otherwise the field will continue to be dominated by soft money and will never access main-stream capital markets.

2) To the extent that blended value ventures in some sectors (e.g. employment of very disadvataged people, food security in agriculture, public health in poor communities) will require highly patient capital that is realistic about the risk-return trade-offs, we stakeholders need to agree on what social outcomes we are looking for, how to assess this credibly and feasibly, and hold ourselves accountable to these outcomes.

Cheers, Jackie

Timothy Freundlich - Mar 24, 2004 12:01 pm (#15 Total: 70)
Director, Strategic Development, Calvert Social Investment Foundation


Tim Freundlich here, Director, Strategic Development at Calvert Foundation (http://www.calvertfoundation.org).

I'm especially looking forward to the "Capital Challenge" discussion starting April 13. As a recent Fast Company article stated, "The challenge for many nonprofits and social enterprises now is to capitalize on the possibilty they have created. For any to grow to massive scale, for their impact to be truly glbal, the methods of funding these types of endeavors will have to change. There is no grant, individual donor, or government support that can equal what the free market supplies to innovate forprofits."

Essentially, we must take in hand the formation of a much more efficient/effective capital marketplace for the blended value space, one that includes the elements we take for granted in the traditional capital markets -- intermediation, transparency, financial vehicles including publicly traded securities, liquidity, risk capital (beyond grants) and syndicates/networks of investors who participate.

We are working on certain aspects of this at Calvert. It's a challenge, as core to the development is a significant redefinition of the very nature of returns along blended value terms: e.g. "What is market rate return, and where did we come up with this concept in the first place?" among other similarly non-conventional-wisdom sorts of adaptations.

The space is unfolding as is the discussion, and these are interesting times.

:) Tim

Timothy Freundlich - Mar 24, 2004 12:13 pm (#16 Total: 70)
Director, Strategic Development, Calvert Social Investment Foundation


And I'd echo/emphlify on what Jackie wrote...the tension in the investment space in moving to blended value functionality is that in the trad. markets we all ascribe to a (roughly) similar set of risk/return measures and factors. This is missing in the BV space, becomes anecdotal and 'heart' measured. The big challenge here is in the plurality of social value creation. A dollar is a dollar is a dollar (in trad market terms), but SROI is all over the place, people value it differently -- the discussion on Measurment and Performance will get at this in May, surely.

I would question the term 'soft', though. But reality is the main-stream capital markets participate in currently defined risk adjusted return vehicles -- which back to my previous posts point.

Tim

petert - Mar 24, 2004 1:48 pm (#17 Total: 70)
Peter Tavernise


Peter Tavernise here, Sr. Mgr for Corporate Philanthropy & Sr. Program Officer for the Cisco Systems Foundation. [Standard disclaimer that the below thoughts & opinions do not necessarily reflect the policies, etc. of either entity above.]





Jed, our voice in the wilderness....

"...not having the right metrics today doesn't mean that we won't ever have them--or that it's not a worthwhile question to pursue. People assume that econometrics was handed down from the hand of God to Alan Greenspan. And that's not really the way it worked. That interpretation of value has evolved over the past 50 years. With all due respect, we've really only been grappling seriously with measuring the environmental impact of a company, for example, for 5 or 10 years. I think it's natural to think that we might need another 5 to 50 to figure it out."

This is the pivotal point: we have to embark on measuring what we can measure--in order to arrive at that future where we will have defined BV measures, metrics & related analytics. If we don't start, we'll never get there. And the idea is not to repeat what econometrics has done for our own field, in a kind of delayed parallel, but to transform how everyone views value, including those in economics.

The process also has to be a cost & time efficient (no undue burden on NPO's, please), and should allow us to distill, refine, & improve the methodology as we go along. Properly implemented, one of the first fruits of this labor will be better information for management, strategic planning, decision-making, and effective collaboration in order to reach socioeconomic goals.

One major effort on this front is the work of Listening Post guru (http://www.jhu.edu/listeningpost/) Lester Salamon, who has been working with the UN to just get countries around the world to include the NGO sector in their GDP stats. Extraordinary achievement in and of itself, and a great step forward in thence being able to gather relevant data that would never otherwise have been available.

Once we begin aggregating & comparing measurements (by issue area, size of NPO, scope of services, type of constituency served) we can begin to see what are useful metrics. Given that we have technology available that did not exist as econometrics was evolving, the sector should arrive at some useful metrics-sets for BV & social impact specifically in far less than 50 years.

Once we get even half way there, we can begin to make the case to individual citizen donors for why they should invest in NPO's rather than the stock market in order to secure what they need--because we will have better measures than ever for what those contributions will actually return to the community in the most holistic sense.

Take a hypothetical example: you are in the hospital and the new nurse who is drawing up your injection can't do math because the community college system in their state is in a shambles. The $2M you have invested in a high-yield stock portfolio is not going to help you avoid a fatal overdose.

But a studied BV approach to both the social & stock markets could produce e-learning solutions that help states do more with shrinking budgets, and help to train & recertify health workers. We just don't have the measures & indicators, or the means to measure, that we need to make that case convincingly enough to transform the way people fundamentally conceive of markets and returns.



Cisco Systems and the Cisco Systems Foundation is working with a group of NPO and for-profit partners to begin to map these metrics for our grantees (including those who receive $$, people, and/or product grants).

On a practical level, Community Foundations of America (www.cfamerica.org) seem to have the most straightforward approach for our purposes, and after some reality testing with NPO's, it is their Toolkit that is most easily apprehended and adopted by grantees out of all of the resources we share with them.

The reporting platform we are using is B2P Impact Manager, which was produced in collaboration with CFA. The two organizations in turn are now collaborating with Urban Institute's National Center for Charitable Statistics to begin to record, aggregate and map these practical-level metrics and indicators for program assessment & eval. However to my knowledge they are not specifically addressing the BV angle.

Jed's balcony view of different metric-sets by issue area & geography is a great start, and I agree with his position that now is an opportunity to compare notes and come to some agreement on shared standards from which to embark.

The danger he points out is valid: in CSR there are hundreds of distinct metrics sets being promoted as ways to measure & rate a corporation's social responsibility. That kind of scattershot approach is not going to give corporations any confidence they might ever choose the "right" set of standards with which to comply--and the out they might use to say "sorry, too unclear what we should do, so we're doing nothing right now."

Best, Peter

Cynthia Gair - Mar 24, 2004 3:59 pm (#18 Total: 70)
REDF, Director, Portfolio and Field Advancement (www.redf.org)


Cynthia Gair here, Portfolio Director, REDF (www.redf.org)

Hello again all. It's exciting to see that Sally Osberg's "electric current" is working: even the early part of this conversation shows that the idea and realities of blending social, economic, and environmental value are being mulled over and experimented with by folks in multiple sectors. It's become a magnet for individuals and organizations innovating in a wide range of community improvement activities.

Having worked with social entrepreneurs and social purpose enterprises for 10 years, I can second Jackie Khor's observation that making blended value investments and running successful blended value ventures is more difficult than doing so with their commercial counterparts. A few specific challenges come up again and again in our work.

1) How shall we determine whether an activity / investment is successful? What should we measure ? Beyond financial viability, what is the purpose of the activity / investment, how will we determine if that purpose has been achieved, and how can we measure the success of activities that don't always lend themselves to quantification? 2) How can we assess relative value created in a world differing goals, and few baselines? 3) How can we convince investors new to this arena that value accruing to the community, rather than to individual investors, is vital and worthy of investment? Is there an effective substitute for a dollar return to such investors?

I agree with Peter, we need to embark on measuring what we can measure, and that's the way we have proceeded.

Working closely with a wonderful group of entrepreneurial nonprofits, REDF has come up with some approaches that work across our portfolio. In addition to standard business financial information, data measuring the social outcomes of an enterprise(discussed in depth in "An Information OASIS" at www.redf.org) is gathered and analyzed. This has proven to be of tremendous use to the entrepreneurs themselves, as well as to current and prospective investors. The theoretical and the practical meet on this ground!

This is helping all of us assess the efficacy of specific enterprises and programs. Other questions, some of those I've listed above and many questions raised in Jed and Sheila's paper remain to be answered. By making our work available online, we try to seed others' exploration of questions such as "how can a system like REDF's OASIS be applied to a different porftolio or in a different mission area?"

We expect to continue generating innovative approaches and look forward to sharing them with all of you.

rick@rubicon - Mar 24, 2004 5:33 pm (#19 Total: 70)
Rubicon Programs


Hi Rick Aubry here ED of Rubicon Programs, based in Northern California for 31 years we have been doing work now called Social Entrepreneurship. The goal has always been to create successful and sustainable ways to serve three sometimes overlapping communities, homeless people,the working (or currently notworking)poor and disabled folks. While we are perhaps best known for our social enterprises (Rubicon Bakery and Rubicon Landscape) we don't limit our understanding of social entrepreneurship to social enterprise.

Anyway this fascinating conversation seems to be taking two tracks. The finance folks are focusing on the blended value question of how can we ever create a way to get money to endeavors that do great things, but whose great things are hard to measure, or even when they can be measured, the financial returns don't approach less costly but less important "social returns". Jed's BVP concepts are great ways to think about this challenge but don't give The Rockefeller's and Calvert's of the world a solution to get more investments into high social value low financial return causes (Believe me we live this every day).

The Social Entrepreneurs in the conversations are presenting exciting work throughout the world, but do seem to beg the question of "how much" social value they create. Cynthia from REDF is highlighting the very valuable OASIS tool which is out there as a building block measurement system for all, but the "missing link" remains a real way to provide relative social value created.

If I understand Jed's work (which I don't claim to) it is in some ways to de-emphasise of Social Entrepreneurship as "the way". That non financial value is being created everywhere, in business, government as well as the non profit sector, and that we need to measure all such value creation.

I guess my current perspective is that everyone believes their work is the most successful at solving the problems they are working on, and that the metrics, which are crucial and need to be worked on, are still too far behind the reality of capturing the value people are creating and are still too highly discounted as tools of value. We have spent several years at Rubicon building one of the best measurement systems around, and its value is primarily internal: it helps us measure what works best and do our jobs better: It is of limited value in convincing anyone to fund one project over another.

sally osberg - Mar 24, 2004 7:10 pm (#20 Total: 70)
CEO of Skoll Foundation


Rick raises the $64K question re. the impact of metrics on capital flow. Philanthropy just doesn't behave according to the rules of capital markets-but some PRI programs (esp.Jackie's Provenex) and (Tim's) Calvert's funds do...

One of the more telling moments in a recent Skoll board meeting came as a director noted that his university (an august institution) didn't have the faintest idea of how to measure its effectiveness--even though by all accounts (if not "measures") its reputation for excellence was assured.

Great comments, insights, thoughts from everyone. I loved Mario's reference to Drucker's "knowledge leaks"! that's a keeper...

Lots of good leaking going on here--

Sally

Jed Emerson - Mar 25, 2004 6:12 am (#21 Total: 70)
Senior Fellow, Generation Foundation (London)


Rick, I actually DO think you get what I'm driving at! (But perhaps that's for another conversation...).

Your last paragraph, I think, sums it up nicely in that the performance metrics you're now using are being applied primarily as a management tool and secondarily as a means to communicate performance achievements to outside actors. I think in this context it will take some time yet for a broad set of capital actors to tie capital allocation to performance, but the first step in getting there is having a Social MIS in place to begin with...

What I think some of the discussion regarding metrics and capital lacks is something of a historical context for the development of econometrics in general. I think we should remember that up until the very early 1900s the history of our economy (and much of Europe's) was one of boom and bust in quick succession. It was in response to the busts that people decided it made sense to have ground rules and a set of agreed upon performance metrics for companies so that outside investors could accurately gauge what what value was actually being created and upon those numbers then build effective capital market structures. It then took decades of work (and the Great Depression!) to bring us to a point where we do have FASB, GAAP and other frameworks that guide how we assess performance of and value creation by for-profit firms...

I would argue we are at the front end of a similar process now...As the Calverts, REDFs, Acumens, Provenx and other such "closed funds" set the parameters for measuring the performance of their investees, those various frameworks can then be brought together and in a few years we could create a unified standard for funds of that sort...

As part of the Blended Value Mapping Process (it's not really a project as much as an evolving process...), we will be assisting in bringing together practitioners of Social Return On Investment analysis from the Europe and US to begin discussing how those efforts might be leveraged against eachother in a more effective manner to address issues of common concern and, ultimately, may result in an international standard for assessing SROI....

And within for profit firms there continues to be a great deal of progress made in developing the metrics companies may use to track the performance of nonfinancial (read: social and environmental value) within their companies... which to me sounds erily (spelling!! It's 6AM!) familiar to the process you've undergone at Rubicon to develop (guess what?) a social management information system to track what is taking place within your programs and enterprises....

THIS is why approaching these questions not from a silo but from a perspective that looks at the "cross cuts" such as metrics or capital makes so much sense to me.... The specific application will surely differ, but the fundamental challenge remains the same whether one is within a for-profit or nonprofit, or any other "cut" one may make....

The for-profit space has got to figure out how to make capital and operating decisions with reference to these "new" performance indices in the same way the nonprofit sector attempting to....

and it will all take a number of years yet, so I actually think we are right on track with this process.

Hopefully yours,

Jed

Jed Emerson - Mar 25, 2004 6:22 am (#22 Total: 70)
Senior Fellow, Generation Foundation (London)


Hi, Dave! I wonder if you've looked at the book by Gretchen Daly (editor) on "Nature's Services" that explores the contribution value of the environment to human systems and economics? Or some of the frameworks presented by Marc Epstein in his work on environmental performance indices for companies? Tracking the links between environmental and social elements of value creation are some of the most promising areas, since with the EPA regs coming in place over 30 years ago, we actually have some promising work---and a good base to build upon...

What do you see, in the context of your specific work, as the links between the various forms of value you are creating with your Fund?

Inquiring Minds....!! best jed

Michael Chertok - Mar 25, 2004 6:52 am (#23 Total: 70)


It's great to see the electric current of social entrepreneurship flowing!

If you are just joining our conversation, don't be shy to just jump in and introduce yourself and your organization. It's really OK if you haven't read ALL the previous posts.

As Rick pointed out, our discussion so far has had a track around financing...and another around measurement and metrics. Please feel free to continue sharing your ideas about this, but remember that over the next several weeks, we'll have an opportunity to focus in-depth on both of these areas, as well as on regulatory and policy issues.

In this conversation, I want to challenge you to do some "silo-busting". Tell us about some of the work you are doing right now that you would like to hear others perspectives on...

sjordan - Mar 25, 2004 9:06 am (#24 Total: 70)
US Chamber of Commerce CCC


I'm executive director of the US Chamber of Commerce Center for Corporate Citizenship, and this discussion is very important for our work. The US Chamber is the largest business association in the world representing over 3,000 state and local chambers, 900 vertical business associations, 90+ American Chambers overseas, and give or take 3 million businesses. The CCC is a 501c3 not for profit housed in the Chamber, and we're supposed to do three things: (1) understand, capture and communicate the social contributions that businesses make, (2) help companies and chambers of commerce by identifying tools, experts, resources, and partners that can help them make their social initiatives more effective, and (3) understand and work with key leaders to maximize the benefits and minimize the costs of how public policy affects corporate citizenship and vice versa.

The BV discussion could be an important tool informing the CCC's voice, resource, and policy functions. so we're big fans.

Some of the recent feedback that we've gotten related to this discussion is as follows, and it might be useful because this comes from folks who are not necessarily experts, but are grappling with these issues viscerally in their companies (don't shoot the messenger):

(1) we have a language issue...when I start talking about some of this stuff I get this reaction: "I don't understand a word you are saying." We need to simplify some of these concepts and "unpack" them.

(2) "How does this relate to my business? Can you make it so that capturing these costs/benefits will lower my taxes in the long run or improve my productivity? Give me good PR? Make people like us better? What's the payback and how would you price it given our limited budget?

(3) (this one is actually an old comment: "why can't we just create a P/E ratio for nonprofits, some baseline gauge that can help us compare apples to apples? If you can help us compare food kitchens to homeless shelters, food kitchens to food kitchens, and tell us how the food kitchen is doing over time, that would be great. My CEO doesn't care if it relates to the business directly, he just wants to know that we are making a difference in our community."

This is the kind of stuff we get, so the answers this discussion generates are going to be very helpful.

Just for kicks -- how would you go about calculating the BV of this exercise?

Regards,

Stephen

dcisme - Mar 25, 2004 9:37 am (#25 Total: 70)


Greetings, Donna Callejon, of GlobalGiving here. Bob refers to something we are building called the GlobalGiving Alliance -- a way for corporate and other entities interested in social and economic development around the world to come together to identify and pilot new solutions that support social entrepreneurs and their projects around the world. HP and Visa "get it." What is "it?" That an integrated strategy for global engagement - integrated among business development, marketing/PR, philanthropy and employee engagement (giving, volunteering etc)- brings companies tangible benefit to all three bottom lines!

mmorino - Mar 25, 2004 10:04 am (#26 Total: 70)
Chairman of Venture Philanthropy Partners


Hello again. Seems like the discussion level is picking up and there are some excellent views being shared. With respect to the linkage between performance (metrics) and capital flow, I'd add in another wrinkle. Jed spoke of how the capital markets matured and benefited from things like GAAP and FASB, as they provided a means to assess the financial health and risk of organizations for public and private investors. In a discussion with Tom Tierney of Bridgespan, when we were talking of the importance of organizations being able to convey their results (outcomes), he suggested that a major impediment to donors was the inability to assess the risk related to the organization itself, primarily in terms of financial health. As the group discusses the issues of accountability, one area that could be further explored is a more rigorous look at the reporting requirements for nonprofits so that they would be more forthcoming with regard to the organization's financial performance and health. Be interested if folks are aware of efforts that focus on this issue or examples of better ways for such reporting. Mario

David Rankin - Mar 25, 2004 10:10 am (#27 Total: 70)


Thanks for the thoughtful questions Jed.

I am familiar with "nature's services" and will in fact be talking to Gretchen on a similar issue next week. I have a bunch of methods questions about that work. Not to belabor it here, but I have problems with "cost accounting" methods of determining value.

Our issue, as you know, is a bit different.

Our grantees have prevented the release of thoudands of tons of pollutants, restored thousands of miles of rivers, created intellectual property that will improve the health of coastal resources world-wide. They have worked very hard to measure the ecological improvements they have created. (We drive them more than a little crazy by puching for real outcome measures, and most fall short in one way or another of developing and measuring them).

The value we help create sorts into three big b

David Rankin - Mar 25, 2004 10:29 am (#28 Total: 70)


(my computer decided I was done and sent an incomplete response)

The value we help create sorts into three big "buckets." Financial capacity, project outputs and ecological change. Financial capacity is the easiest to understand- it is our grant and PRI dollars, and matches up with our recipients financial statements. Project outputs are often, but not always, a bit less tangible. These include new information, new intellectual property (patents, copyrights, trademarks and trade secrets(that we don't allow to be kept secret!)), and so on. This "bucket" can include reduced pollution levels, "protected" property, new management practices over acres of land or miles of river, and so on. The last category beneficial "ecological change" is what we seek to maximize. It is also the hardest to measure. Examples here include improvements to the health or number of native biota, increase plant diversity and abundance, or improvements to the extent of threatened natural communities.

The links between the "buckets" for a project are a measure of the project's efficiency like RONA, EVA, ROI, etc.

The links between projects are a measure of the strength of our portfolio- like alpha in a multi-factor CAPM.

The barrier is the lack of common measure for ecological change, and very little intellectual underpinnings for scale considerations (especially time- read discount rates).

So I'm here shopping for ideas.

Thanks for the chance to share.

David Rankin VP Programs Great Lakes Protection Fund www.glpf.org

rick@rubicon - Mar 25, 2004 12:08 pm (#29 Total: 70)
Rubicon Programs


So here is the challenge from this practioners perspective. I think Jed is right, we are making progress: There is some recognition that blended metrics matter and we have to keep working at getting them into more practical tools. Sally is also right that in the current world we still rely on "reputation accounts" to value worthiness. I think of this as the same dillema going on in medicine. The genome project will eventually yield the answers to how to best treat virtually every biological challenge. But medicine has to do act every day, make decisions, value judgements without such a Rosetta Stone. In Social Entrepreneurship, BVMP we are now at day two of the Genome Project, Thanks to Jed, Provinex, REDF, ( also urge folks to look at the summary of measurement tools that Will Rosenszweig Cathy Clark, Sara Olson et al have put together) have skeletal outlines and possible maps to point us towards a "cross cutting tool"

But no tool or even consensus exists yet, and in the meantime every day practioners have to take action and investors have to make bets. I think the best bet still remain with the best entrepreneur rather than the newest great idea.

Timothy Freundlich - Mar 25, 2004 12:19 pm (#30 Total: 70)
Director, Strategic Development, Calvert Social Investment Foundation


I do think that the issue of applying time to the equations and calculi is an important one. It's almost the opposite of the traditional financial world's discount rate. It is additive, in that the ripple effects of social value creation compound over time. The dollar invested in impact creation today actually increases over time. In some cases, by multiples, if not exponentially. A fix at the root cause level today, can save 10x or 100x in the future of damage control investments. This becomes a Premium Rate for Net Present Value calcs (in SROI and FROI terms). Jed, seems to me you've written a bit about this line of thinking, have you not?

chetski - Mar 25, 2004 12:30 pm (#31 Total: 70)
Global Greengrants Fund


How can we mitigate against the problem that an over emphasis on metrics can inadvertently skew goals and create a risk aversion that can then 'dumb down' vision and goals to insure that; A. things are measurable, and B. modest goals are set to guarantee that the goals are met.

Should the 'skew effect' of metrics be measured too?

Chet Tchozewski

Global Greengrants Fund

Cindy Cooper - Mar 25, 2004 2:57 pm (#32 Total: 70)
Speak Shop


Hi everyone, I'm taking Michael Chertok's invitation to jump in and introduce myself and Net Impact. I oversee Net Impact's Membership Program. Net Impact is an international network of over 9000 MBAs and business and nonprofit professionals "committed to using the power of business to create a better world." As such, our members share a common interest in blending business and social values, but individual paths expressing this common interest vary widely. NI members can be found in all sectors. It's very useful for bridging silos and sometimes challenging for defining program activities. Because Net Impact also has a network of local chapters (at bschools and cities across the world), the localized interpretations of what Net Impact is and who we support also varies. Many chapters embrace the umbrella, cross-sectoral model. Others have specialized their activities around a specific sector. There is a natural tension between specialization and a generalist approach.

Oz - Mar 25, 2004 5:21 pm (#33 Total: 70)
http://www.call4tech.com/np


I wonder reading thru this whether Blended Value becomes too blended and makes roi and sroi become even more opaque than it is and too complex that it really isn't..

Kinda like losing the chunks in the guacamole, then looks more like green paint and loses it's taste and character,therefore appeal.

Being a network guy I spend all day building bridges albeit virtual but I spent just a much time using the bridges to stop what I call duplicity by duplication. To assist NPO's in sharing common resources and help stop overlap. Taking the technology from one org to another. One example is bar code card system I have developed for one pantry that in time can by used by other service organisations. So folks don't have to fill out a gadzillion forms each step. Save time tree and people's sanity.. But in the longer term it's subtle way via technology to get the partners to think stuff out . So when change may happen they (hopefully) think about the results of the other partners. So down the road descions will be made based on both parties needs which means the results will be better for the clients and in the end thats who we all work for. It's very small step given the magnitude of the stuff many of you talk about however I see it equally important.In the end if we don't support the clients we have failed.. So when you hear me raging on about the clients, know you know why.. Most clients are in a messy blender already called life and to crank up the blender speed a couple of notches does nothing .. We need to get the clients OUT of the blender called hunger despair and homelessness.

FYI I consider the NPO's I serve my customers , their clients become my clients .. In the end my goal is to serve the clients...

I have attached a jpg of the way the data flows and you can see how thats it becomes a silo buster .

Sorry about the geeky stuff but thats what I do.

Thanks all for this great forum and I will be watching to see how I can make all the stuff work with some technology..



oz

Attachments:

HS_dat_flow.jpg (71 KB)

Sheila Bonini - Mar 25, 2004 6:03 pm (#34 Total: 70)
Hewlett Foundation


First of all, this has been a great discussion so far! Thank you all for all the thoughtful comments. I noticed a lot of interest in the topic of metrics and hope that all of you will join us in the beginning of May when we drill down into that topic.

Rather than put off the discussion, however, I wanted to add a few observations and reply to both Chet's and Tim's postings. Chet makes an important point when he talks about the issue of pursuing what is measurable at the risk of comprising our vision or mission. Tim also makes an important point when he talks about pursuing fixes that address the root cause level, but it is very difficult to measure an individual organizations contribution at that level. So, how can we ensure that we are addressing the root cause level and still have modest goals that are measurable?

I won't pretend to have the answer to this question, but think that how we approach the problem is very important. If we begin by asking what is measurable, we will never get to the big picture. We must begin by asking how do we want to change the world? If we begin with a macro theory of change about how we are going to change the world (what activities will lead to the ultimate changes that we want to affect) we can work our way down to our specific organization or program's activities as a part of that big picture. Then we can ask, What parts of the theory are proven? What is assumed? What outcomes are measurable? How can we track or communicate those that are difficult to quantify?

sjordan - Mar 26, 2004 10:15 am (#35 Total: 70)
US Chamber of Commerce CCC


I wanted to build on Sheila's comments about the macro theory of change -- getting a good answer to the wrong question can be very counter-productive, but on the other hand, I think this is an organic discussion that is going to make progress through trial and error.

What I would like to see is how we can make this conversation more concrete. For example, some companies have very narrow programs, but there are others who are into housing, food, education, literacy, community safety, blood banks, health services, etc. They are basically portfolio managers for their company's social investments. Now some folks in this discussion are very down on the silos, but couldn't it make sense to explore both a macro top-down approach, and a micro, silo-driven approach as well? The housing folks have some very concrete metrics, so do the education and workforce people, etc -- we have to have tools for the specific social investors as well as for the portfolio managers.

So I don't think we're ever going to get just one answer, but I don't think we should try -- financial investors have at least three types of financial statements with multiple permutations to base their decisions on, so maybe one model we should look at might look something like this:

A social investment statement that helps investors compare across social sectors

A social investment statement that helps investors compare specific performance metrics within a social sector

A social investment statement that helps investors analyze performance of the individual organization over time.

I am sure there are other (and probably better) ways to organize information, but this is a cut that seems fairly simple and straightforward, and I think another thing that will be important is that we develop tools that are fairly accessible to lay people.

It only makes sense to have multiple decision tools, because individual investors are going to have different investment parameters and social objectives that they want to achieve, and there is no single currency or silver bullet metric to capture all of it, and I suspect it's probably a good thing in a pluralistic society that different folks have different objectives. It would be a shame if we channeled everyone into only one kind of way of thinking because of how we structure this question.

So I guess at one level, a key part of the debate is: do we focus on creating "open" rules that apply no matter what social values people bring to the table, or do we try and achieve consensus about a specific theory of change and society? Or is it possible to even "blend" some of these different user needs?

AlisonWise - Mar 26, 2004 11:05 am (#36 Total: 70)
Sea Change Sustainable Business Interest Group


Great discussion. I wanted to introduce myself and the two organizations I am currently working with, which are in many ways attempting to recongnize and leverage the concept of blended value. The first is Sea Change Sustainable Interest Group (www.scsbig.org), a non-profit 501c-6 organized to lobby on behalf of policies that will give sustainable business a competitive advantage (unlike non-profits that, unfortunately, are hampered by their IRS designation from political activity). We are tackling some systemic problems, such as subsidy and tax shifting to create better market information and to internalize the externalized costs currently carried by the public.

The second is Future 500, a non-profit working with Fortune 500 comapnies on stakeholder engagement and triple-bottom line (or perhaps blended value bottom line?) issues. We have developed a system for stakehoklder engagement that works towards practical and effective ways to create solutions that work for stakeholders from a wide and sometimes divergent set of interests.

So, to borrow language, I think the best way to go about answering the question Sheila asks about "How to change the world?" it is always good to look for those "upstream solutions." What changes can we make that will have systemic implications? It is why education is so important, just as it is why having the right sort of economic indicators in place is critical. Towards that end, metrics that can be applied to processes that are "upstream" as opposed to just measuring downstream outcomes I think would be potentially exponential in their capture of good information and in turn changes that could be made. So, measuring or surveying decision-making policies at corporations and government instead of just the outcome of those decisons as an example.

Attachments:

photo-alison.jpg (9 KB)

annwrixon - Mar 26, 2004 11:13 am (#37 Total: 70)
Institute of Computer Technology (ICT)


Tim,

I could not have said it better. I am also very much looking forward to the "Capital Challenge" discussion in April. I think we have taken blended values as far as they can go right now. For at least the last decade all of the non-profits I have worked for or been associated with have moved into blended value relationships across silos, but the biggest challenge remains the lack of a capital marketplace for investors.

The challenges in developing a capital market seem overwhelming to me, but I know there is solution and hope there are enough smart people on social edge to start figuring it out.

I am worried that there is no substitute for a dollar. In fact, in my experience working in blended relationships with corporations ultimately that is what is measured (in some very imaginative ways, sometimes). This is not to take away from the sincerity of the work. These were very committed individuals and companies, but their capital markets only evaluate them on what they add to the bottom line so what other measure can we use that matters? (really only a rhetorical question.

annwrixon - Mar 26, 2004 11:22 am (#38 Total: 70)
Institute of Computer Technology (ICT)


Steve,

I must quote you, "I want to be able to point to tangible evidence of how I was able to apply the principles of blended value in my organization, or how a new partnership was formed as a result of the interactions here on line."

ME TOO

I forgot to introduce myself. I am the Executive Director of the Institute of Computer Technology (ICT). ICT trains teachers to integrate technology in the classroom worldwide. We manage teacher education initiatives for several global corporations. We are based in Sunnyvale, California.

Ernie Ting - Mar 26, 2004 12:38 pm (#39 Total: 70)
est/a


hi Alison-

I'm intrigued by what you're trying to do with Sea Change, in essence rewarding businesses for sustainable practices by ensuring that social impacts become financial impacts... It seems to be a specific example of the great potential of including government players in cross-sector collaboration, as I suggested and Mario echoed earlier in this discussion.

A lot of the comments here have touched on the puzzle of how to get businesses (as philanthropists and in their core operations) interested in blended value measures -- when the $$$ bottom line seems to be inescapably dominant for most of them. I do think that bringing public sector partners into the mix is a very powerful way to make BV compelling for the majority of business execs.

The fact of the matter is that almost all large business markets are already substantially "tilted" one way or another by imperfect competitive conditions and the patchwork of existing tax, fiscal and regulatory policies. Reflecting those conditions, all business strategies then flow "downhill" to seek growth, greater profits and enhanced returns on investment. If you are able to alter the tilt of the table -- even a little -- by incorporating BV interests in public policies, you can get a huge impact on the conduct of business actors and make it much easier to get their attention to social objectives and measures.

Ernie

AlisonWise - Mar 26, 2004 1:36 pm (#40 Total: 70)
Sea Change Sustainable Business Interest Group


Hi Ernie-

Yes, "tilting" as you say is one way of putting it, though perhaps "leveling" might be a better way of describing what we see as a way to create better information in the marketplace. The idea of tilting suggests to me taking one regulatory or legislative unfair advantage and replacing it with another. We like to think our policies, by virtue of the recognition of both the public interest and market factors, are designed to create a transparently equitable infrastucture that rewards businesses who profit from a long term vision of said profitability by working within the parameters of environmental sustainability.

annwrixon - Mar 26, 2004 2:42 pm (#41 Total: 70)
Institute of Computer Technology (ICT)


Alison and Ernie,

This is so interesting. I agree that leveling through regulation and legislation is one way to go. The Clean Water Act and Clean Air Act seem like great examples of this.

My concern is that in my experience this did not set up blended values. It is true the Clean