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Tim Draimin

Mayor rolls out finance options for nonprofits | Crain's New York Business - 0 views

www.crainsnewyork.com/...110619868

social finance bonds nonprofits

shared by Tim Draimin on 21 Jun 11 - No Cached
  • Mayor rolls out finance options for nonprofits A new bonding authority would extend low-cost, tax-exempt financing for nonprofits' expansion and facility upgrades.
  • Mayor Michael Bloomberg, who has long been considered a patron of nonprofits, took steps on Thursday to unleash the growth potential of that community by announcing the formation of a new entity committed to helping the city's 501(c) organizations gain access to low-cost, tax-exempt financing to expand or upgrade facilities.
  • The New York City Industrial Development Agency, which previously issued tax-exempt bond financing on behalf of nonprofits for various capital projects, has had its hands tied, unable to do that job since its authority was rescinded by the state Legislature in January 2008.
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  • In the interim, nonprofits seeking to grow their operations have been stuck in a state of arrested development.
  • Elizabeth Berger, president of the Downtown Alliance, which supports economic development in lower Manhattan, welcomed the mayor's announcement as a necessary step in enabling nonprofits to play their part in promoting the city's economic vitality.
  • “New York City is home to tens of thousands of nonprofits that are looking to expand, create jobs or move into new facilities, but for the past few years they have faced more expensive financing costs, while some have had to forgo expansion altogether,” Mr. Bloomberg said, in a statement. “This new entity will make it easier and more inexpensive for our critical nonprofit sector to grow and expand.”
  • While the city's nonprofits don't enjoy quite the same cachet in terms of revenue-generating potential as either financial services or leisure and hospitality, the group exceeds both sectors with respect to employment. While the other sectors employ approximately 434,000 and 320,000, respectively, the more than 42,000 health, human services and cultural nonprofit (HHSC) organizations throughout the five boroughs support approximately 470,000 employees, according to the mayor's office. That sector is the largest private employer in city—employing more than 15% of New York's non-governmental work force.
  • According to the mayor's office, more than 13 organizations have gone to out-of-state funding sources for assistance in financing capital projects totaling more than $337 million since June 2009. The administration also estimates nonprofits have at least 20 shovel-ready capital projects stuck in the development pipeline with a combined price tag of more than $400 million.
  • “At a time when many not-for-profits are struggling to make ends meet amid the nation's fiscal woes, this new issuer will serve to strengthen and support an increasingly important sector in our city's economy,” Ms. Berger said in the mayor's office statement. “In lower Manhattan, not-for-profits represent a vital and growing sector, and this action recognizes their value.”
  • Capital projects and investment in expansion and facilities upgrades have been curtailed as the volatile economy takes a toll on nonprofits struggling to make up for reductions in funding support. “For over three years, nonprofits like ours have faced far too many obstacles in obtaining financing to grow and expand,” Sisi Kamal, chief financial and operating officer at the Friends Seminary School, said in the statement. “The ability to locally access necessary financing in an efficient and cost-effective manner would be a significant investment in the future of our organization and that of many others serving the residents of New York City.”The administration said the new entity, a local development corporation, will open in the next four to six months and that financing requests will be based on board approval. The five borough presidents, in conjunction with the comptroller, will be charged with nominating directors to serve on the board.
  • Tim Draimin on 21 Jun 11
     
    Bloomberg simplifies non-profit access to financing with new entity to help orgs gain access to low-cost, tax-exempt financing.
Tim Draimin

Honor the Stanford mission, be of value to society, urges Reich - 1 views

news.stanford.edu/...lassday-talk-reich-061111.html

social economy hybrid organizations social value

shared by Tim Draimin on 13 Jun 11 - No Cached
  • Honor the Stanford mission, be of value to society, urges Reich
  • Rob Reich, associate professor of political science, exhorted members of the Class of 2011 to use their education not just for personal gain but also to better society.
  • Reich is an associate professor of political science, faculty director of the Program in Ethics in Society and co-director of the university's Center on Philanthropy and Civil Society.
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  • The new social economy Segueing into his lecture, "The Promise and Peril of the New Social Economy," Reich promptly informed his audience that his talk would not be about Facebook or Twitter or other social media.
  • "Same name, different guy," he said. "For the political junkies among you, you will know what I mean when I say that while I am lesser in stature, I am greater in height."
  • After a short performance by the a cappella group Everyday People, some welcoming remarks by Howard Wolf, president of the alumni association, and an introduction by Provost John Etchemendy, Reich stepped to the lectern. He prefaced his lecture by offering his apology to anyone who thought they were going to hear a talk by "the other" Robert Reich, the diminutive Secretary of Labor in the Clinton administration.
  • "The exciting fact about the world that you graduates are about to enter is that there are many novel and innovative ways for people to do good." Rattling off some of the buzzwords associated with the new approaches, such as "impact investing," "venture capitalism" and "social return on investment," Reich acknowledged the enormous innovation and ferment that has been taking place. "This innovation brings along with it great promise," he said, "but also, I hope to show you, some real peril." Historically, he said, a flourishing democratic society is composed of three distinct sectors: the business or for-profit sector; the government or public sector; and the social or nonprofit and philanthropic sector, this last constituting the social economy.
  • "By 'new social economy,' I mean the broad new landscape of organizations that seek to produce social benefits," he said.
  • Blurring the lines But innovations of the past 20 years have broadened the social economy far beyond the world of nonprofit organizations and foundations, and the new social economy is full of hybrid organizations and philosophies.
  • In the for-profit sector there have been innovations such as "corporate social responsibility," in which corporations assume responsibility for the social impact of their actions.
  • And there is socially responsible investing, in which investment funds avoid industries embroiled in moral controversy, such as tobacco companies, or purposely invest in companies that produce social returns. Such funds barely existed 15 years ago, but now constitute more than 10 percent of professionally managed investment funds. There are nonprofit organizations that seek to create operations that earn revenue in addition to accepting donations, and "philanthrocapitalism," as The Economist dubbed it, in which philanthropists purposely employ business strategies in their grant-making efforts.
  • Government also acting
  • Even government is getting into the act, Reich said, with the creation of the White House Office of Social Innovation, which seeks to create new types of partnerships between government and the private sector, and between government and the public sector. The "Investing in Innovation Fund" of the Department of Education involved 12 foundations, including the Gates and Hewlett foundations, which contributed $500 million to the department to unlock $650 million in federal funds. "Now there's a genuinely novel idea," Reich said. "Foundations making grants to the federal government." Because of this blurring of boundaries between the traditional three sectors, the new social economy offers today's graduates a host of choices in "doing good." "If you aim to do good and pursue a social cause, you can be sector agnostic: It doesn't matter what sector – public, private, civil society – one enters," he said. "That is an amazing new world and quite possibly a brave new world."
  • Will it work? But innovation can also be perilous, as there is no guarantee that all innovations lead to positive social change, Reich pointed out. Hybrid organizations like social enterprises might seem great in theory, but in practice they must cope with a deep tension between the profit impulse and the social mission impulse. "Will profit overwhelm principle?" he asked. Reich said the 20th-century regulatory framework governing the old three-sector society will eventually prove inadequate for the cross-sector collaborations that are increasingly popular in the 21st. So, he queried, what does this brave new social economy mean for those about to graduate from Stanford? Citing the purpose of the university as set forth by Jane and Leland Stanford, "to promote the public welfare by exercising an influence in behalf of humanity and civilization," Reich called it "a beautiful, honorable and worthy mission." "As you commence the next stages of your life, remember this: Your education here has not been frivolous," Reich said. "It has qualified you for personal success, yes. But – not to put too much pressure on you – we adults are counting on you to solve the global financial crisis, to figure out the war on terror and to come up with the governance structure of the new social economy."
  • adamspence on 13 Jun 11
     
    Rob Reich, associate professor of political science, exhorted members of the Class of 2011 to use their education not just for personal gain but also to better society.
  • Tim Draimin on 14 Jun 11
     
    Commencement address on the expanding
Peter Deitz

An Alternative to the Social Impact Bond? - 1 views

socialfinance.ca/...tive-to-the-social-impact-bond

social impact bonds us

shared by Peter Deitz on 12 May 11 - No Cached
  • The human capital performance bond proposal differs from the more familiar social impact bond in three important ways: It is truly a bond.  The social impact bonds -- as used in the UK, explored by the Rockefeller Foundation and Nonprofit Finance Fund in the U.S., and profiled here on SocialFinance.ca -- are really equity investments where the investor’s capital is at risk. Consequently, rates of return can run as high as 14%. Not the case in Minnesota. Rather, investors are essentially guaranteed their money back and the rate of return is expected to be around 4%. The anticipated upside of this model is that a lower required rate of return means more organizations will be able to demonstrate economic value that beats that rate and thus allows them to compete for these new funds. The payment timeline is different. In the social impact bond model, organizations receive the cash upfront and must hit pre-determined benchmarks in order for investors to get their money back. With human capital performance bonds, the organizations (mostly nonprofits) carry most of the risk and are only paid if and when they achieve their goal. They would need to secure PRIs or patient capital to meet their interim cash flow needs. The incentives are different. Social impact bonds depend on investors engaging in a due diligence process to evaluate the likely effectiveness of particular social interventions. The model thus uses investors to create the market forces that purportedly will enhance the efficiency of resource flows. The human capital performance bond proposal, in contrast, does not give investors that role.  An intermediary (details yet to be worked out) would fill this gap.
Joanna Reynolds

Financial SCAN - 0 views

www.guidestar.org/...financial-scan.aspx

finance

shared by Joanna Reynolds on 30 May 12 - No Cached
  • Joanna Reynolds on 30 May 12
     
    Brought to you by: Assessing a nonprofit's financial health is time-consuming and challenging. Which metrics and trends should you focus on? How should you assess surplus size, revenue diversity, and financial stability? What's appropriate to look for when comparing organizations?
Joanna Reynolds

http://www.aph.gov.au/senate/committee/economics_ctte/capital_market_2011/report/report... - 1 views

www.aph.gov.au/...report.pdf

Australia nonprofit report

shared by Joanna Reynolds on 06 Jan 12 - No Cached
  • Joanna Reynolds on 06 Jan 12
     
    Development of a Capital Market for NPS in Australia
Peter Deitz

Academic webinar | Impact investing - 0 views

www2.gotomeeting.com/...260083282

pri webinar c3i

shared by Peter Deitz on 12 May 11 - No Cached
  • This webinar will take the format of a roundtable discussion. All participants are invited to consider a set of questions before the webinar and participate in an open discussion to be moderated by David Wood David Wood, Director, Initiative for Responsible Investment, Hauser Center for Nonprofit Organizations at Harvard University. The aim of the webinar is to generate a lively debate between academics, experts and practitioners around some of the key questions surrounding the concept of impact investing.
  • Peter Deitz on 12 May 11
     
    Co-organized by Tessa Hebb
Tim Draimin

Government gives out £81m to charities from Transition Fund - Civil Society -... - 0 views

www.civilsociety.co.uk/...ent_gives_out_81m_to_charities

big society bank tranisiton fund for Nonprofits social finance UK

shared by Tim Draimin on 15 Jun 11 - No Cached
  • Government gives out £81m to charities from Transition Fund
  • Finance | Vibeka Mair | 13 Jun 2011
  • The government has paid out a further £81m from the £107m Transition Fund to around 727 charities which are most vulnerable to reductions in public spending.
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  • To date £97.5m has been committed from the Transition Fund to more than 900 charities. Final awards will be announced later this summer.
  • The Transition Fund aims to help charities make the most of more opportunities to deliver public services and new sources of finance, such as capital investment from the Big Society Bank
  • Nick Hurd, minister for civil society, said: “All the charities receiving transition funds have a plan to overcome current challenges and emerge stronger. We recognise the hugely important contribution charities make to our society and we are committed to supporting them."
  • Tim Draimin on 15 Jun 11
     
    "The Transition Fund aims to help charities make the most of more opportunities to deliver public services and new sources of finance, such as capital investment from the Big Society Bank."
Peter Deitz

Social Entrepreneurs 2011: How a Business Can Change the World - 0 views

www.inc.com/...ness-can-change-the-world.html

socialenterprise

shared by Peter Deitz on 03 May 11 - No Cached
  • A special report on the innovative business models social entrepreneurs are inventing
  • special
  • In the pages that follow, we shine a light on this new universe of social entrepreneurship. First, we meet Fred Keller, the founder of Cascade Engineering, a $250 million Michigan plastics manufacturer, who recently turned his business into a B Corporation, the highest standard for socially responsible businesses. Then we investigate five more business models—and meet the entrepreneurs who have adopted them.
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  • An Eye Bank Bets on Best Practices SightLife, a Seattle-based nonprofit eye bank that extracts corneas from organ donors and distributes them to transplant centers around the world, is one of the largest such facilities in the U.S., with 96 employees and more than $14 million in annual revenue. It supplies nearly 5,000 corneas for transplant a year. But it wasn't always that way.
  • Peter Deitz on 03 May 11
     
    Inc Magazine covers social business. Have a look at the six articles the've just published.
Tim Draimin

Impact Capital is the New Venture Capital | Entrepreneur the Arts - 1 views

blog.entrepreneurthearts.com/...tal-is-the-new-venture-capital

social finance impact investing social enterprise

shared by Tim Draimin on 14 Jul 11 - No Cached
  • Impact Capital is the New Venture Capital
  • By Sir Ronald Cohen
  • Broadly speaking, capitalism does not deal with its social consequences. Even as communities grow richer on average, so the gap between the “haves” and the “have-nots” increases. For example, since the mid-1970s, both the USA and UK have actually become less equal rather than more equal. In the long post-war boom many governments did make significant headway in ameliorating the consequences of social inequality. This can be seen in levels of investment in areas such as health and in critical performance measures such as life expectancy. Nevertheless, governments, despite their best efforts and even in the best of times, have not been able to resolve all social problems.
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  • Commentators on one side of the political spectrum attribute this failure to the lack of resources available to the state and to the state’s reluctance or inability to act appropriately. Commentators on the other side attribute government’s shortcomings to the inherent inefficiency of the state itself. The truth is that the political process, which focuses on short-term gains, does not favor long-term, preventative investment of the type required to address major social problems.
  • The social sector, which is also called the voluntary, non-profit or third sector, has done its best, with the support of philanthropic donations and government, to address the social problems that fall through the gaps in government provision.
  • Some argue that the social sector’s problem is that it is significantly under-resourced. Others argue that the insufficiency of resources is in part a consequence of the sector’s reliance upon philanthropy — from foundations and from individual donors — that can be unpredictable. Both critiques may be correct: the social sector has a problem in accessing capital, often because of a lack of a reliable revenue stream, and, as a consequence, it is inefficient, especially in respect of building sustainable organizations, securing funding and utilizing assets to support large-scale activity.
  • Recent moves to make the social sector more efficient, by focusing on improvements to the management of both the donors and the recipients of grants, are an important development. The Bill & Melinda Gates Foundation applies rigorous criteria to the assessment of the performance of organizations in receipt of its grant funding. Michael Dell’s philanthropic work is similarly rigorous. Their goal, according to Harvard professors Robert Kaplan and Allen Grossman, is, essentially, “to find and fund the Microsofts and Dells of the non-profit sector.”
  • In fact, such moves are more necessary than ever, as deficit-ridden governments seek to pass greater responsibility onto the shoulders of the social sector. An example of this is the UK Coalition Government’s strategic objective to foster the “Big Society.” In essence, the Big Society agenda seeks to pass a significant portion of responsibility for social cohesion back to the community via the voluntary sector, and, at the same time, to confer greater legitimacy upon such community work and to provide incentives and support for it. However, the social sector as currently constituted is unlikely to be able to address the scale of the social need; or, to put it another way, to meet the scale of the social challenge.
  • This is where social entrepreneurs come in. We know that entrepreneurs create jobs and foster innovation. In that sense, they already make a substantial social contribution. But entrepreneurs have special qualities that could make a significant beneficial impact were they to be applied to social issues. The entrepreneurial mindset embraces leadership, vision, the ability to attract talented people, drive, focus, perseverance, self-confidence, optimism, competitiveness and ambition. To these one might add an appetite for taking informed risks, an unwavering focus on results, a willingness to take responsibility, a grounded sense of realism, astute judgment of opportunities and people, and a fascination with the field of enterprise in question. The engagement of entrepreneurs in the social sector, bringing in their wake high expectations of performance, accountability and innovation, could lead to significantly increased social impact.
  • Could the social sector be transformed to allow the emergence of entrepreneurs from within its own ranks and attract social entrepreneurs and capital on a large scale? The answer is yes, provided that we can create an effective system to support social entrepreneurship, by linking the social sector to the capital markets and introducing new financial instruments that enable entrepreneurs to make beneficial social impact while also making adequate financial returns for investors. Given these conditions, it is possible that social entrepreneurs and impact investors will significantly fill the gap between social need and current government and social-sector provision. Indeed, were social enterprise to achieve significant scale, it would transform the social sector and lead to a new contract between government, the capital markets and citizens.
  • In this process, charitable, institutional and private investors, attracted by the combination of social as well as financial returns, would bring into being a new asset class: impact investment. In a recent report, JP Morgan came to the conclusion that impact investments already constitute an emerging asset class: “In a world where government resources and charitable donations are insufficient to address the world’s social problems, impact investing offers a new alternative for channeling large-scale private capital for social benefit. With increasing numbers of investors rejecting the notion that they face a binary choice between investing for maximum risk-adjusted returns or donating for social purpose, the impact investment market is now at a significant turning point as it enters the mainstream… We argue that impact investments are emerging as an alternative asset class.”
  • This new asset class requires a specific set of investment and risk-management skills; it demands organizational structures to accommodate these skills; it must be serviced by industry organizations and associations; and it must encourage the development of standardized metrics, benchmarks and even ratings. As has been observed by the impact-investment firm Bridges Ventures in the UK, such an asset class should provide welcome diversification for capital markets: at times of economic stress, price-sensitive business models appropriate to lower income neighborhoods can prove more resilient and also find wider applications in the mainstream market as both margins and consumer spending power are squeezed.
  • Not surprisingly, politicians as well as academics, entrepreneurs and investors are paying increasingly close attention to these developments. In the US and in the UK, and now also in Canada and Australia, steps are being taken to provide social entrepreneurs with access to the same kinds of resources as business entrepreneurs. The USA’s Social Innovation Fund ($173 million) and the Investing in Innovation Fund ($644 million) are notable examples; as is the proposed creation of the UK’s Big Society Bank. In Canada, the Federal Government recently received the report of the Canadian Task Force on Social Finance, whose recommendations include requiring public and private foundations to devote a proportion of their funds to mission-related investments; clarifying fiduciary obligations so that pension funds and others can invest in social programs; introducing new financial instruments for social enterprise; and marshalling government support for social enterprise, directly through seed investment and business support services and indirectly through fiscal engineering.
  • How likely is it that such steps will succeed? In answering this question, we would do well to consider that the global economy faced a similar moment of challenge and opportunity in the 1970s and 1980s, when many of the most familiar names in the post-war corporate world started to decline and shed jobs, among them General Motors, American Motors, Courtaulds, ICI, Smith Corona, Olivetti, US Steel, Bethlehem Steel, Kodak and International Harvester. The question then was: what would take their place?
  • What took their place was a new wave of business enterprise helped by venture investing, mostly focused on high-tech industries. This is the wave that brought us Intel, Cisco, Oracle, Microsoft, Apple, Sun Microsystems and Genentech. The hi-tech wave has since swept the world, taking us into the embrace of Google, Wikipedia and Facebook and ushering in a communications and information revolution based on global access to information from multiple sources. It has thereby profoundly changed global culture.
  • Just as hi-tech business enterprise and venture capital, working in tandem, have attracted increasing numbers of talented risk-takers since the 1970s, so social enterprise and impact investment are now attracting a new generation of talented and committed innovators seeking to combine new approaches to achieving social returns. Social enterprise and impact investing, in short, look like the wave of the future.
  • About Sir Ronald Cohen Sir Ronald Cohen is chairman of Bridges Ventures and The Portland Trust. He chaired the UK’s Social Investment Task Force and the Commission on Unclaimed Assets and he is a founder-director of Social Finance. Until 2005, he was executive chairman of Apax Partners Worldwide LLP, which he co-founded in 1972.
  • Tim Draimin on 14 Jul 11
     
    Sir Ronald Cohen's overview of the emergence of the impact investing space, including references to Canada the Canadian Task Force on Social Finance.
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