All Things Impact.

private capital & the public good

All Things Impact 2016.11: Perpetuity is a really long time

Brian WalshComment

Hi friends,

Here are four links worth your time (plus job postings and an All Things Impact Calendar of upcoming events):

1. Effective Philanthropy: rethinking foundation life spans
Perpetuity is a really long time. In the Chronicle of Philanthropy, Ray Madoff and Rob Reich explore whether foundation "endowments designed to operate forever provide the best approach for donors and society at large" referencing John Stuart Mill who wrote that it was folly to make "a dead man’s intentions for a single day a rule for subsequent centuries."

"[T]he world faces catastrophic risks, such as climate change, bioterrorism, and nuclear warfare. If humanity faces the possibility of extinction, what reason could be produced to warehouse philanthropic assets for a long-term future that might not exist? What’s more, faster giving in the near term might actually succeed in warding off these existential threats...

How should current philanthropists, as well as policy makers, weigh the interests of future generations? Are future generations best served by current saving or current spending? If foundations are to survive past the lives of their founders, what deference should the living owe to the preferences of the dead?"


2. Impact Investing: seeking liquidity in impact investing
As some keen readers noted, I didn't publish a newsletter last week. I was in The Hague for the Impact Summit Europe, where I was happy to speak about liquidity in impact investing alongside Laurie Spengler, CEO of Enclude (formerly known as ShoreBank International and Triodos Facet). Liquidity is important because in order to attract new investors to impact opportunities, they will need better assurance that they will someday see their capital again (ideally with a healthy return). Enclude was engaged by the Global Alliance for Banking on Values to create an open-ended fund structure which would allow for the liquidity needs of impact investors. The new vehicle, launched last year, is calledSFRE (pronounced "sapphire"), standing for  "Sustainability | Finance | Real Economies".  SFRE has so far raised $40 million but aims to raise as much as $1 billion over the next 10 years, to be invested in the "globally growing segment of banks focused on serving individuals and enterprises in the real economy."


3. Responsible Investing: investments in sustainability issues are shareholder-value enhancing
Materiality is a fundamental principle of financial reporting; it’s an acknowledgement that some information is important to investors in making investment decisions. According to SASB (the Sustainability Accounting Standards Board), “U.S. Federal law requires publicly listed companies to disclose material information, defined by the U.S. Supreme Court as information presenting “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”
 
Academics Mozaffar Khan, George Serafeim & Aaron Yoon have a new working paper on the economic performance of companies which perform well on material sustainability issues:

An increasing number of companies make sustainability investments, and an increasing number of investors integrate sustainability performance data in their capital allocation decisions.

To date, however, the prior academic literature has not distinguished between investments in material versus immaterial sustainability issues. We develop a novel dataset by hand-mapping data on sustainability investments classified as material for each industry into firm-specific performance data on a variety of sustainability investments. This allows us to present new evidence on the value implications of sustainability investments.

Using calendar-time portfolio stock return regressions we find that firms with good performance on material sustainability issues significantly outperform firms with poor performance on these issues, suggesting that investments in sustainability issues are shareholder-value enhancing. Further, firms with good performance on sustainability issues not classified as material do not underperform firms with poor performance on these same issues, suggesting investments in sustainability issues are at a minimum not value-destroying. Finally, firms with good performance on material issues and concurrently poor performance on immaterial issues perform the best. These results speak to the efficiency of firms' sustainability investments, and also have implications for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions.


4. Wildcard Topic: Does Cryonics Make Sense?
Tim Urban at the always-intriguing Wait But Why has a long post on the science and philosophy of cryonics. 

He begins his exploration skeptically, with the understanding that “Cryonics is the morbid process of freezing rich, dead people who can’t accept the concept of death, in the hopes that people from the future will be able to bring them back to life, and the community of hard-core cryonics people might also be a Scientology-like cult.”

After exhaustively researching and analyzing each piece of his initial framework, he concludes with the understanding that “Cryonics is the process of pausing people in critical condition, in the hopes that people from the future will be able to save them.” No matter your personal views on cryonics (or foundations existing in perpetuity, for that matter), his journey is thought-provoking throughout: 

“[T]his post has forced me to take a big step back—back to where I can see death not as a moment but as a process, back to where I can see the human lifespan as a product of our times, not our biology, and back to where I see the concept of human health spread out along the spans of time and where I can imagine how future humans will see our current times of helplessness in the face of biological deterioration.
 
From way out here, it hits you that we’re living in a phase—a sad little window that an intelligent species inevitably passes through, when they’re advanced enough to understand their own mortality, but still too primitive to save themselves from it. We grapple with this by treating death like a tyrannical overlord we wouldn’t dare try to challenge, not even in our own private thoughts. We’ve been universally defeated and dominated by this overlord for as long as we’ve existed, and all we know how to do is bow down to it in full resignation of its power over us…
 
Cryonicists view death as a process and consider many people who are declared dead today to still be alive—and they view cryonics as an attempted transfer of a living patient to a future hospital that can save his life. In other words, they view cryonics merely as an attempt to resist the overlord, no different than the way we view someone being transferred to a hospital in a different location which has better treatment options for their condition. Most of us, by contrast, view death as a singular moment, so we see cryonics as an attempt to bring a dead person back to life—i.e. we see cryonics as an attempt to defeat the overlord. When cryonicists see us cheer on a billionaire who fights cancer and shake our heads at one who signs up for cryonics, when they see us praying for someone in a coma and rolling our eyes at someone being vitrified—they see us being highly irrational.

Cryonicists view death not as an all-powerful overlord but as a puzzle to be solved. They see humans as an arrangement of atoms and see no reason that arrangement should have to inevitably deteriorate if our scientists can just get better at working with atoms. So for them, trying to defeat death altogether is an obvious, rational mission to undertake. But most of us view death as a fundamental fact of the universe—a mysterious and terrifying shadow that hovers over all living things and that only a naive fool would try to escape from—so instead of cheering on the people trying to solve the puzzle of death, we scoff at them and laugh at them, as if they’re too immature to come to peace with the inevitable."


5. Job Opportunities
Here are some impact related job opportunities that have come across my desk. Please feel free to send relevant openings, which I am happy to pass along.


6. All Things Impact Calendar
A new section to this newsletter, here are some events I'm keeping an eye on. Please send me any I should add to this calendar.

April 4-6  Global Philanthropy Forum (SF) Effective Philanthropy

April 6-7  Impact2 Conference (Paris) Impact Investing

April 8 – 12  Council on Foundations (DC) Effective Philanthropy

April 13-15  Skoll World Forum (Oxford, UK) Effective Philanthropy

April 26-27  Impact Capitalism (Chicago) Impact Investing

May 1-4  Milken Global Conference (LA) Various

May 2-4  Grantmakers for Effective Organizations (Minneapolis) Effective Philanthropy

May 4-5  Ceres (Boston) Responsible Investing

May 10-12  Mission Investors Exchange (Baltimore) Impact Investing

June 7-8  Social Innovation Summit (DC) Various

June 23 – July 2  Aspen Ideas Festival (Aspen, CO) Effective Philanthropy

Sept 6-8  PRI in Person (Singapore) Responsible Investing

Sept 13 – 16  SOCAP (SF) Impact Investing

Sept 26 - 28 ANDE Conference (Lessburg, Virginia) Impact Investing

Oct 9 – 14  Opportunity Collaboration  (Cancun Yucatan) Impact Investing

Oct 18  High Water Women (NYC) Impact Investing

Nov 3-5  Net Impact (Philadelphia) Various

Nov 9-11  Sustainable, Responsible, Impact Investing (Denver) Responsible Investing

Nov 16-18 Independent Sector (DC) Philanthropy

Dec 7-8  Global Impact Investing Network (Amsterdam) Impact Investing

That’s it for this week. Help me spread the word about #AllThingsImpact to your friends and colleagues, who can sign up to receive this newsletter at All Things Impact. Please also send me any compelling links you discover in your own journeys across the web (even things like this baby goat playing with a horse).
 
Until next time, thanks for reading!
Brian
 
Brian Walsh
Head of Impact at Liquidnet. Full Bio.