All Things Impact.

private capital & the public good

All Things Impact 2016.14: “the best solutions don't always come from white guys in Silicon Valley”

Brian WalshComment

Hi friends,

Welcome to All Things Impact, a newsletter of interesting things I've seen from across the spectrum of impact:effective philanthropyimpact investing (in the private markets), responsible investing (in the public markets) and awildcard topic. For previous posts, to subscribe, and for more information, please visit All Things Impact.
Here are four links worth your time (plus the All Things Impact Calendar):
1. Effective Philanthropy: inside the room where it happens
The way that most philanthropic funding decisions get made can seem like a black box to those outside the process. Just because this is normal doesn’t mean it has to be the norm. My colleague on the Fund for Shared Insight, Chris Cardona of the Ford Foundation, offers the “deleted scenes” of how our recent draft RFP - opened to public comment - became a final version. He blogged about this at TransparencyTalk (the Foundation Center’s blog for its GlassPockets initiative).

“Shared Insight is a funder collaborative working to improve philanthropy by increasing foundation openness – i.e. sharing our goals, strategies and failures; listening and engaging in dialogue with others; acting on what we hear; and, sharing what we have learned…we developed a draft request for proposals (RFP), and decided that we should model the behavior we hope other funders will adopt by publishing the draft online, and inviting anyone to comment…we were honored to receive 18 pages worth (!) of feedback…

The upshot of this feedback is we’ve produced an RFP that we hope is more streamlined, more straightforward, and more direct. We added several more examples of the types of projects we’re interested in funding, and we made our definition of openness much simpler, without a framework. The process of gathering the feedback was tremendously informative, and we deeply appreciate all those who contributed their time and wisdom to this effort. We hope the result was worth it – and that in the end, we’re able to fund even better projects that advance foundation openness.”

2. Impact Investing: “the best solutions don't always come from white guys in Silicon Valley”
In Inc. Magazine, (h/t Jamie A.) Kelly Hoey writes about Village Capital, the “venture development organization that finds, trains and funds entrepreneurs working to solve global challenges.” According to Executive Director Ross Baird, “the way we currently support entrepreneurs as a society unfortunately funnels a ton of dollars into the hands of a very small amount of people, who work in a few U.S. states, and went to a handful of schools, and they're investing in people who look like them. As a result, the innovations we're seeing aren't relevant to the majority of people.”

“Village Capital recognizes that one startup or a single innovative technology is not going to solve the problems of the world's unbanked…the point…is not to find a single silver bullet to the challenges of financial inclusion--rather, it is on finding and honing a large number of really good lead bullets to solve specific, targeted sub-issues within the greater problem of financial inclusion.

What can problem-solvers, game-changers and visionary investors learn from Village Capital's social impact entrepreneurs? Dustin Shay offers the following 3 suggestions:

Social Good and Profit Are Not Mutually Exclusive. Some of the best solutions to critical problems are actually for-profit. There's a limit to the amount of philanthropic money in the world, and it won't be enough to solve every major problem. We need to leverage the power of entrepreneurship if we're going to create self-sustaining solutions that can grow and scale to move the needle in a meaningful way.

The Best Solutions Don't Always Come From White Guys in Silicon Valley. The prevailing thought process is that Silicon Valley is the only place innovation happens (75% of venture capital is deployed in Boston, New York, and San Francisco). Further, venture capital has an inherent bias in favor of people who look like them. Entrepreneurial innovation is present everywhere (95% of the entrepreneurs Village Capital supports DON'T come from Boston, New York, or San Francisco) and to solve challenges for specific communities we need to find the entrepreneurs within those communities.

Everyone Can Start Something That Can Make a Difference. "If not now, then when? If not us, then who?" If you approach problems from an entrepreneurial perspective and realize that these issues aren't going to solve themselves, you can make an incredible difference. Everyone's viewpoint is necessary when it comes to starting an organization - money is certainly not the only thing entrepreneurs need. If you're not starting something yourself, getting involved and offering honest, direct, actionable feedback is a great way to support many entrepreneurs solving critical issues.”

3. Responsible Investing: Yale’s $25.6 billion endowment confronts climate change
My working model for how responsible investing will become even more mainstream is if enough asset owners (or asset stewards) put pressure on enough asset managers, then those managers will invest in companies (and other assets) while acknowledging externalities, minimizing harm, maximizing impact, and generating as much risk-adjusted financial return as possible.  

A few years ago students concerned about climate change at Yale organized and convinced the University - an enormous asset steward with an endowment of $25.6 billion - to require the outside asset managers who invest their money on their behalf to reduce the climate change risk in their portfolio. Now, 18 months later, the CIO David Swenson is declaring success in an open letter to Yale Community.

Dialogue with external asset managers has resulted in “more thoughtful consideration of investment opportunities, higher quality, and lower risk portfolios for Yale, and better environmental outcomes.”

"[Yale] has incorporated into its investment process pointed engagement with Yale’s external managers on the topic of climate change. Although public scrutiny has focused on investments in fossil fuel producers, the Investments Office approaches the climate change issue more broadly by considering any exposure with risk related to climate change and potential regulations aimed at reducing emissions. That consideration includes, for example, asking managers about the implications of climate change when evaluating farmland acquisitions in southern locations or pushing our partners to consider the risks of owning lowlying coastal real estate…

The Investments Office believes the risks of climate change, like any risks, should be incorporated in the evaluation of investment opportunities. This is not an easy, straightforward task. However, initiating and continuing a dialogue with our managers about those risks result in more thoughtful consideration of investment opportunities, higher quality and lower risk portfolios for Yale, and better environmental outcomes.

4. Wildcard: “Evolutionary Cognition” & How Animals Think
Alison Gopnik writes in The Atlantic about a new way for humans to learn from nonhuman minds.

“The study of animal minds was long divided between what are sometimes called “scoffers” and “boosters.” Scoffers refused to acknowledge that animals could think at all: Behaviorism—the idea that scientists shouldn’t talk about minds, only about stimuli and responses—stuck around in animal research long after it had been discredited in the rest of psychology. Boosters often relied on anecdotes and anthropomorphism instead of experiments…

Psychologists often assume that there is a special cognitive ability—a psychological secret sauce—that makes humans different from other animals. The list of candidates is long: tool use, cultural transmission, the ability to imagine the future or to understand other minds, and so on. But every one of these abilities shows up in at least some other species in at least some form…

A better way to think about other creatures would be to ask ourselves how different species have developed different kinds of minds to solve different adaptive problems. Surely the important question is not whether an octopus or a crow can do the same things a human can, but how those animals solve the cognitive problems they face, like how to imitate the sea floor or make a tool with their beak. Children and chimps and crows and octopuses are ultimately so interesting not because they are mini-mes, but because they are aliens—not because they are smart like us, but because they are smart in ways we haven’t even considered. All children, for example, pretend with a zeal that seems positively crazy; if we saw a grown-up act like every 3-year-old does, we would get him to check his meds.

Sometimes studying those alien ways of knowing can illuminate adult-human cognition. Children’s pretend play may help us understand our adult taste for fiction…We human beings tend to think that our social relationships are rooted in our perceptions, beliefs, and desires, and our understanding of the perceptions, beliefs, and desires of others—what psychologists call our “theory of mind.” In the ’80s and ’90s, developmental psychologists, including me, showed that preschoolers and even infants understand minds apart from their own. But it was hard to show that other animals did the same. “Theory of mind” became a candidate for the special, uniquely human trick."

5. All Things Impact Calendar
Here are some events I'm keeping an eye on. Please send me any I should add to this calendar.

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

May 25 Venture Jobs Prosperity Conference (Rochester, NY) Impact Investing

June 7-8  Social Innovation Summit (DC) Various

June 13 GrantStation Forum on Philanthropy (NYC) Effective Philanthropy

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 dog's owner projecting a theory of mind onto his pet). 

Until next time, thanks for reading!

Brian Walsh
Head of Impact at LiquidnetFull Bio.