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| − | =Mapping the Fourth Sector= | + | ==This page has moved to:== |
| − | ===[http://newshare.com/wiki/index.php/Fourthsector-background ABOUT THE GATHERING] / [http://www.eventbrite.com/e/mapping-the-fourth-sector-tickets-5035776142 DETAILS ABOUT FOURTH SECTOR] / [http://www.fourthsector.net/learn ABOUT THE FOURTH SECTOR]===
| + | =http://mediagiraffe.org/wiki/index.php/Fourthsector= |
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| − | ===Bill Densmore's running notes on "Mapping the Fourth Sector" summit at George Washington University on Thurs., Jan. 15, 2015. These notes are raw, in real time and subject to correction. This page will be updated as fixes and details are added and to format better.===
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| − | MORNING OPENING
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| − | ====GWU President Steven Knapp:====
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| − | *Students are already dreaming about creating fourth-sector businesses. "For many of our students, there is nothing surprising about crossing back and forth between for-profit and benefit enterprises ... they often see no contradition."
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| − | ====Chris Myer, panel facilitator:====
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| − | ====Joseph Firschein, Federal Reserve Board of Governors====
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| − | "We're consumers of this, we're just looking to learn as much as we possibly can." His remarks are his only. Why is fed interested in the topic.
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| − | *Make sure fed institutions comply with law, community investment act.
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| − | *Inform fed users about practics and products
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| − | *Advance public understanding
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| − | Want to identity issues that affect the low-income communities and convening. "There are folks here from all different kids of sectors ... we have a lot of expertise in the room. it is not just the presenters, there are alot of people I hope to hear from. "There is a lot of tlak about things like crowd funding, pay for success." Certification regimes -- B-corps and things individual corporations are doing. Impact goals.
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| − | Troubling things:
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| − | *"What is in and what is out as far as what a for-benefit is?"
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| − | *"To what extend are some things for benefit only and how do you distinguish them."
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| − | Hopes to tackle those and other questions.
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| − | ====Joe Cordes====
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| − | High interest on the part of students is absolutely real. Organized this quickly with student volunteers from the Trachtenberg School.
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| − | *What is a For Benefit corp: "It's a hybrid organization and what makes it a hybrid is it combines key features of a for-profit enterprise, the strategic objective to make good and services at a profit ... and a committment to achieve a social mssion of some sort."
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| − | Economits asks, what is the point of that: Think of the concept of signal, the idea of a non-distribution constraint developed by Henry Hansen. By calling itself a non-profit in the US the entity is signaling that any value it creates are going to be devoted to mission and not shareholder maximization. "That's an important signal." "Having that signal comes at a price and things an economist worry about is limitations on sources of financing for such activities." They are shut out of equity market and have trouble in debt markets.
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| − | What about a B-Corp -- should have wider access to a range of financing. But it has to confront the user forces of market competition, which forces a maximizing of private shareholder value. "The late Milton Freedman would have been rolling over in his grave at this type of a gathering."
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| − | Why has this peaked now? Economic growth is in areas "that lend themselves to a kind of blending with this kind of activity."
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| − | ====Elizabeth Boris, Urban Institute:====
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| − | Project to define, identify and create information about the Fourth Sector. It involves 170 volunteers. Calls it a "wonderful cacophony that we have been engaging in in the last 10 months."
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| − | ====Rajiv Joshi, Managing Direcdtor, The B Team ====
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| − | Declining ecosystmes, levels of inequality and poverty. World Bank estimates 4-6 degrees global warming by the end of the century. "Many of the challenges we face in the world today require a fundamentally different approach to solving them. ... How you you transform the ways that organizations, some of the biggest, can be changed. .... purpose of business is not to maximize quartelry returns but to transform environment .... we are building a movement of business leaders who are leading by example to try ot change their companies."
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| − | In Brazil, the first publicly listed B-corp is forming. "I think we are at the cusp of a real change we can all be inspired about. We are at a tipping point that we are heading toward."
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| − | *They are launching a Plan B for business.
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| − | ===Christopher Myer===
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| − | Who's in the room? Show of hands:
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| − | Policy makers, scholars, students
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| − | ===Heerad Sabeti overview of the fourth-sector concept===
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| − | (Slide deck link will be provided here later)
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| − | *The way we solved problems is growing economies and businesses. But the gap between solutions and problems is getting wider, wider and wider. "This is a downward spiral that is not getting us to where we need to go and what we need is a more systemic change. ... How do we solve all the world's problems at once?"
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| − | *One way to solve problems is to tackle them one at a time. Anotehr way is to imagine the world 20 years from now with all the problems solved. Take a look at that and work backwards. This is the "deconstruct the solution" approach.
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| − | **First layer -- individual change -- individual smake decisions with have systematic consequences.
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| − | **Second layer -- organizations -- change the way organizations are structured to support change.
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| − | **Third layer -- Support ecosystem -- Has to align with an organizational structure that aligns.
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| − | What do we know about the Fourth SEctor? "It is all very anecdotal."
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| − | "The assumption that all entrepreneurs are purely profit seeking is not true." To achieve the triple bottom line, the fourth sector shoudl be an integral part of all economic development.
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| − | ==SECOND MORNING PANEL== | |
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| − | Panel moderator, Kathy Calvin, president/CEO United nationsl Foundation, header, The B Team
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| − | *Victoria Bjorklund, has started a legal practice in exempt organizations.
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| − | *Jean Case, wife of Steve Case, has done work to democratize philanthropy. They have created a guide to impact investing.
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| − | *Ross Baird founded Village Capital -- invests in energy, ag, health care and financial inclusion.
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| − | ====Bjorklund====
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| − | It is not possible to form a limited liability company to do charitable work in New York State. "The secretary of state will block that if they know it is for a nonprofit." "We can't get the law changed. That is a really simple impediment."
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| − | Private foundations cannot hold more than 20% interest in for-profit company under U.S. law. "Is it time to consider about whether we want that." B Altman was 100% owned by a private foundation. The Readers Digest Association was owned 100% by foundations. We also have rules against "jeopardizing investments." Program-related investments are not jeopardizing investments, under IRS interpretations. She has given the IRS a list of appropriate program-related investments. "Lets unleash program related invested and mission related investing by private foundations and encourage them to have the courage to make the big bets."
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| − | ===Jean Case of the Case Foundation===
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| − | "We went into impact investing not so much as learners but not udnerstanding that a whole movement was emerging from it."
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| − | "We were big believes in the power of entrepreneurs and the power of business to change the world ... as we took the foundation forward we realized there was this thing around us calle dimpact investing and a few years ago we jumped in with both feet. ... .I think until we are at the finish line we should all declare ourselves learners..... this world is disuprted no matter what sector you are in. So in some ways it is a beautiful time to try and bring some order, some organization some structure to this space -- today we're calling it hte fourth sector." They spend a year going out in the field having small roundtable discussions, trying to understand what the issues are aroudn impact investing.
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| − | *They wrote: [http://casefoundation.org/resource/short-guide-impact-investing/ "The Short Guide to Impact Investing."]
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| − | "For too long business has been left at the sidelines in solving the worlds challenges .... we want to unleash the spirit of entrepreneurs."
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| − | ===Ross Baird, executive director, [http://en.wikipedia.org/wiki/Village_Capital Village Capital]===
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| − | The key insight Village Capital had was using entrepreneurs decide how to allocate capital. The y have 40 investments and they are outperforming the expert-selected investments by 40 times or more. "They hypothesis has not yet been nullified. This is really a creative way to help put money in startup companies."
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| − | ===PANEL Q-AND-A===
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| − | Calvin: Have moved to hybrid sharing of impacts and goals between for-profit and for-benefit.
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| − | Jean Case: A key to change is "reaching beyond your bubble." Thomas Edison was a great model. Having a table with diverse views. Case requires cross-collaboration. They like ot have a nonprofit, a public sector and a private sector partner. "Stunned at the insight" that comes from those three differnet points of views. THomas Edison called his groups "the muckers" and it really became a model for innovation. "At another level it it has actually been around for awhile." She is on the board of National Geographic Society. It is a brilliant model of a social enterprise. The parent is a nonprofit, that has a for-profit subsidiary that makes all the money and profit which funds work of the National Geographic Society. "At some levels we think this is all new, but some of these things have actually been around for awhile."
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| − | When new-media came along in the 1980s. National Geographic created a joint venture with Fox.
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| − | Calvin question to Ross: What areyou seeing in the marketplace -- structure change or narrative change.
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| − | Baird: He sees two really big trends:
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| − | *People udner the age of 40 -- where do people want to work. It's changing. Economist did a survey: Forty percent of people under 40 said they purpose of a corporation is to save the planet. "If you are a Fortune 500 company and you don't udnerstand how yuour business integrates with these values, you are going to lose your best employees."
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| − | "To call this a fourth sector is in some ways misleading because pepole in the ohter sectors who are ignoring this reeally getting left behind."
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| − | Bjorklund: When is it time to have change and a succession plan. The REaders Digest Association example. Born during the depression, with a monthly magazine, one article per day you could read. The owners, the Wallaces, believed in literacy mission served by the Readers Digest. They wanted to perpetrate ownership. Because of 1969 changes, they had to use a group of charities benfefitting their private foundations and 13 public charities. The charities that were benficiaries watched the value of Readers Digest stock go down because they were not in a position to force chnage at the operational level. In 2001, Elliot Spitzler came in in 2001 and said the stock had to be broken off, it was distributed to the charities who sold it off.
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| − | "As we think of structures reforming these entities we have to think of benchmarking and alos think of structures that can evolve with good business practices and not become dinosoars of the type that Readers Digest suffered from."
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| − | At the Robin Hood Foundation (public charity), have tried really hard to measure outcomes. There is a [https://www.robinhood.org/sites/default/files/2009_Metrics_Book.pdf Robin Hood guide to investing metrics.]
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| − | ===QandA from emailing in=== | |
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| − | Jean Case: Looking at opportunites in impact investing -- there is a new class of investors emerging -- many trillions of dollars that will transfer to a new generation in the next decade. The recipients of that weealth have exactly the proerties that Ross was talking about. "What they are asking: Why would you want to just settle for a financial return?" This new class of investors today don't have the portfolios to deploy "but we are already seeing in very signfinicnat ways their impact on the way their parents are investing and they way their grandparents are investing.
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| − | *A whole new class of entrepreneurs is emerging. "We don't want to jsut build companies that give return to shareholders, we want to build companies that give return to society."
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| − | It is early days, important to recognize there is a lot of potential before we change enaythingt o jump in and play a role.
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| − | Victoria Bjorklund: Today foundations can either make a program-related investment or a portfolio investment. Being forced to categorize is difficult for foundations.
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| − | Ross Baird: "Start with an issue first that you care about."
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| − | Jean Case: Intention, transparency and measurement. Had a meetign with a company that thinks it is an impact investing company but it isn't sure.
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| − | Bjorklund: Encourages many people to start as a for-profit and then convert to a non-profit. It is harder to go the other way. More flexibllity as a for-profit.
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| − | Kathy Calvin: What do you need in terms of data to get the job done?
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| − | Ross Baird: All of the people who are impact investors are going to ask about data, so you need to be ready. "It's aboslutely critical to start collecting data from day one."
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| − | Bjorklund: Robin Hood has about 150 grantees. In their first grant they list the statistical information they have to provide. "They tell us wow, we resented this so much it was really diffickult for us to do but now we can show empiracly what we ar edoing and we are getting funding from other sources, too." "We require convenings where you don't get to share your secrets about your work. .... this kind of sharign is a big change in operations for many standard organizations."
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| − | Jean Case: Social impact bonds. Excited aobut what it will do to bring rigor and data about effectiveness and efficacy in the public sector. We continue to fund things that show no efficacy year after year after year.
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| − | Bjorklund: "Rating and star" agencies don't have rigor.
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| − | Calvin: Do we need new institutions in that area?
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| − | "I think we need to empower some of the better ones that already exist."
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| − | Jean Case: If you compare this to the birth of venture capital. It was practiced before it was recognized. What built it up was it was heavily inflienced by a policy deciison that allowed pension fundions to partipicate. It was a few people who created that. "It would surprise me if we were seeing the same thing in this sector."
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| − | *Question from audience member Hazel Henderson, CEO and editor in chief of Ethic Markets Media (a certified B-Corp): "I want to really question the term impact."
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| − | Henderson: Say what you mean. Can you say positive impact? That's my big question.
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| − | Ross Baird: The first question we ask any entrepeneur we see is what problem are you trying to solve. "What are you being intentional about, how are you measuring it, when will you know you are solving the problem."
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| − | Jean Case: Intentionally is most important point. if you don't have that right you are going to measure the wrong things. You have to do it out front. Her point is that if you have a social impact, say what it is.
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| − | Audience quesetion: Amanda Brown from Independent Sector. Releasing ethic practices in good governance, focused on the charitable sector.
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| − | Victorial Bjorklund:
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