Jed Emerson — Liveblogged when he was at NYU

This is Jed Emerson. Those of you who aren’t aware of his work may want to do a quick Google search on the guy. Basically, he helped to start all of the discussion about “social return on investment” and “blended value”. You do a Google search on those phrases and you’ll find him staring right back at ya. He’s got a list of professional affiliations a yard long and calls himself a “professional fellow”. For myself, I count him as one of the people who helped to inspire me to do socialmarkets.org. Basically, Jed Emerson’s SROI and blended value together with Yochai Benkler’s discussion of the Internet, is about 75% of the intellectual DNA behind socialmarkets.org.

It was with great luck that we somehow managed to connect last week in New York. I was just this short of being star-struck. Oh yeah, it’s clear that I’m a nonprofit nerd. Anyway, I was invited to check him out at his talk sponsored by the NYU Reynolds Program in Social Entrepreneurship . I was intending to live-blog this but they didn’t have a Wi-Fi connection that didn’t have a paywall so I wasn’t able to. However, I have the slightly edited notes from the talk here. And as soon as the video is up, I’ll point you there as well. Enjoy. The “I” in the notes are paraphrases of things he’s actually saying during the talk.

Fall of the Roman Empire

making the argument that Empire was undermined from within

social entrepreneurs are the new barbarians from within

raising a whole new series of questions about capital and its relatioships

calling into quesiton many assumptions about govt, philanthropy, nonprofits, the poverty industry

there’s a huge line of people working on this issue

however, everyone is siloed

“I don’t care about philanthropy or nonprofit management”

There’s a bigger game that we need to be a part of.

I don’t have a real job because I don’t do boundary definition well.

I started to get into this stuff as social enterprise.

Paid to provide services but not actually do meaningful change.

Basically paid to keep youth off the streets so as to not remind people of the problems of homelessness.

Then he met the R in KKR – Roberts

In our current state of market, there’s no rational way of allocating money

So how do you take business acumen mindset principles and skills to do this?

REDF was the result

First to do a lot of intellectual capital creation

Got sucked into the social investing arena in 1993 or so

Assumed that social investors would have elegant frameworks but at that time, they didn’t

At the time it was more of a negative evaluation framework.

So got involved into CSR and sustainable development

So mainstream nonprofits asked to also get social returns

At which point he realized that his career went horribly astray

The problem here was that for-profits always try to maximize value

So later he started to think about value itself

1. Whether or not you’re truly maximizing the value of being around as a person? Was it all worth it? Did you make a contribution?

2. So are the organizations you’re a part of worth their value?

3. So how are all your assets structured in alignment with your mission goals?

Way too many people spend 20-40 years trying to make money and then realize they need to do good

Yet nonprofit people cloak themselves in righteousness but then do nothing to bring to bear all their economic assets

Let’s talk about value

Discussing a chart related to the way economic and social values intersect

Unfortunately, traditional value chart is the wrong way to discuss

Asks you to bifurcate and disaggregate value with the absence of social impact – this is wrong

Basically, your mom knew that the value of living was understanding financial and economic stewardship and the fact that you need to maintain social relations and take care of the planet

“take care of your allowance, don’t beat up your sister and walk the dog”

At the end of the day everything is really blended together

Holds up the example of Sekem and it’s investment by the Acumen Fund and it’s various values

Sun Ranch – integrates sustainable ranching and ecotourism and wildlife management

All orgs have the capacity to maximize the various components of value that they’re managing.

Most orgs still function in that bifurcation. Affordable housing – great idea but built with clear-cut timber and with a nonrenewable energy orientation.

They should have tried to maximize all the benefits and used the large affordable housing market to drive change within the housing market.

So let’s focus on asset management

Always have to think about debt equity alt. investments and extra-financial assets

How do you manage the networks you create?

These are not necessarily assets without economic value it’s just that there aren’t any metrics to measure them yet.

Privately held community trusts should be a model for foundations.

Capital should seek out best and highest use but in pursuit of blended value

There should be other considerations of value

Microfinance was redistributed as CDOs – meaning that nonprofits and Wall St. finally got together with a set of asset owners who actually worked together to maximize value creation

Pointed out the Gates Foundation’s excuse for investing in companies without alignment

Thinks that they should have aligned their investments in order to increase total value

There are about six financial tools avalialbe to foundations

Traditional Grants

Recoverable grants

PRI

Blended value investing

Asset alignment of corpus

Proxy voting and corporate engagement

So we’re talking about a unified investment strategy

There are many new tools – 15 years ago you couldn’t do that

Heron Foundation asset allocations are actually talking about blended values

This all creates new metrics

Once you move off financial analytics, how do you measure impacts?

It’s not that we don’t do triple bottom lines – that plays to the bifurcation

For instance GE could not raise its growth output in China because sales people were driving the need for better environmental efficiency to be more competitive against foreign competitors

So GE drove more eco values into its products to compete better

So when we think about the light spectrum – there’s visible light but we know all about the x-rays microwaves and gamma rays and that’s where current metrics are

It only shows part of the spectrum

Econometrics are agreed upon not handed down as natural law

Initiative for Enhanced Analytics

Looking for the best way to capture extra-financial performance of publicly traded companies

However, this isn’t going to happen from nonprofits or the for-profit sector

There are these new barbarians

Showed people fractals and tried to explain them and how it relates to blended value

Transcendental relevant leadership practice

You want to inspire and get the job done – this shouldn’t be completely separated

You’re not just managing payout but managing assets for long-term performance

This is all data-driven – don’t confuse intent with impact

A lot of nonprofits destroy value in the course of their mission