Metrics Discussion

July 23, 2008

• If the health clinic you have invested in is reaching the poor and delivering reasonable social value?

• If the carbon footprint of your housing investments is offset by your renewable energy portfolio? your renewable energy portfolio?

• If your portfolio’s financial return is competitive in an increasingly crowded investment field?

• If the number of jobs created by “private sector development” funds is material to ending poverty?

Fund ABC

Number of investments and/or businesses supported 10

Funds disbursed $8,000,000

Social metrics – annual portfolio

Jobs created 2000

Funds report out on social and financial performance using a

common set of metrics and accounting

2

Jobs created 2000

Wage growth 50%

Revenue growth 105%

Net income growth 20%

Number of customers served 100,000

Local suppliers supported $5,000,000

Additional finance mobilized by investees $10,000,000

Financial metrics – annual portfolio

Gross return 25%

Management fee 3%

Pre-investment TA 5%

Post Investment TA 5%

M&E expenses 2%

Net return (Projected) 10%

Aggregated ANDE Member Social and Financial Impact Number

reporting

Total amount of capital invested $459 Million 9/10

Social metric data could be aggregated and various sector

benchmarks created

3

Number of businesses supported 5,601 14/14

Number of jobs created 250,000 8/14

Additional finance mobilized by investees $5.5 Billion 8/14

Potential Ratios Sector average Company A

Jobs created / capital invested 1 : $1,836 1 : $7,200

Finance mobilized / capital invested $119 : $1 $70 : $1

Revenue growth / capital invested Xx Xx

Products Green Coffee

We could rate social impact in a common way

4

Year company founded 2001

Country of operations Tanzania

Annual revenue $ 3,418,000

Governance Score 10

Community Leadership Score 15

Employment Impact Score 13

Environment Impact Score 9

Customer Score 17

TOTAL SCORE: 64

RIIC Social

Impact

Score

1. Highlight where we are towards establishing common metrics for the ANDE community

2. Discuss progress towards building platforms to support social impact metrics and transparency

5

impact metrics and transparency•Update on the PDMS metrics platform

•Update on the RIIC social metrics survey

3. Discuss as a group what it will take to move this forward

Sector-level:

•Metrics specific

Organization-level

•Specific ‘story’, theory of change

and qualitative

indicators

6

Renewable

energy

•Metrics specific to sectors Agribusiness Health Etc…

Base-level

•Common metrics

for all ‘small and

growing’

businesses

Common metrics for ‘Small and Growing Businesses’

First level

Jobs created

Wage growth

Revenue growth

Net income growth

7

Net income growth

Number of customers served

Local suppliers supported

Additional finance mobilized

Carbon offsets

Second level

Quality of data

Comparable charitable impact

‘SGB returns and expenses’

Gross

return

‘Management

fee’

Pre-

investment TA

Post-

8

Post-

Investment TA

M&E

expenses

Net return

Returns generated by SGBs less aggregate

expenses from intermediaries

What would it take…

Intermediaries to commit to:� Collect and report on the core

social metrics and financial accounting annually

� Use a common one page template

What ANDE could do…

• A standard definition of social impact metrics and accounting, and a standard reporting template / table

� Use a common one page template in annual reports with the ANDE ‘seal of approval’;

� Provide more detailed but confidential information to ANDE to help build the research base for the sector

Funders to commit to:

� Use, request and track the same data for these type of investments

9

• Aggregated sector-wide impact to support advocacy efforts

• Sector and individualized benchmarking reports

• Overall improved transparency for the sector on what works and what doesn’t work

1. Highlight where we are towards establishing common metrics for the ANDE community

2. Discuss progress towards building platforms to support social impact metrics and transparency

10

impact metrics and transparency•Update on the PDMS metrics platform

•Update on the RIIC social metrics survey

3. Discuss as a group what it will take to move this forward

• Building a best in class portfolio management tool that allows individual social investors to:

• Track investment performance against target on financial and operational metrics

• Define standard and custom social and environmental metrics for aggregation at portfolio level

• Qualitative reporting and capabilities assessment balances performance management functionality

• Building a shared data architecture and information standards that enable:

• Aggregation, verification and benchmarking of certain performance indicators

• Better insight to be shared with investors, policy makers and academics

- Drill-down to any deal

- Summary of investment, status, team members, attachment uploads

- Financial details of investment

User friendly interface in beta testing

- Metrics summary

- Project Managers add, edit, and select metrics

- Notes to provide qualitative input on data

- View and change forecasts for targets

Acumen Fund*

E + Co* Endeavor*Grey

Matters*OmidyarNetwork

SEDFRoot

Capital*

Skoll*

• Basic quarterly reporting• Performance vs. past and

vs. plan

Public

Funder

Intermediary

Enabling performance management along the chain of

accountability

Fund* Matters* Network

Microdrip

Capital*

• Basic quarterly reporting• Performance vs. past and

vs. plan• Qualitative assessments• Diagnostics• Stakeholder voice

Enterprise

Customer

Acumen Fund*

Root Capital*

E + Co* Endeavor*Grey

Matters*OmidyarNetwork

SEDF

System level features

Private, confidential space for fund level portfolio management

Standard and shared metrics for certain industries

Customization and

Skoll*Google

.org*Rockefeller* IFIs & DFIs

HNW individuals

CommercialImpact

Investors

Creating a “Social Venture One”?

LPs

GPsFund*

Microdrip

Capital* Matters* Network Customization and qualitative reporting enabled within fund

Firm level data shared across multiple investors

Aggregated data enables benchmarking by fund, geography, sector, etc.

Shared pipeline functionality

Co’s

* Involved in current beta testing

Impact Investing Collaborative • Diverse network of impact investors • Platform for collaboration• Initial focus on 3 projects, incl. Project Galileo (metrics)

Goals of Project Galileo

15

Goals of Project Galileo• Develop standards for assessing the social & environmental impact

of investments/portfolios (S&P, Moody’s, LEED)• Catalyze launch of an independent standards-setting body

Value Proposition• Investors: ability to measure impact across a variety of investment

opportunities; allocation of capital to optimize on impact• Fund managers: coordinate, streamline reporting on impact data;

attract new investors• Field: drive more capital into impact investments

July

Survey of investor

perspectives and impact

measurement

New survey developed by

adapting B Ratings System for developing

Pilot of new survey using companies in

Agora Partnerships

JuneMay

•Release of the survey for

feedback at RIIC Bellagio

summit

AprilMarchJanuary-February

B Ratings System (BRS)

identified as most

Subsequent feedback, testing

16

measurement tools

developing countries

Partnerships Portfolio

summit

•Decision to focus on

institutional development

•Feedback at PDMS summit

most applicable

methodology

1. Refinement of content • Portfolio-level analysis

2. Development of tool to collect, analyze, manage data• Allow users to re-weight or integrate the underlying data

17

• Allow users to re-weight or integrate the underlying data

3. Business plan and incubation of independent standards-setting body

• Organizing Committee designated to provide oversight • Actively seeking collaboration/coordination with other

initiatives, incl. ANDE and PDMS

Governance

• Formal registration• Verified financial statements • Structures in place to promote sound governance of the company

Community

leadership

• Purchasing from and/or serving local economy• Giving back to local community

Employment• Creating high quality employment for people from marginalized or lower income communities

18

Employment income communities

Environment • Business models that reduce emissions and promote conservation

Customer• Providing goods/services with a social or environmental impact • Serving customers in need (e.g., Bottom of the Pyramid)

Comprehensive and comparable measurement of company’s impact (potential impact at time of investment, actual impact over investment horizon)

Products Green Coffee

Year company founded 2001

19

Year company founded 2001

Country of operations Tanzania

Annual revenue $ 3,418,000

Governance Score 10

Community Leadership Score 15

Employment Impact Score 13

Environment Impact Score 9

Customer Score 17

TOTAL SCORE: 64

RIIC Social

Impact

Score

Products Green Coffee Fair trade and

Organic Coffee

Coffee The principal

products are

organic coffee

and high-quality

conventional

Coffee

20

conventional

coffee.Year company founded 2001 1982 1995 36596 1997

Country of operations Tanzania Mexico Peru Perú Guatemala

Annual revenue $ 3,418,000 $ 5,000,000 $ 8,300,000 $ 1,694,393 n/a

Governance Score 10 10 10 10 8

Community Leadership Score 15 16 13 7 12

Employment Impact Score 13 18 6 19 23

Environment Impact Score 9 12 9 9 6

Customer Score 17 15 15 8 14

TOTAL SCORE: 64 71 53 52 62

RIIC Social

Impact

Score

Engage ANDE members in the development process through on-going testing and feedback

• Address portfolio-level issues (i.e. weighting criteria)

Develop technological and organizational arrangement

21

Develop technological and organizational arrangement • Coordinate with PDMS to extent possible

Establish entity to undertake business planning process, incubation phase

• B Lab as likely candidate

Core social metrics Common accounting

Social impact ratings

22

PDMS

Core social metrics Common accounting