10. THE PORTFOLIO FRAMEWORK
1. Modern portfolio theory was developed by American economist Harry Markowitz, who later won the Nobel Prize in Economics in 1990. Harry Markowitz, “Portfolio Selection,” Journal of Finance 7, no. 1 (1952): 77–91.
3. To indicate his views on the subject, Markowitz stated, “a rule of behavior which does not imply the superiority of diversification must be rejected both as a hypothesis and as a maxim.” Harry Markowitz, “Portfolio Selection,” 77.
8. For a context specific discussion, see Addis Ababa Action Agenda of the Third International Conference; Financing for Development (New York, N.Y.: United Nations. July 13–16, 2015), 22, 24–25.
10. OECD, “Blended Finance; Mobilising resources for sustainable development and climate action in developing countries,” October, 2017.
12. Brian Dunn discusses the role of the philanthropist in creating a “new efficient frontier.” We disagree with some of his interpretations about the limitations of philanthropic capital as it applies to his thesis. However, the overall premise of the white paper is relevant. Brian Dunn, Modern Portfolio Theory—With a Twist, August 2006, www.americansforcommunitydevelopment.org/downloads/NewEfficientFrontier.pdf.
15. This example is analogous to the partnership profiled in Howard W. Buffett and Adam Stepan, “Saved by the Soil? Africa’s Frontier for Conservation-Based Agriculture,” Columbia University School of International and Public Affairs Case Consortium, SIPA-17-0011.01, 2017.
17. J. Gregory Dees, “Philanthropy and Enterprise: Harnessing the Power of Business and Social Entrepreneurship for Development,” Innovations 3, no. 3 (2008): 119–32.
20. For a discussion of various public financing tools and theory, see: Lester M. Salamon, “The New Governance and the Tools of Public Action: An Introduction,” Fordham Urban Law Journal 28, no. 5 (June 2001): 1611–1674.
23. For examples and additional analysis, see charts in Jed Emerson, “The Blended Value Proposition: Integrating Social and Financial Returns,” California Management Review 45, no. 4 (2003): 35–51, at 37–39.
24. Also see J. Gregory Dees, “Enterprising Nonprofits,” Harvard Business Review (January-February 1998): 55–67.
25. The following is a subset of available instruments and is not meant to represent the full universe of allocation options.
26. Paper presented to Comunitas, Juntos Pelo Desenvolvimento Sustentavel, Pelotas–RS, March, 2016, 13–15.
27. Bruna Santos, Knowledge Manager, Comunitas, email comments received January 3, 2018.
28. For example, private donors underwrote financing for irrigation infrastructure that communities would not have otherwise been able to afford. This increased farmers’ incomes and expanded raw commodity production enough to support local food processing enterprises. The technical assistance, training, and knowledge-sharing—all activities that would not have commercial market support in rural western Afghanistan—were financed through grants to Herat University. Taken together, these contributions created an environment for private sector participation and improved the likelihood that the rest of the cross-sector partnership would succeed.
29. For example, see the discussion of using an intermediary partner to this end in: Prime Coalition and MIT Sloan School of Management, section titled “Option B—Issue a Grant That Qualifies as Charitable to a Non-Profit Intermediary That Supports Market-Based Solutions,” in Foundations: exploring the emerging practice of philanthropic investing to support innovation in science and engineering, Practice Briefing (June 2017): 8.
34. K. Martin Worthy, “The Tax Reform Act of 1969: Consequences for Private Foundations,” Law and Contemporary Problems 39, no. 4 (1975): 232–54.
35. Patricia L. Rosenfield and Rachel Wimpee, “The Ford Foundation: Themes 1936–2001,” The Rockefeller Archive Center, 2015, rockarch.org/publications/resrep/niedfeldt.pdf.
37. Ford Foundation, New Opinions in the Philanthropic Process, A Ford Foundation Statement of Policy (New York, N.Y.: Ford Foundation, 1968).
38. Ford Foundation, Investing for Social Gain: Reflections on Two Decades of Program-Related Investments (New York, N.Y.: Ford Foundation, 1991), 7.
39. Worthy, “The Tax Reform Act of 1969.”
40. Ford Foundation, Investing for Social Gain.
41. Christine Looney, Inclusive Economies, Ford Foundation, November 3, 2017.
43. Phone interview with Christine Looney, Senior Program Investment Officer, Inclusive Economies, the Ford Foundation, June 22, 2017.
44. Ford Foundation, Investing for Social Gain, 34.
45. Robert Mark Silverman, Ed., Community-Based Organizations: The Intersection of Social Capital and Local Context in Contemporary Urban Society (Detroit, Mich.: Wayne State University Press, 2004), 40.
46. Christine Looney, email message to Howard W. Buffett. November 9, 2017.
47. Ford Foundation, Investing for Social Gain, 35.
52. For additional information, including detailed examples from the Gates Foundation PRI strategy, see “Making Markets Work for the Poor: How the Bill & Melinda Gates Foundation Uses Program-Related Investments,” Stanford Social Innovation Review (Summer 2016).
53. Discussion with Ryan Kreitzer, Principal, Program-Related Investments, and others at the Bill & Melinda Gates Foundation, July 21, 2017, with follow-up on November 8, 2017.
54. Prime Coalition and MIT Sloan School of Management, “Option C—Issue a Recoverable Grant or Loan That Qualifies as Charitable to a Non-Profit Intermediary That Supports Market-Based Solutions,” Practice Briefing (June 2017): 8.
57. Christie Baxter, “A Basic Guide to Program-Related Investments,” The Grantsmanship Center Magazine (Fall 1997).
58. Christie Baxter, Program-Related Investments: A Technical Manual for Foundations (Hoboken, N.J.: Wiley, 1997).
60. Baxter, Program-Related Investments.
63. Alex Nicholls and Emma Tomkinson, “The Peterborough Pilot Social Impact Bond,” Said Business School University of Oxford Case Study (October 2013): 39.
65. Jennifer Maloney, “Goldman to Invest in Rikers Program,” Wall Street Journal, August 2, 2012.
66. Donald Cohen and Jennifer Zelnick, “What We Learned from the Failure of the Rikers Island Social Impact Bond,” Nonprofit Quarterly, August 7, 2015.
67. Eduardo Porter, “Wall Street Money Meets Social Policy at Rikers Island,” New York Times, July 28, 2015.
70. Eduardo Porter, “Wall Street Money Meets Social Policy at Rikers Island,” New York Times, July 28, 2015.
71. Nicholls and Tomkinson, “The Peterborough Pilot Social Impact Bond,” 28–29.
72. To learn more about Social Impact Bonds, see Emily Gustafsson-Wright, Sophie Gardiner, and Vidya Putcha, The Potential and Limitations of Impact Bonds: Lessons from the First Five Years of Experience Worldwide (Washington, D.C.: Brookings Institute, July 2015).
83. “Making Markets Work for the Poor: How the Bill & Melinda Gates Foundation Uses Program-Related Investments,” Stanford Social Innovation Review (Summer 2016): 8.
84. Council on Foundations, New Examples of Permissible Program-Related Investments.
86. This is in terms of the range of blended cross-sector financial tools presented in this chapter.
87. The investment priorities of foundations vary significantly. Simply to illustrate, a foundation may hypothetically target 0–3 percent returns for PRIs, and 4–10 percent returns (or more) for MRIs, depending on the asset class.
89. No information in this publication is intended as, nor does it constitute, investment advice, legal advice, or tax advice. Nor is it an offer to sell any securities to any person or a solicitation or offer to purchase any securities. Information and included references are not recommendations, sponsorships, or endorsements by the authors of any company, organization, or security.
91. For more information, see the Principles for Responsible Investment, PRI Association, www.unpri.org/.
93. Phone interview with Christine Looney, Senior Program Investment Officer, Inclusive Economies, the Ford Foundation, June 22, 2017.
11. THE PERFORMANCE CASE
1. The New York City mayor’s Office of Operations was created by Executive Order of Mayor Edward I. Koch in 1977. Now mandated by local law and additional executive orders to perform a number of functions, the office is best known for the Mayor’s Management Report (MMR), issued twice yearly. The report was initially based on a relatively simple performance management system with primarily process and output measures, seeking to hold government agencies accountable to the mayor and the public for how much work they were doing and how efficiently they were managing the resources given to them. The impact of the report was limited by the fact that it was not connected to the city budget process (the method through which resources were allocated) or connected to formal strategic planning (which would specify the goals, expected outcomes, and time horizon for each agency). Nevertheless, the report continues to this day, expanded from a few dozen pages to more than few hundred pages by the dawn of the twenty-first century. Although there was some communication and collaboration between the mayor’s Office of Operations, which was responsible for the MMR, and the government agencies that gathered the information and reported on the indicators (quarterly and annually), New York City’s agency commissioners generally viewed the report as unnecessary paperwork and an effort by City Hall to micromanage them. It was the city budget process, run by the mayor’s Office of Management and Budget (OMB), that agency officials focused on because that process determined their level of funding for the coming fiscal year. The media gives the MMR only moderate attention when the annual report is released, and their coverage is generally focused on measures they find curious or silly or on unexpected “big misses”—such as significant shortfalls in inspections expected to be done, or the number of housing units built.
2. For an analysis of why and how Bratton’s system worked, see Franklin E. Zimring, The City That Became Safe (New York: Oxford University Press, 2012).
3. Jack Maple was a colorful “New York City” character who always wore a homburg hat, two-tone expensive shoes, and a bow tie. He was a regular at the storied “Elaine’s” restaurant and bar where political and entertainment celebrities hung out until the wee hours to see each other and be seen by the gossip columnists and tabloid writers. Maples connected with Bratton at the New York City Transit Police when Bratton was appointed to head that organization in 1990. Even as a lieutenant there, Maple was already experimenting with mapping crime patterns to get ahead of what might be the next wave of crime. See Douglas Martin, “Jack Maple, 48, a Designer of City Crime Control Strategies,” New York Times, August 6, 2001.
5. John Buntin, “Assertive Policing, Plummeting Crime: The NYPD Takes on Crime in New York City,” Harvard Kennedy School of Government Case Study, August 9, 1999, 22.
6. Dennis Smith and William J. Bratton, “Performance Management in New York City: Compstat and the Revolution in Police Management,” in Quicker, Better, Cheaper? Managing Performance in American Government, ed. Dall Forsythe (New York: Rockefeller Institute Press, October 2001), 455.
7. Smith and Bratton, “Performance Management in New York City.”
11. Uniformed Firefighters Association of Greater New York, FDNY Line of Duty Deaths, accessed March 15, 2017. www.ufanyc.org/lodd/.
12. The McKinsey Report, Increasing FDNY’s Preparedness, 13, 16–17.
13. The McKinsey Report, Increasing FDNY’s Preparedness.
15. This program was developed by William Eimicke at the SIPA Picker Center for Executive Education of Columbia University and FDNY First Deputy Fire Commissioner Don Shacknai, in partnership with many senior uniformed officers from the fire and EMS divisions.
16. To enable all of the FDNY senior leaders in 2002 to benefit from FOMI, there were two cohorts of sixteen in the first year of 2002–03.
17. The cohorts attend the offsite program one week a month for six months, completing a program-long team project in addition to management and leadership courses. Some examples of projects subsequently implemented by the FDNY include the department’s strategic planning process (2003), the purchase of multiple RAC units (Rehabilitation and Care) for use at emergencies to treat fire and EMS personnel operating in extreme environments (2009), and altered EMS response protocols for low-priority calls (segment 7, 8, and 9, for things like broken ankles where it is clear that no one’s life is in danger) to no lights and sirens, where the risk posed by longer response times is outweighed by the risk of accident/injury by full on lights and sirens—full speed response (2010).
19. In 1995, former mayor Giuliani transferred the slow responding, low morale, EMS from a similarly troubled New York City Health and Hospitals Corporation to the world class FDNY, in hopes of improving EMS response times and overall performance. Instead, both FDNY and EMS privately opposed the merger, and prior to FOMI, the two organizations functioned as essentially two separate agencies, with very different recruitment and promotion procedures, very few colocation houses/stations, and even different unions.
20. William Eimicke taught the strategic planning course beginning in the first year of FOMI, and Chief Pfeiffer subsequently worked closely with Eimicke and a core group of FDNY senior managers to create the first plan and help institutionalize it in the department. The FDNY Strategic Plan 2015–2017 is guiding the department today.
23. During his career, Chief Pfeifer commanded response to some of the largest fires and emergencies in New York City’s history. On the morning of September 11, 2001, he was the first chief to arrive at the World Trade Center following the attacks.
24. Interview of Fire Commissioner Nicholas Scoppetta, in Al Baker, “7 Fire Dept. Officers Censured in Bank Blaze Inquiry,” New York Times, June 25, 2009.
25. Ray Rivera, “2 Firefighters Are Dead in Deutsche Bank Fire,” New York Times, August 18, 2007.
26. Al Baker, “City Agencies Faulted in Deutsche Bank Fire,” New York Times, June 19, 2009.
27. Baker, “City Agencies Faulted in Deutsche Bank Fire.”
28. Baker, “City Agencies Faulted in Deutsche Bank Fire.”
29. Kathleen Gilsinan and Adam Stepan, “From Compstat to Gov 2.0: Big Data in New York City Management,” SIPA Case Study, Columbia University, SIPA-14-0004.4, 2014.
30. Gerola has since moved on to Microsoft and is working on similar big data and communications projects for the NYPD.
31. Gilsinan and Stepan, “From Compstat to Gov 2.0,” 7.
32. Baker, “City Agencies Faulted in Deutsche Bank Fire.”
33. Interview of Fire Commissioner Nicholas Scoppetta, in Al Baker, “7 Fire Dept. Officers Censured in Bank Blaze Inquiry.”
34. A graduate of Harvard University and the University of Chicago Law School, Holloway served as chief of staff and counsel to Bloomberg’s deputy mayor for operations Edward Skyler (now an executive at Citibank), then as commissioner of the New York City Department of Environmental Protection (NYC DEP), and finally as deputy mayor for operations (2011–2013). Holloway left city service in December 2013 when he was appointed deputy chief operating officer of Bloomberg LP. He was forty years old at the time. See Mara Gay, “Bloomberg LP Taps Mayor’s Deputy,” Wall Street Journal, December 29, 2013.
35. Gilsinan and Stepan, “From Compstat to Gov 2.0,” 7.
36. Alan Feuer, “The Mayor’s Geek Squad,” New York Times Magazine, March 23, 2013.
37. Michael Gartland, “City Deaths Caused by Fires Hits Record Low in 2016, New York Post, January 10, 2017, https://nypost.com/2017/01/10/city-deaths-caused-by-fires-hits-record-low-in-2016/; Gigi Georges, Tim Glynn-Burke, and Andrea McGrath, “Improving the Local Landscape for Innovation (Part 3): Assessment and Implementation,” November 1, 2013, http://www.socialinnovationsjournal.org/social-issues/100-human-services/1668-improving-the-local-landscape-for-innovation-part-3-assessment-and-implementation.
38. Stephen Goldsmith and Susan Crawford, The Responsive City (San Francisco, Calif.: Jossey-Bass, 2014), 119.
39. Gilsinan and Stepan, “From Compstat to Gov 2.0,” 11–12.
40. Interview and email exchange between Stephen Goldsmith and William Eimicke, April 21, 2017.
41. Sam Roberts, “Statistics, Beloved by Mayor, Show a Slump in City Services,” New York Times, August 29, 2011.
43. Mayor Bloomberg also created the New York City Center for Economic Opportunity Innovation Fund, which financed performance-driven programs to reduce poverty. The city provided funding, as did private foundations, with projects chosen through a competitive process that emphasized partnerships among government agencies and philanthropies. Impact measures were applied and external evaluations were conducted. The initiatives were experimental, often controversial, and were not always successful. Efforts to apply similar performance-based criteria to the city’s large social service contracts were limited due to challenges connecting actions to results and limited analytic tools and personnel at the time. For more information about NYC Opportunity, visit http://www1.nyc.gov/site/opportunity/about/about-nyc-opportunity.page. See also “Project on Social Innovation,” NYC Center for Economic Opportunity, accessed April 24, 2017, www.socialinnovation.ash.harvard.edu/featured-profile/nyc-ceo-innovation-fund.html.
44. For example, Deputy Mayor Goldsmith told us he was often struck by the large number of indicators included in performance reports that had little or no impact on outcomes. Even when the measures were directly connected to outcomes, it was extremely difficult to improve performance, in part because New York City had difficulty connecting improved outcomes to employee compensation. Interview and email exchange between Stephen Goldsmith and William Eimicke, April 21, 2017.
12. THE PERFORMANCE FRAMEWORK
1. John W. Selsky and Barbara Parker, “Cross-Sector Partnerships to Address Social Issues: Challenges to Theory and Practice,” Journal of Management 31, no. 6 (December 2005): 849–73, at 851.
2. Impact Rate of Return and iRR are federally registered trademarks of Global Impact LLC and all rights are reserved.
3. For a discussion of how firms of varying sizes and organizational structures approach this, see Jeremy C. Stein, “Information Production and Capital Allocation: Decentralized Versus Hierarchical Firms,” Journal of Finance 57, no. 5 (2002): 1891–1921.
4. In the absence of such a measure, many observers judge organizations in the philanthropic sector by the percentage of their budget spent on operating expenses versus programmatic expenses. For further discussion, see Woods Bowman, “Should Donors Care About Overhead Costs? Do They Care?” Nonprofit and Voluntary Sector Quarterly 35, no. 2 (2006): 288–310.
5. Discussed later in this chapter, iRR’s uniform output differs from other similar efforts, such as the calculation for a social return on investment or a monetization approach. This is because it does not estimate the value of social good created. Rather, it estimates relative performance of a given program against an established goal for social good, using comparative analysis. In effect, this results in a calculation for an impact value of a dollar, which is somewhat the opposite of monetization.
6. For reference, one broad definition of social impact assessment is “the process of identifying the future consequences of a current or proposed action which are related to individuals, organizations and social macro-systems.” Heck Becker, “Social Impact Assessment,” European Journal of Operational Research 128, no. 2 (January 16, 2001): 311–21, https://doi.org/10.1016/S0377-2217(00)00074-6.
8. We do not wish to diminish the many previous or ongoing attempts to provide common definitions or consolidate the field’s work. For example, the International Association for Impact Assessment (IAIA) has been operating since the 1980s. IAIA has adopted the following definition: “Social Impact Assessment includes the processes of analysing, monitoring and managing the intended and unintended social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions.” The definition also includes a goal statement: “Its primary purpose is to bring about a more sustainable and equitable biophysical and human environment.” For more information, see Frank Vanclay, “International Principles for Social Impact Assessment,” Impact Assessment and Project Appraisal 21, no. 1 (2003): 5–12, https://doi.org/10.3152/147154603781766491.
10. For additional information about the related quality-adjusted life years (QALYs) calculation, see Franco Sassi, “Calculating QALYs, Comparing QALY and DALY Calculations,” Health Policy and Planning 21, no. 5 (September 1, 2006): 402–8, https://doi.org/10.1093/heapol/czl018.
15. “Sunk cost” is the term used by the Acumen Fund, The Best Available Charitable Option, 1.
16. Acumen’s scenario illustrated how their loan (after appropriate discounts) would cost less than $0.02 to prevent malaria for one individual over a year. This is versus a cost of $0.84 for the same results through what they call the best available charitable option. Acumen Fund, The Best Available Charitable Option, 2–4.
17. See discussion of BACO in Michael Moran, Private Foundations and Development Partnerships: American Philanthropy and Global Development Agendas (New York: Routledge, 2014), 127–28.
21. Matthew Bishop, email message to Howard W. Buffett, November 14, 2017. Bishop is a member of the board of directors of the Social Progress Imperative, which publishes the Social Progress Index.
25. Andrew Kassoy, email message to Howard W. Buffett, November 10, 2017. Kassoy is the cofounder of B Lab.
29. Antony Bugg-Levine and Jed Emerson, “Impact Investing: Transforming How We Make Money While Making a Difference,” Innovations 6, no. 3 (2011): 9–18.
31. Global Impact Investing Network, “The Business Value of Impact Measurement.”
32. Because “positive social or environmental impact” is undefined and not quantified, this precondition is open to wide interpretation. However, the most significant aspect is that the investor must have established intentions to make a positive impact with the investment. The notion of intentionality is an important one because it is a key element separating what could otherwise be two identical investments. For a further discussion on this subject, see Paul Brest and Kelly Born, “When Can Impact Investing Create Real Impact?” Stanford Social Innovation Review (Fall 2013).
33. Many investors today associate the concept of concessionary or below-market returns with the goal of social impact. This follows a somewhat traditional school of thinking (sometimes called the “trade-off myth”) that there are only two ways of allocating capital—to maximize financial return or to maximize social return—with nothing in between. However, nearly all impact investors have some level of expected financial return. In fact, data illustrate that impact investing strategies may outperform comparable traditional investing in specific fields. See “The Financial Performance of Real Assets Impact Investments; Introducing the Timber, Real Estate, and Infrastructure Impact Benchmarks,” The GIIN and Cambridge Associates, May 3, 2017, https://thegiin.org/knowledge/publication/real-assets-impact-investments.
34. This precondition speaks directly to the previous point: that there are a variety of investment tools deployable for social impact, many of which do not fit into the traditional return / no return binary. Just as there are a series of financial tools in traditional investing that range in their expected risk/return profile, so too will there be a range in the impact investing space. For example, read more about the Omidyar Network’s framework on the subject at Matt Bannick et al., “Across the Returns Continuum,” Stanford Social Innovation Review (Winter 2017), https://ssir.org/articles/entry/across_the_returns_continuum#.
35. There are a few difficulties inherent to this precondition. Measurement itself may be cost prohibitive for a given investment. Further, a situation may clearly meet the first three preconditions but cannot meet the last due to complexity or lack of information. This is not to argue against measurement as a precondition but rather to acknowledge its challenges within the scope of impact investing as defined here.
37. Amit Bouri, “How Standards Emerge: The Role of Investor Leadership in Realizing the Potential of IRIS,” Innovations: Technology, Governance, Globalization 6, no. 3 (2011): 117–31.
40. For example, the iPAR platform provides financial portfolio impact analysis. It is based on the GIIN IRIS catalog but with a reduced overall tracking burden of thirty-nine primary metrics (such as jobs created or energy saved) and an additional 115 submetrics (as of 2018). iPAR focuses on the intersection of theme and geography and uses a highly visual interface to reflect an investment’s impact intent, as well as risks or threats to its successful implementation. See iPAR, Impact Portfolio Allocation Review, https://iparimpact.com/.
43. Michael M. Weinstein and Ralph M. Bradburd, The Robin Hood Rules for Smart Giving (New York: Columbia University Press, 2013).
45. Weinstein and Bradburd, The Robin Hood Rules for Smart Giving.
47. All data for this example are from the Robin Hood Foundation website infographic, accessed October 19, 2016.
48. Note, “social return on investment” can be used to describe a measurement or output, as well as a formal “SROI” process. The latter is defined by Social Value UK (formerly the SROI Network), with more information available at http://www.socialvalueuk.org/.
50. Jane Gibbon and Colin Dey, “Developments in Social Impact Measurement in the Third Sector: Scaling Up or Dumbing Down?” Social and Environmental Accountability Journal 31, no. 1 (April 12, 2011): 63–72, http://dx.doi.org/10.1080/0969160X.2011.556399.
51. For example, recall the Social Progress Index mentioned earlier. It takes a very different approach from monetization by decoupling many aspects of social development from those of economic development.
52. This also may apply to cases of private sector collaboration. Barringer and Harrison argue that, “in considering the potential for interorganizational relationships to create value, simple cost/benefit analysis is insufficient…[with] potential outcomes that are impossible to place a dollar value on.” Bruce R. Barringer and Jeffrey S. Harrison, “Walking a Tightrope: Creating Value Through Interorganizational Relationships,” Journal of Management 26, no. 3 (June 1, 2000): 367–403, at 396.
53. For example, Robin Hood incorporates a program measure for strength of leadership, and includes other variables in the numerator of its benefit-cost ratio calculation. The organization also determines a “Robin Hood factor” to assess what percentage of success can be attributed directly to its involvement, and it can adjust its evaluation depending on Robin Hood’s influence over the success of a program being evaluated. Wes Moore, CEO of Robin Hood, email message to Howard W. Buffett, November 28, 2017.
54. In such instances, virtual or shadow pricing may be used. However, this still assumes that measures for such factors are effective when converted into financial terms. For additional information on the subject, see Lynn A. Karoly, Valuing Benefits in Benefit-Cost Studies of Social Programs (Santa Monica, Calif.: RAND Corporation, 2008), www.rand.org/pubs/technical_reports/TR643.html.
56. For more information about LEED (Leadership in Energy and Environmental Design) certification, visit the U.S. Green Business Council website, https://new.usgbc.org/leed.
57. This may seem counterintuitive at first. A lower number in the Impact Efficiency figure is representing a lower cost per unit. Therefore, a lower figure value is actually reflecting greater (or higher) cost efficiency.
58. Kathleen Gilsinan and Adam Stepan, “From Compstat to Gov 2.0: Big Data in New York City Management,” SIPA Case Study, 2014, Columbia University, SIPA-14-0004.4.
59. The iRR FDNY example was developed in consultation with Joseph Pfeifer, Chief of Counterterrorism at FDNY.
60. J. David Goodman, “New York City’s Fire Deaths Reach Lowest Point in Over 100 Years,” New York Times, January 9, 2017.
61. Interview and email exchange with Joseph Pfeifer, Chief of Counterterrorism at FDNY, January 18, 2017.
65. MillionTreesNYC recorded its millionth tree planted in 2015, roughly two years ahead of schedule. More information on the initiative can be found here: www.nycgovparks.org/trees/milliontreesnyc. Furthermore, the Department of Parks and Recreation engages thousands of volunteers in the cataloging and mapping of street trees across the five boroughs of the city. Information about individual trees throughout New York City can be viewed on a dynamic online map. For example, the following web address links to a Japanese Pagoda tree growing outside the School of International and Public Affairs building on Columbia University’s campus: https://tree-map.nycgovparks.org/#treeinfo-2129084.
67. In 2009, New York City conducted a bike share feasibility study containing a substantial outreach effort with over 350 meetings, more than 10,000 suggestions for bike sharing stations, and 60,000 comments from the public. See information about community engagement in planning, and the feasibility study: “NYC Bike Share, Designed by New Yorkers,” New York City Department of Transportation, 2013. For a report about the first two years of the program, see: Sarah M. Kaufman, Lily Gordon-Koven, Nolan Leveson and Mitchell L. Moss, Citi Bike: The First Two Years (New York: NYU Wagner Rudin Center, June 2015), 7.
71. Specifically, Mayor de Blasio’s plan called for an increase in 100 MW of decentralized solar capacity for city-owned buildings, and an increase in 250 MW of solar power capacity for privately owned properties. See: “One City Built to Last,” 14 and 16, The City of New York Mayor’s Office of Long-Term Planning and Sustainability. www.nyc.gov/html/builttolast/assets/downloads/pdf/OneCity.pdf.
73. For a detailed discussion on this topic, see: Steve Cohen, The Sustainable City (New York: Columbia University Press, 2017).
75. International Finance Corporation, Utility-Scale Solar Photovoltaic Power Plants.
76. For a case study on a similar type of development initiative, see Howard W. Buffett and Adam Stepan, “Aid or Investment? Post-Conflict Development in DRC and Rwanda,” Columbia University School of International and Public Affairs Case Consortium, 2018, SIPA-18-0016.
77. Estimates vary. The Rwandan government’s Institute of Statistics reports that over 70 percent of the country’s population is employed by agriculture. (Seasonal Agricultural Survey 2016, National Institute of Statistics of Rwanda, 7. Kigali: Rwanda, December, 2016.) The UN FAO estimates this amount as 80 percent for Afghanistan. (The FAO Component of the Consolidated Appeals 2012, Afghanistan. The Food and Agriculture Organization of the United Nations, 6. Rome: Italy, 2011.)
79. Rwanda’s Simbwa Cell in the Kabarore Sector, Gatsibo District, Eastern Province, covers 10,091 acres, and has considerable area suitable for agroforestry development. Data provided by Scott A. Zillmer, Senior Research Editor, Maps and Graphics at National Geographic, January 8, 2018. An administrative map of the district can be found here: http://gatsibo.gov.rw/fileadmin/templates/document/Map_of_Gatsibo_District.pdf.
80. In projects such as this, an NGO or international development agency may prefer to use the number of farmers or households as the Key Impact Indicator. However, the government of Rwanda, Ministry of Agriculture and Animal Resources often uses hectares of land as a primary metric. Therefore, this scenario uses land area as its KII. See: Rwanda Irrigation Master Plan, The Government of Rwanda, Ministry of Agriculture and Animal Resources, Ebony Enterprises Ltd, and the World Agroforestry Centre. Nairobi: Kenya, 2010. www.amis.minagri.gov.rw/documents/rwanda-irrigation-master-plan.
81. More women than men participate in subsistence agriculture in Rwanda (Rwanda Vision 2020, 17). For a discussion paper recommending that development projects focus on female farmers, see Sheron Randolph and Rickie Sanders, “Female Farmers in the Rwandan Farming System: A Study of the Ruhengeri Prefecture.” Agriculture and Human Values 9, no. 1 (1992): 59–66. https://doi.org/10.1007/BF02226504.
84. For a discussion on the importance of agroforestry to smallholder farmers in Rwanda, see Charles Bucagu, Bernard Vanlauwe, Mark T. Van Wijk, and Ken E. Giller, “Assessing farmers’ interest in agroforestry in two contrasting agro-ecological zones of Rwanda.” Agroforestry systems 87, no. 1 (2013): 141–158.
86. For information on a comparable cross-sector development under way, led by the University of Nebraska Medical Center, Med Center Development Corporation, see Cindy Gonzalez, “UNMC plans partnership to create Omaha’s next Aksarben Village or Midtown Crossing,” Omaha World Herald (Omaha: NE), May 24, 2014.
87. Figures for this scenario were calculated from estimates in Turner & Townsend’s International Construction Market Survey 2016. Building costs in São Paulo for this iRR scenario are based on a mix of averages across categories (e.g., Business Park, Education, and Hospital) as well as additional costs for building to LEED certification standards. See International Construction Market Survey 2016, Turner & Townsend, 24–25, June 2016: www.turnerandtownsend.com/media/1518/international-construction-market-survey-2016.pdf.
89. This may be particularly useful in cases such as the aggregated UN Sustainable Development Goal impact indicators referenced earlier.
90. Aggregated insights from this type of analysis, particularly over time and across different organizations and impact themes, could be especially useful for improving the accuracy of iRR in future applications.
91. For example, happiness, pain, or love. However, we recognize that attempts to measure such factors are under way. For instance, see John Helliwell, Richard Layard, and Jeffrey Sachs, World Happiness Report 2017 (New York: Sustainable Development Solutions Network, 2017).
13. THE CAUTIONARY CASE
6. Lacy Edney and Segolene Poirier, “A Visit to Christ the Redeemer in Rio,” The Rio Times, March 27, 2012.
7. At one time, Petrobras was the sixth largest company in the world by market capitalization and accounted for about 10 percent of the Brazil GDP. In the aftermath of the scandal, the company lost about half of its market value. See David Segal, “Petrobras Oil Scandal Leaves Brazilians Lamenting a Lost Dream,” New York Times, August 7, 2015.
11. Maria Fernanda Gebara and Alice Thuault, “GHG Mitigation in Brazil’s Land Use Sector,” World Resources Institute, December 2013.
12. Lindsay Sandoval, “The Effect of Education on Brazil’s Economic Development,” Global Majority E-Journal 3, no. 1 (June 2012): 4–19. See also Columbia University SIPA’s short video case study, “Schools of Tomorrow?” Picker Center, 2015.
14. Stevens, “Mayor of the Month for January 2013.”
15. Simon Romero, “Shepherd of the City’s Rebirth, Rio’s Mayor Feels the Strains, Too,” New York Times, February 28, 2014.
16. Romero, “Shepherd of the City’s Rebirth.”
17. Romero, “Shepherd of the City’s Rebirth.”
18. David Biller, “Mayor Bets Big on Rio de Janeiro’s Broken-Down Port Area: Cities,” Bloomberg.com, February 20, 2015.
19. C40 Cities, Chair of the C40.
20. Mimi Whitefield, “Porto Maravilha: Reclaiming Rio de Janeiro’s Neglected Port,” Miami Herald, June 3, 2014.
21. Whitefield, “Porto Maravilha.”
22. Biller, “Mayor Bets Big on Rio de Janeiro’s Broken-Down Port Area.”
24. Rio Prefeitura, “The Porto Marvilha Urban Operation.”
25. This is similar to the approach used to provide additional revenue in support of the High Line partnership in the parks case, chapter 5.
26. Rio Prefeitura, “The Porto Marvilha Urban Operation.”
27. Dan Horch, “Corruption Scandal at Petrobras Threatens Brazil’s Economy,” New York Times, February 11, 2015.
28. Horch, “Corruption Scandal at Petrobras Threatens Brazil’s Economy.”
29. Horch, “Corruption Scandal at Petrobras Threatens Brazil’s Economy.”
30. Will Connors, “5 Things to Know About Brazil’s Corruption Scandal,” Wall Street Journal, March 4, 2016.
32. Jonathan Watts, “Museum of Tomorrow: A Captivating Invitation to Imagine a Sustainable World,” The Guardian, December 17, 2015.
33. Watts, “Museum of Tomorrow.”
34. Lulu Garcia-Navarro, “What Brazil’s Museum of Tomorrow Means to Locals Today,” NPR, December 26, 2015.
35. Watts, “Museum of Tomorrow.”
36. Watts, “Museum of Tomorrow.”
37. Watts, “Museum of Tomorrow.”
40. Museu do Amanha, About the Museum.
41. Garcia-Navarro, “What Brazil’s Museum of Tomorrow Means to Locals Today.”
43. Garcia-Navarro, “What Brazil’s Museum of Tomorrow Means to Locals Today.”
44. Clara Long, “Rio’s Museum of Tomorrow Celebrates One Year Anniversary,” Rio Times Online, December 19, 2016.
45. Anna Jean Kaiser, “Legacy of Rio Olympics So Far Is a Series of Unkept Promises,” New York Times, February 15, 2017.
46. Kenneth Rapoza, “Short Term, Olympics Might Do Brazil Economy More Harm Than Good,” Forbes, August 4, 2016.
47. Taylor Barnes, “Rio’s Olympic Legacy Largely Falls Short of Bid Promises,” USA Today, February 9, 2016.
48. Simon Romero, “Dilma Rouseff of Brazil Says She Won’t Be Silenced in Impeachment Trial,” New York Times, August 29, 2016.
49. Simon Romero, “Dilma Rousseff Is Ousted as Brazil’s President in Impeachment Vote,” New York Times, August 31, 2016.
50. Romero, “Dilma Rousseff Is Ousted as Brazil’s President in Impeachment Vote.”
51. Nelson Belen, “Rio Officials Negotiating Sale of Olympic Apartments to Civil Workers,” Rio Times Online, February 2, 2017.
55. Lindau and Felin, “Rio Olympics’ Legacy.”
56. Nelson Belen, “Visitors Disappointed with Rio’s Abandoned Olympic Park,” Rio Times Online, February 2, 2017.
57. Belen, “Visitors Disappointed with Rio’s Abandoned Olympic Park.”
58. Calo Saad, “Cost of Rio’s 2016 Olympics Rises by Almost $100 Million,” Reuters.com, January 29, 2016.
61. Joanna S. Kao, “The Cost of Building the 2016 Rio Olympics,” Financial Times, August 5, 2016; see also Jonathan Watts, “Rio Mayor Eduardo Paes: ‘The Olympics Are a Missed Opportunity for Brazil’,” The Guardian, July 11, 2016.
62. Andrew Zimbalist, Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup (Washington, D.C.: Brookings Institution Press, 2016), 95–113.
63. Zimbalist, Circus Maximus, 154.
64. Vanessa Barbara, “I Criticized the Olympics. That Doesn’t Make Me a Traitor,” New York Times, August 20, 2016.
65. Jonathan Watts, “Have the Olympics Been Worth It for Rio?” The Guardian, August 21, 2016.
66. Andrew Jacobs, “After Olympics, Rio Is Altered if Not Reborn,” New York Times, August 21, 2016.
67. Watts, “Have the Olympics Been Worth It for Rio?”
68. Jacobs, “After Olympics, Rio Is Altered if Not Reborn.”
69. Jacobs, “After Olympics, Rio Is Altered if Not Reborn.”
70. Nelson Belen, “Exploring the New Centro and Port Zone of Rio de Janeiro,” Rio Times Online, December 9, 2016.
71. Jacobs, “After Olympics, Rio Is Altered if Not Reborn.”
72. Matt Sandy, “The Rio Olympics Could Be the Next Victim of Brazil’s Corruption Scandal,” Time.com, March 24, 2016.
73. Jamil Chade, “Stadium Deals, Corruption and Bribery: The Questions at the Heart of Brazil’s Olympic and World Cup ‘Miracle’,” The Guardian, April 23, 2017.
74. Chade, “Stadium Deals, Corruption and Bribery.”
75. Chade, “Stadium Deals, Corruption and Bribery.”
76. Simon Romero, “Scandal in Brazil Raises Fear of Turmoil’s Return,” New York Times, May 19, 2017.
CONCLUSION
1. See Andrew Carter and Peter Roberts, “Strategy and Partnership in Urban Regeneration,” in Urban Regeneration, ed. Peter Roberts, Hugh Sykes, and Rachel Granger (Thousand Oaks, Calif.: Sage 2017), 44–67.
2. For a brief discussion on the gap that NGOs fill in the provision of social welfare services, see Carol Reade, Anne Marie Todd, Asbjorn Osland, and Joyce Osland, “Poverty and the Multiple Stakeholder Challenge for Global Leaders,” Journal of Management Education (2008): 820–40, https://doi.org/10.1177/1052562908317445.
3. Karin Bäckstrand, “Multi-Stakeholder Partnerships for Sustainable Development: Rethinking Legitimacy, Accountability and Effectiveness,” Environmental Policy and Governance 16, no. 5 (2006): 290–306.
4. Thomas G. Pittz and Terry Adler, “An Exemplar of Open Strategy: Decision-Making Within Multi-Sector Collaborations,” Management Decision 54, no. 7 (2016): 1595–1614.
7. Douglas Martin, “Private Group Signs Central Park Deal to Be Its Manager,” New York Times, February 12, 1998.
9. Howard W. Buffett, Nitasha Nair, and Adam Stepan, “Social Value Investing in Afghanistan,” Columbia University School of International and Public Affairs Case Consortium, 2018, SIPA-18-0015.0.
10. Bruna Santos, Nora Shannon, and Adam Stepan, “Juntos: Mentoring Cities in Brazil,” Columbia University School of International and Public Affairs Case Consortium, 2017, SIPA-17-0013.1.
11. “New York City’s Fire Deaths Reach Lowest Point in Over 100 Years,” New York Times, January 9, 2017.
13. Kathy Babiak and Lucie Thibault, “Challenges in Multiple Cross-Sector Partnerships,” Nonprofit and Voluntary Sector Quarterly 38, no. 1 (December 12, 2007): 117–43.
14. For a detailed discussion of strategic management and cross-sector partnership implementation from both an organization and partnership perspective, see Amelia Clarke and Mark Fuller, “Collaborative Strategic Management: Strategy Formulation and Implementation by Multi-Organizational Cross-Sector Social Partnerships,” Journal of Business Ethics 94 (2010): 85–101.
15. For a series of relevant templates and example agreements, see Policy Framework and Legal Guidelines for Partnerships (Washington, D.C.: U.S. Department of State, February 2011), 21–71.
16. For examples and guidance on this process, see “Phase 2: Adaptive Planning,” in Herman Brouwer and Jim Woodhill, eds., The MSP Guide; How to Design and Facilitate Multi-Stakeholder Partnerships (Wageningen, The Netherlands: Wageningen UR, 2016), 28. Also see online resources at http://www.mspguide.org.
18. For an outline of various topics that comprise a “comprehensive long-term regeneration strategy” in the context of the chapter’s partnership types, see Ronald W. McQuaid, “The Theory of Partnerships—Why Have Partnerships,” in Managing Public-Private Partnerships for Public Services: An International Perspective, ed. Stephen P. Osborne (London, UK: Routledge, 2000), 9–35.
19. See the discussion and referenced material for “boundary spanners” in Valerie Wildridge, Sue Childs, Lynette Cawthra, and Bruce Madge, “How to Create Successful Partnerships—A Review of the Literature,” Health Information & Libraries Journal 21 (2004): 3–19, at 7, https://doi.org/10.1111/j.1740-3324.2004.00497.x.
20. Joshua David and Robert Hammond, High Line: The Inside Story of New York City’s Park in the Sky (New York: Farrar, Straus and Giroux, 2011).
22. Jamil Chade, “Stadium Deals, Corruption and Bribery: The Questions at the Heart of Brazil’s Olympic and World Cup ‘Miracle’,” The Guardian, April 23, 2017.
23. In a survey of business leaders, “integrity” was universally cited as a critical operating business principle among a network of related subsidiaries. See David F. Larcker and Brian Tayan, “Trust and Consequences: A Survey of Berkshire Hathaway Operating Managers,” Stanford University Closer Look Series, CGRP52, October 20, 2015.
24. Simon Romero, “Shepherd of the City’s Rebirth, Rio’s Mayor Feels the Strains, Too,” New York Times, February 28, 2014.
25. Siv Vangen and Chris Huxham, “Enacting Leadership for Collaborative Advantage: Dilemmas of Ideology and Pragmatism in the Activities of Partnership Managers,” British Journal of Management 14, suppl. 1 (2003): S61–S76.
27. For a discussion of organizational interdependence, see Vivien Lowndes, “The Dynamics of Multi-Organizational Partnerships: An Analysis of Changing Modes of Governance,” Public Administration 76 (Summer 1998): 313–333, at 315, 319.
28. See Stephen Goldsmith and Susan Crawford, The Responsive City: Engaging Communities Through Data-Smart Governance (Hoboken, N.J.: Wiley, 2014).
29. “AP Analysis: Rio de Janeiro Olympics Cost $13.1 billion,” USA Today, June 14, 2017.
30. See the section on “Implementation” for a discussion and referenced research on the need for “shared values” to implement “common vision among independent actors.” John W. Selsky and Barbara Parker, “Cross-Sector Partnerships to Address Social Issues: Challenges to Theory and Practice,” Journal of Management 31, no. 6 (December 1, 2005): 849–73, at 856.
31. We acknowledge that most private foundation endowments are not invested in a manner that would reasonably be classified as risk-taking or risk-seeking (within the constraints defined by the IRS). However, philanthropic assets have that flexibility, and we hope to see more innovative financial tools in use in the future.
33. See discussions on “Contribute ‘What We Do’ ” and “Contribute Specialized Services to a Large-Scale Undertaking” in John A. Pearce II and Jonathan P. Doh, “The High Impact of Collaborative Social Initiatives,” MIT Sloan Management Review 46 no. 3 (2005): 30–39, at 34–35.
34. For a discussion on this topic in the context of social enterprises, see Antony Bugg-Levine, Bruce Kogut, and Nalin Kulatilaka, “A New Approach to Funding Social Enterprises,” Harvard Business Review 90 no. 1/2 (2012): 118–23.
35. For a detailed and related analysis examining social impact indicators and indicator categories across numerous social return on investment (SROI) studies between 2002 and 2012, see Gorgi Krlev, Robert Münscher, and Katharina Mülbert, “Social Return on Investment (SROI): State-of-the-Art and Perspectives—A Meta-Analysis of Practice in Social Return on Investment (SROI) Studies Published 2002–2012,” CSI Advisory Services, 2013, 39–42, www.csi.uni-heidelberg.de/downloads/CSI_SROI_Meta_Analysis_2013.pdf.
36. For a related discussion and two New York State public sector case studies, see Theresa A. Pardo et al., “Knowledge Sharing in Cross-Boundary Information System Development in the Public Sector,” Information Technology and Management 7, no. 4 (2006): 293–313.
38. For a related public sector case study from the UK, see David Wastell, Peter Kawalek, Peter Langmead-Jones, and Rob Ormerod, “Information Systems and Partnership in Multi-Agency Networks: An Action Research Project in Crime Reduction,” Information and Organization 14, no. 3 (2004): 189–210, https://doi.org/10.1016/j.infoandorg.2004.01.001.
39. IEG World Bank Group, World Bank Group Support to Public-Private Partnerships: Lessons from Experience in Client Countries, F02-12 (Washington, D.C.: International Bank for Reconstruction and Development/ The World Bank, 2015), xiii.
40. IEG World Bank Group, World Bank Group Support to Public-Private Partnerships, xiii–xix.
41. For a discussion on the importance of social capital in collaborative partnerships aiming to overcome complex social policy challenges, including collective action problems, see section titled “How Social Capital Can Contribute to Sustainable Development,” in Yvonne Rydin and Nancy Holman, “Re-Evaluating the Contribution of Social Capital in Achieving Sustainable Development,” Local Environment 9 no. 2 (2004): 117–33, at 127–31.
42. Peter F. Drucker, Management: Tasks, Responsibilities, Practices (New York: HarperCollins, 1974).
43. For further discussion, see Alexander Bassen and Ana Maria Masha Kovacs, “Environmental, Social and Governance Key Performance Indicators from a Capital Market Perspective,” Zeitschrift für Wirtschafts—und Unternehmensethik 9, no. 2 (2008): 182–92.
44. Consider the United Nations Global Compact, an initiative to promote sustainable and ethical business practices, mainly focused on the private sector. As a voluntary regulatory program, it has certain limitations; however, it has grown to approximately 13,000 committed organizations (of which over 9,000 are corporate) spanning 170 countries. Its signatories agree to “responsible business practices, combined with collaboration and innovation,” through a commitment to ten principles in the areas of human rights, labor, the environment, and anticorruption. For more detailed information, see “2017 United Nations Global Compact Progress Report; Business Solutions to Sustainable Development,” United Nations Global Compact, September 2017, www.unglobalcompact.org/library/5431.
45. Take, for instance, a working group of European financial institutions and companies directing investments and activities in support of the United Nations Sustainable Development Goals. Among other things, this group has defined specific, socially focused, key performance indicators and submetrics for advancing many of the sustainable development goals. Further, the institutional investors in the group committed to “support the generation of positive social and/or environmental impact through their products and services.” These groups also have committed to “actively collaborate with other like-minded investors to accelerate investments into a more sustainable world.” This statement is available at www.pggm.nl/wie-zijn-we/pers/Documents/Institutional-investment-into-the-Sustainable-Development-Goals-statement.pdf.
47. Steven Radelet, The Great Surge: The Ascent of the Developing World (New York: Simon and Schuster, 2015), 3–42.
49. Joseph E. Stiglitz, The Price of Inequality (New York: Norton, 2013), xxix.
50. Stiglitz, The Price of Inequality, 336–55.
51. Stiglitz, The Price of Inequality, 354.
52. See section on “ ‘New Governance’ and ‘New Public Management’ ” in McQuaid, “Theory of Organisational Partnerships,” 125–46.
53. Drucker, Management: Tasks, Responsibilities, Practice.
54. See the discussion of the evolving roles and expectations of business in society in Alyson Warhurst, “Future Roles of Business in Society: The Expanding Boundaries of Corporate Responsibility and a Compelling Case for Partnership,” Futures 37 no. 2 (2005): 151–68.
55. In addition to changing social norms and the distinct perspectives of the millennial generation, consider the relatively recent Giving Pledge effort. Launched in 2010, the Giving Pledge asks billionaires to commit at least half of their wealth to philanthropic causes rather than amass it for maximizing generational wealth transfers. Nearly two hundred billionaires from across the world have taken the pledge, representing approximately $1 trillion in assets. For more information, visit the Giving Pledge website at http://givingpledge.org/.