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2007|Case No.SI76| Length 9 pgs.
In 2000, Jed Emerson founded the Center for Blended Value, a think tank based in Colorado that promoted the concept of “blended value” investments. Emerson applied the concept of blended value to criticize the traditionally impermeable wall between foundation investments and programming. Typically, foundations invested 5% of their assets in generating environmental and social value (through grantmaking) and 95% in generating financial returns (through the endowment or corpus). Emerson argued that foundations should actively align their financial and social investments.
Emerson outlined five primary ways for foundations to implement a value maximizing strategy of financial asset management: 1) engaged investing of mainstream assets (e.g. proxy voting); 2) socially responsible investing of core assets; 3) investment in alternative asset classes and small and medium enterprises; 4) below market-rate investments; and 5) investment in a way that enabled significant corporate transformation.
The think tank team wondered how to overcome the challenges associated with encouraging more foundations to adopt a value-maximizing strategy of financial asset management. He aspired to help foundations assess the trade-offs between the costs and benefits associated with each value-maximizing approach and develop and disseminate strategies for mitigating various risk factors. The team also recognized the importance of creating effective metrics for assessing the economic, social and environmental value of the blended value proposition, noting that existing market-based metrics had taken decades to create.
Learning ObjectiveThe blended value concept (also known as mission related investing, impact investing, aligned capital and social investments) and foundation investment strategy and management.
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Keywordsendowment management, mission related investment, socially responsible investing, social innovation