Gino Borges:
Jed, please share with the audience on how you arrived at impact investing. Give a little sense of when this whole journey started.

Jed Emerson:
I was raised outside of New York City. My Dad was a minister. My mom was a social worker. In some ways I feel like I was bred to do community work!

I started in seventh grade as a peer tutor in Spanish Harlem–the beginning of my youth development career really, which continued until I was 25 and asked to become founding director of the Larkin Street Youth Center in San Francisco. All I wanted to do when I was a kid was to run a nonprofit and change the world–to be the part of the good guys through advocacy and challenging existing structures trying to create positive change.

At 29, I woke up–realizing I had become part of this nonprofit and philanthropic service system that was more focused on accommodating a dysfunction within society than actually challenging and changing that dysfunction. At the time—during the late `80s in San Francisco–homelessness was still a big and important issue, but I felt I had become part of this process of accommodation. The program was really good, and it continues to be a very effective homeless and youth services organization. But, I felt like I had become part of the process where philanthropy, and public sector funding, operated on the basis of politics, perception and persuasion as opposed to performance. I felt like my job was to stand up and convince people of certain things so they would write me checks and we would go on to do our work, but at the end of the day, we weren’t fundamentally changing things.

I decided I needed to get at this in a different way, transitioning out of that role into a variety of market and business approaches to community change and impact. I became then the founding director of the Roberts Enterprise Development Fund, which worked to bring philanthropic capital to for-profit companies that were owned by nonprofits to provide transitional employment to formerly homeless people.

That experience brought me out of the nonprofit sector and into the for-profit sector, looking at how you can use business and economics to create community change in addition to philanthropic and nonprofit strategies. Over time, I realized I was having the same conversation with different actors, each of whom thought they were having very discrete challenges. But to my mind, they’re all grappling with the same fundamental issue. I was working with for-profit, mission-driven investors, CEOs and founders of for-profit companies trying to create positive social and environmental change on the one hand, and on the other, I was working with nonprofits who were using business to advance community-level change and impact. What I realized is that all these people were grappling with what I came to understand as a bifurcated value proposition: the idea that society is asking us to either do well or do good. You either make a grant, or you make an investment. You either work for the nonprofit sector or you work for the for-profit sector.

Over time, I had morphed into this place of being completely agnostic about the delivery mechanisms. I didn’t really care if it was a nonprofit, a for-profit, or a cooperative. And when it came to capital, I had started to think of all of it (philanthropy, below market or market rate capital) all as simply as a type of fuel—it was just all capital with different kind of levels of return and performance. The issue here was how did you understand the nature of the value you were trying to create. And I had come to realize value itself was not bifurcated, but rather whole—a blend of economic, social and environmental components. And so if one was focused on that understanding of value, the questions was simply one of understanding what were the best organizational forms and faster capital vehicles to generate the value you sought? That’s what led into this whole conversation from 30 years ago until now.

Gino Borges:
Was there anything in that particular moment or in that evolution that you knew was leading to the Purpose of Capital book? Was it something in the space itself that created a vacuum for this moment? Essentially, what drove you personally to write the book?

Jed Emerson:
I’m one of those people who, when I believe something, I am totally with what I’m talking about, what we’re doing, and the change we’re creating. Over the course of my life, I have tended to drive ideology and practice into the ground until it doesn’t work anymore.

With this approach, you blow through the other side and come up with something else that carries you forward into the next iteration. In the early part of my career, as I said, all I wanted to do was run a nonprofit and change the world. The further I got into that career track, the more I valued the work we were doing and understood the limitations of the practice that we were engaged in during the `80s.

I then went full bore with venture philanthropy and social entrepreneurship, thinking “this is going to be the new thing and this is what we really need.”

Another decade later, as I came out of that, I recognized when you work with entrepreneurs, you can really see the downside of how investors approach the management and deployment of capital. I started thinking how could I be a part of changing peoples’ thinking about how you “do” investing and the fact that it’s all about a total portfolio, managing all of your assets for impact. It’s about deploying philanthropic, near-market and market rate capital, through a variety of vehicles that have different risk return profiles and generate various forms of social and environmental impact. All we’ve got to do is figure out how to do that and we’re good to go! I began talking about this idea in the late ‘90s and wrote my first formal paper on the topic in 2000, when I was on the faculty at Stanford GSB.

And so, that’s what I focused on for the next two decades, co-authoring or editing seven books on social entrepreneurship and impact investing. And then yet again, I woke up about three or four years ago realizing that all of my conversations with people had devolved to strategy and tactics. Everything had come to be focused on the “how.” And when you look at our field, that’s largely where we are. Everybody has debates and discussions about metrics, about definitions, about performance, about fees, about structure. This was the problem; people were coming into the “how” and grappling with all of these challenges because they had blown by the “why.”

There was an assumption that we all were on the same page, understanding why we were here, the purpose and intent of our work. As I step back from that, I realized that I, myself, had become complicit with this focus on practice as opposed to purpose. And I realized we needed to approach this from a different place. If we really clarified how we actually got here–how was it that we created this world that was bifurcated, that had to be re-aggregated, that had to be reconnected on a more holistic basis, then maybe the answers for what we should do would be self-evident.

Einstein is said to have commented that if he were given an hour to solve a problem that his life depended upon, he would take 55 minutes to consider the question and then five minutes to propose a solution. I thought that to be really interesting because we often work the other way around. You go to any conference, you go to any investment committee meeting, you go to any event, and all of the discussions are focused on execution. “If you invest in my fund or my firm or my organization, we’re really going to break the back on poverty this time.” It suddenly struck me that I had fallen into the same trap. I decided to stop going to conferences, to not read any reports on impact investing, and, to be frank, to not really talk to a lot of people. Instead, I wanted to spend time simply reading and catching up with what we already know about how we got to this place of separation and how we could use that as a guide to executing our strategies in the future.

Gino Borges:
When you say you started reading, I’m guessing you read more non-financial books than financial books as part of the Purpose of Capital. Is that correct?

Jed Emerson:
Well, to give this some context, I think of myself as a pretty intelligent person—as I imagine most of your listeners are! I have a Master’s in Business Administration, a Master’s in Social Work. I read the New York Review of Books religiously. I read a lot; I read all the current books that everybody gets all excited about. But, in this case, the more I read, the more I recognized how ignorant I really was and how little I understood of the process and history and philosophies of how we got here—I had what I’d call a bumper sticker level of understanding.

In fact, the more you read seriously into philosophy, history, the cultural political science, and science–the more you read in areas that aren’t affirming what you already know–the more you realize that you really don’t know very much about how we actually got here. I reached this place on the one hand of very sincere and deep inquiry. On the other hand, I was just really humbled by how little I actually understood about anything. That still carries forward to today and I’d imagine may more true for a lot of us than we care to admit!

Gino Borges:
To me, your book comes across as this longitudinal discovery. Looking back at your journey of the past four years, what two or three non-financial books do you most identify with that serve as an underpinning for a lot of your thought?

Jed Emerson:
I created a reference library of 4,000 books that when I’d be reading one text and they would reference a philosopher, a tradition, or a practice that I wasn’t that familiar with, I would literally be able to go across the room and pull down something that could give me more context. Yet, through this process, books that meant a lot to me four years ago don’t mean that much to me now. And, books that I think are pretty good now don’t mean anything to other people!

This is because it’s all a function of the phrase “Where you stand depends on where you sit.” It’s purely a question of where you are in your own process.

I really resist the request to come up with three or four “best books,” but in The Purpose of Capital I do include an extensive bibliography, which is really the starting place in reading the book. Then, I also have a “best books” section highlight about 40 books that were important at a certain stage; though, they became less so over time as I morphed into this other place of understanding.

That’s one set of thoughts around the books. But, the larger question relates back to this Koan that says “Open mouth, first mistake.” There are actually several levels of meaning to this saying, but in this context, I think each of us is in our own place and our own journey. As soon as you open your mouth to try to describe something to somebody else, you become positioned—often times in opposition to the other person’s position—in a certain place and perspective. In our field, we are all trying to convince each other of various strategies and answers, whereas I think the answers, the real answers–come out of the space in between. The things that will really drive our conversation, our personal journey, and our practice forward really isn’t something that I know now. Rather, in dialogue with you and others, we create and we discover together in a process of mutual exploration.

And so that’s the problem with books–they’re static. They may represent a person’s evolution over time, but fundamentally they’re not an interactive means of communication. Thus, in introducing the book and this piece of work to our community in the fall, I refused to give any keynotes or any individual talks. Instead, everything that I’ve done has been in some form of dialogue: either this type of conversation or on a stage in panel discussions and mutual exploration with others who are coming at these same issues. These are fundamental questions of meaning and purpose that we all grapple with whether consciously or unconsciously. The power of the work is in the dialogue and the process of mutual discovery.

However, without having the historical background, we operate in this vacuum sometimes. Again, the more you read and reflect on the various processes and journeys of philosophers and scientists and spiritualists, the more you see that we could be so much more powerful in the context of this discussion by actually shutting up and listening to the voice of experience of history guiding us to create better, deeper, more fulfilling ways to position ourselves in that flow of history as we act to create our future together.

Gino Borges:
A lot of what you mentioned was an emphasis on the mind, an emphasis on reading and an emphasis on interpretation. But what happens if we go below the chin to the heart? I’d like to understand more about an embodied way of getting at impact, a more sensorial way. I’d like to understand more on your own journey beyond the mind and how it might’ve shaped the Purpose of Capital. The dominant paradigm for understanding this conversation is very much cerebral, full of mindfulness practices. But, the body probably does more interpreting than the mind. How would you discuss the Purpose of Capital from this angle?

Jed Emerson:
I am very much oriented toward the earth, to the woods and to the mountains. I try feel as connected as I can within the context in that environment. In fact, the Earth serves as a representation of the philosophy that I’m talking about. My wife is Norwegian and our family has a small cabin up in the Norwegian mountains that sits just below the cabin of the late Arne Naess, the Norwegian philosopher who coined the concept of deep ecology. When you’re up in this area, above timberline where there’s no trees, it’s really rough and rugged. You notice the mountain sit sideways almost; it’s difficult describe. It’s this cross-cut ridge that has been forced up and up out of the Earth.

When you’re at the top, no longer hiking, not trying to summit or dominate the mountain (as John Muir would say), you’re simply trying to be present in the place and context of the Earth as you’re reflecting on who you are and how you are. I do tend to be very left brain-oriented as I think about these things. But if you go far enough into the intellectual and the framework of being, out to a very spiritual place, you reach the limits of metrics. When you go deep into physics, when you really touch the Earth and understand that you’re touching millions of years of history, these are all ways that blow your brain open in order to create a space for something else, some other means of understanding… I’m not even sure I would say my heart, but simply this other sense of awareness. It’s the idea that thought is a function; it’s a ladder that in some ways can bring you up to a place of experiencing consciousness in a different way.

There are so many limitations to how humanity thinks about things. You can push through those limitations in the same way that I described my own thinking over the course of my life. I pushed through different ideological and other conceptual frameworks to go to this other place. If you get to that other side and trust that it’s okay, whatever it is that is on the other side, it can be a phenomenally liberating path, both emotionally and intellectually. It’s this synthesis of emotion and intellect that thinking logically, thinking linearly, on its own, doesn’t offer. For me, simply trying to be present doesn’t quite allow for it either because I tend to then just get too far off into my emotions and my perspective, but I don’t have any way to frame, understand, or contextualize it.

It is this synthesis of head and heart. That’s the power in the forest. When I read, I visualize the lives of these other folks. Whether you’re reading about Gilgamesh or you’re reading about Spinoza, it’s a way to get out of your own head to experience humanity’s process of becoming in a way that we just don’t allow enough opportunity for or open ourselves up to benefit from.

Gino Borges:
I know that metrics are used as a function to organize, to standardize, to scale. I would like to know how you navigate the whole metric conversation. Where does the metric conversation provide value for us as impact investors? Where does it start to become a limiting force as a field? How is it relevant at the personal investment level?

Jed Emerson:
I’ve done battle with metrics most of my professional life! When I was a kid and running Larkin Street Youth Center, metrics were simply something that we did to prove to the city that we didn’t take the money and “go to Tahiti!”. I literally would just walk down the desks of my case workers and ask “How many kids did you serve this last week?” It was all by hand–this is the `80s. We didn’t have well-formulated data tracking systems. I would put these forms together and send them off.

But, they never had anything to do with informing practice or improving the service delivery or the quality of the experience of our clients. It was simply to justify our work to third party, outside actors. As you get more and more into the philanthropic space, you start having outside evaluators and monitors come in and use metrics to pass judgment on you. You have these people who know really nothing about your context or situation who come in and try to quantify aspects of what you’re doing. I’ve always hated that part of metrics.

So, when we began approaching the metrics conversation at the Roberts Fund, we convened the first working group on social return on investment in the mid `90s, published a piece on it in `96 and then spent about three or four years really refining that. We published a whole set of documents in 2000 on social return on investment. We had multiple levels of performance that we were looking at:

One was simply straight econometrics, the social enterprise, the business side of the operation, the finance and the economic side. The other side was socioeconomic–this would be monetizing the economic value of social impact because people coming into the businesses that we were operating, cost center to the public sector. They were people who had had multiple contacts with mental health, with the general hospital system, with the criminal justice system. These were people on various forms of general assistance. Thus, you could actually quantify what that individual represented as a cost center to the public sector. Over time, as they got off of those various forms of assistance, they started earning money. As they started paying taxes, they actually become a benefit to that same system. So, we would track those aspects of value creation in the enterprise.

But we also felt there was the pure kind of social value that was really qualitative. We would look at creating reports that would combine and integrate these three aspects of performance. To my mind, that’s how you assess an approach to social return on investment.

The challenge with that approach though is two-fold. First, is that it’s very complex. We had pretty elegant systems in the ways we started tracking and managing this information and data. But, at the end of the day, it was the layer above, it was not really operationally-oriented. Then we started talking about how do you create Social MIS–how do you create social management information systems that actually could inform the work of the people doing the work–something that you could use with clients to share more about their process and progress. To me, that was the pinnacle of the quality of the work that I was engaged in with metrics.

Through the `90s, more people begin to pay attention to this metrics conversation. But, it became reductive. It became a process of, “Can I come up with one metric that can be the equivalent of a financial return on investment metric?” Different groups, across the world, would roll out these different iterations on these types of strategies–trying to boil it all down to numbers, so they could have an “apples to apples” comparison.

I became really frustrated with the conversation at that point and, quite frankly, largely left the whole metrics discussion. I concluded that, for the most part, the investor community really wasn’t interested in street-level, life impact. They were interested in documenting performance of their wealth impact and almost using metrics as a way to justify their investment strategy and practices. And, I get that. I understand that that’s where folks are coming from. It’s “my money” so I want to understand what my money is doing.

But if you step back, and this goes to the more philosophical, if you understand wealth differently, if you understand it’s less a question of ownership and more a question of stewardship, if you understand the process of your evolution as an individual investor, as being less about you and more about the Other, you begin to see the fundamental limitations of the way people are talking about metrics and how really useless a lot of the metrics are that people are promoting. I wrote an article called “The Metrics Myth” that basically said, on the one hand, “look, this is all bullshit.” And, on the other hand, we have to engage in this conversation and practice because it’s all part of our evolution and development. That’s how I think about metrics today. We need to be having these conversations, but we should not confuse a tool with task. We would think that just because we have a really great metric that somehow that captures the total value proposition that we claim we’re interested in advancing. We need to understand the limitation of the tool. The problem is people become so convinced of their own righteousness as they think that they’re creating new strategies and practices, losing sight of what this is all supposed to be about. It’s not about justifying capital deployment. It’s about transformation and change and really helping all of us become more actualized, both as investors and as investees and multiple stakeholders.

Gino Borges:
Can you discuss what you mean by documenting wealth impact versus documenting the actual impact on the ground? There’s a lot of that conversation going on, but I don’t want to assume we all know what it means.

Jed Emerson:
First off, I think it means different things to different people. We have to acknowledge that. When I talk about it, I think of it against the backdrop of outcome funding, which was a term that was very popular in the early `90s. People began to say “look, it’s not about how many people were served. It’s about the outcomes that were generated through providing those services to those folks.” And that should be our orientation.

Now the problem is, that’s really hard to do. If you really care about outcomes, you’re talking about taking a long-term perspective, which usually means looking beyond the time period of your investment. If you’re a grant-maker, maybe long term is three years. If you’re traditional investor long-term might be five years, maybe seven, but certainly not 15 or 50.

The reality is that climate changes in decades and centuries; it doesn’t change in seasons. When you look at how most investors in the outcome funding conversation approached it, they simply announced they had decided to become “outcome funders” and began asking their grantees to report out on outcomes instead of inputs and outputs, and yet made no investment in the infrastructure that would be required to actually report outcomes in a meaningful way. All we did was basically create another level of deception in the dance of deceit between people with money and people who want money.

This is largely what we’re seeing today–you get all of this rhetoric about performance and metrics and documentation–coming largely from the asset-owning community, whether philanthropic or impact investor. Increasingly for-profit investors are also talking about their great metrics systems. But, we’re not making the investments on the ground that actually enable managers, activists and program participants to create information systems that actually inform practice, that actually help individuals understand transformation and change.

We’re in this weird environment where the public language coming out of Washington doesn’t even believe in science and metrics. And yet, we have more and more initiatives that are telling us of the importance of that. We need to understand who the metrics are for. Who controls the definition of terms and practice? How were those metrics used to inform practice as opposed to justify an allocation to a third party, whether an investor or a public sector actor? Again, it’s a question of power and control and defining these terms in ways that have meaning.

Let’s look at Acumen who has launched a Lean Data initiative, managed by Sasha Dichter, that has done a nice job really advancing and trying to get at that lower level. You have other groups that are looking at stakeholder voice and how you can drive that into the metrics and performance conversation in a meaningful way for impact investors. You have folks out there who are working to create better operating systems for metrics.

Which leaves me again asking the question of “why?” Why are we doing this? What is it that we really hope to get out of it? How will it actually be connected to enterprise management and community change rather than thinking of a new impact report that I can hand out to my peers or that I can present at a conference and somehow tell myself that my life matters because this metric went from here to there. This may be a a cynical take, but it’s what we’ve got.

Gino Borges:
In academia, in public school and in education in general, they always talk about teaching to the test. I sometimes see a similar vibration in the impact investing space where people are investing to the metric. Do you see a similar analogy there from teaching to the test to investing to the metric?

Jed Emerson:
The systems are still in flow, so I don’t know that there is a specific test that we can teach to in that way you’re describing. But, I do see some of the newer actors who are coming on the scene who really think that the solution is that we need better metrics. “Once we have better metrics than everything else kind of comes along.” These were people who in other spheres of life are successful, in part, because they define reality within this confined space. They say financial metrics are what matters. “Here’s how you execute against financial metrics and that’s how you make your millions.” Great–we know how to do that. That could be done.

But, is that really what this conversation is about? Obviously, I would say no. Yet it’s that same thinking they’re bringing into this space. “All we need is just better metrics and impact investing will really scale.” My response, obviously, is to what end? And, is that really the answer, is that really where we’ve come to? I would argue that again, as I said at the start of our conversation–no, that the better answers are revealed through bringing multiple lenses to our analysis. When you layer different lenses together, you see in total what it is that we should be paying attention to. Of course, part of it is capital performance and how we understand the financial elements of what we’re “investing” in. But, as was once said, we should not confuse the map for the territory; t he word is not the thing.

It’s not that the metrics that matter. It’s that they’re a means to an end. A lot of folks seem to be confusing the two, and we end up with what Martin Luther King Jr. referred to as “guided missiles and misguided men.” We need to be very clear: Having metrics that document and justify a strategy does not mean the strategy was successful.

Gino Borges:
I agree. I’ve always asked what is the opportunity cost of this metric? If the parallel conversation is about opportunity costs, I tend to feel much more comfortable. It’s when there’s a literality around the paradigm that I get really nervous. It really begs the question that part of what impact investing needs is an ongoing conversation on just the philosophy of science and the philosophy of knowing. People need to have some type of fundamental understanding of epistemology, the field of knowing and the philosophy of science and how methods actually shape the outcome–ultimately a creative socially-constructed exercise. It just seems that would be one way to keep the evolution of the space alive. Do believe that?

Jed Emerson:
That is certainly true—and it is just that type of historic exercise by which over the years we’ve evolved our current understanding of the social construct that is “capital.”

The best way to get there is to approach the conversation from a posture of humility. To say, in fact, “I don’t know; I may be very smart and clever, but I may not be the smartest person in the room,” which when you have money and you’re controlling the power relationship is actually a hard position to strike because everybody is telling you how smart you are and how clever and how good looking you are largely because they want to access your capital. That’s true for a philanthropy. It’s true for wealth holders of various types.

For practitioners, it’s also very challenging because you have to present a front of competence and conviction. You have to be able to say to people “in exchange for your million dollars, I’m going to generate this level of impact and transformation on the ground.” God forbid you should spend the million and come back to say it actually turned out differently from what we thought. “We took a new direction or we had to modify it.”

We’ve created this whole idea that we actually have answers–that all we have to do is follow the algorithm and we’ll get the right solution set presented. All we have to do is get the right definition, the right metrics and this will all be worked out in time. However, if you read history, if you really sit with the fundamental questions of philosophy, if you really study, the process of scientific evolution and development is a series of failed initiatives and hubris. Out of that, If we’re lucky, we have some sense of position within a given point in time where we say between where I stand today and where I stand 10 years from now, I’m going to take a set of readings and use metrics to guide me in a way that will be directionally, I pray and hope, accurate, but ultimately will take me somewhere that will give me a whole new perspective on where I stand today and will prove that I was wrong today because I have new insight. It’s this process of humility and openness and evolution and revolution that we’re losing as we seek to commodify impact, as we seek to create products that are conforming, that can be distributed nationally, that can “scale internationally.”
This is all what’s driven me to a place of saying “this is fucking insane!” We’ve got to stop and just reconsider–what is it that we’re really doing here? How did we get here? The best part of this is that we can actually know this because humanity has spent centuries reflecting on these issues of meaning and purpose, of the connection and linkage between wealth and justice and equity. These are not new things. Yet we seem to convince ourselves otherwise.

Arnold Toynbee, a historian, said something along the lines of the fact that “every generation is convinced it is the pinnacle of development.” On the one hand, it’s true–what we know today is so much more than what my parents knew or what my grandparents knew. And yet, so much less. We become so convinced that our technology, our algorithms, our philosophies, our experience are superior to the previous generations that we lose sight of the past and what it continues to offer–through history, through reading–the wisdom and insight that could actually really help us today.
We consistently believe we may operate in an ahistorical context—when in truth, we simply cannot. This is why I think we need to spend less talking and more time listening to history, what history has to say to inform how we are presently and how we’re called to be in a process of becoming because that’s what we are. We are connected backwards and we’re connected forward.

What I try to do in The Purpose of Capital is blow up some of how we think and open up a process of reflection. The book does not present any answers to the purpose of capital. It doesn’t really say “This is what it is.” I have one line where I try to get close to that. But, even so it’s a process of reflection, stepping back, and listening. That’s what’s really largely absent. And, that’s why the Ebook is free. I’ve priced the paperback and hardback at-cost with no royalties because I really think we need to change our conversation. The critical importance of the issues we’re talking about is income equity, justice, and shifting power relationships. These are important things. When you go to the conferences, everybody is leading with their solutions and their answers. But, at some point before we lock on to the next solution set, that we’re all so convinced it’s going to get us where we need to go, we just need to stop, and just listen and connect in a much, much deeper way with what this fundamental purpose is that we seek.

Gino Borges:
Now you mentioned the word “scale.” That’s another word that gets used unreflectively. Can you talk about your relationship with the term scale? Is there a meaningful way to scale? How do we scale meaningfulness? Maybe that’s a dance upon itself, but I’d like to get your understanding on how your relationship with scale has evolved and how we can move it out into the world.

Jed Emerson:
In the book, I have a chapter on scale and the impact “commons.” What’s important for us to understand is that you can scale for breadth and you can scale for depth. There are probably a lot of other ways that we can slice and dice that notion. We need to be careful about confusing scaling for breadth with effectiveness and efficiency and, again, achieving what it is that we hope to get. When you think about impact at scale, I think we’re often talking about ETFs or largely distributed impact. Now that’s not necessarily bad. For example, if I’m doing vaccination programs, literacy, or other related things, scaling for breadth as a good thing.

That said, we shouldn’t confuse that with the success of scaling for depth–with being able to really roll out a deeper connection and intentionality about the work in which we’re engaged. When I think of scaling impact, for me, the pinnacle of impact investing is the whole notion of Mutual Impact, which I describe in the book. Mutual Impact speaks to the idea that we as actors in this space have the opportunity to become as transformed, evolved and changed–to experience as much impact in our own lives, meaning and sense of purpose, as those that we are concerned with–the “objects of our impact,” if you well. In this way, impact is not something that we should attempt to scale as a way to “do” things to other people. Impact is really something that we are each involved in, a reciprocal kind of relationship.

For example, if you think about justice in the form of the truth and reconciliation councils in South Africa following the fall of apartheid, that’s scaling impact. That is deep; it is mutual and transformative. It’s not something that I do as an investor because I have the money and I control the power relationship, thus I get to define what the impact is. It’s not that. It is openness to the process itself. The problem with scaling impact investing is that it will simply become one more process of disintermediation. It’ll be one more way that we become separated from other. it will become one more way we pay other people to do shit that we should be doing ourselves and being engaged in ourselves. We need to be very careful as we think about what it is that we’re really trying to do here. How do we, on the one hand, deploy trillions of dollars of capital in pursuit of a changed world, and at the same time, maintain a connection?

In the development of experiential wealth management, this is where you have folks who are being organized into groups that go out into communities that are in dialogue with minors, with franchised, with whomever. These are examples of ways that people are trying to reconnect with the power of their wealth, both positively and negatively, and open themselves up to being changed by the relationship with capital. In the same way, franchised communities have tried to defend themselves from the impact of our capital over the centuries. This is all part of the process of understanding appropriate scale, a scale for depth versus breadth, and this whole notion of engaging in mutual impact as opposed to directing impact at others.

Gino Borges:
As we finish this conversation, are there any questions for Jed?

Audience:
I do. Now that you’ve worked in those different fields, do you have any thoughts on whether a for-profit or a nonprofit venture is more advantageous? Obviously it’s going to be the heart of the leaders of the organization that drive it, but just from the way it’s viewed in the public, the way it’s viewed by investors–what are your thoughts?

Jed Emerson:
Again, it goes back to this question of intent and what is it that you’re trying to do. Also, it’s a question of understanding where you are in your own process of development and evolution. For some entrepreneurs, they’re at a place where they need to prove to themselves that the business that they’re engaging in has embedded impact, advances positive value in “XYZ” ways, and can do that in order to create a level of financial return for shareholders and investors at “X” level. There’s a set of operating assumptions some entrepreneurs come into the process with that the type of organizational form that they create needs to reflect what they’re trying to do.

There’s another set of actors who are coming to the table and saying: “I’m interested in multiple stakeholder ownership, I’m interested in creating investment structures where outside investors can be rewarded for their investment in a way that doesn’t extract value from the very community that they’re concerned about.” That looks more like a hybrid vehicle. It looks more like a cooperative ownership structure. Then, there’s other ways that you can create that organizational entity to get you what you want.

I’ve had so many conversations with entrepreneurs who get trapped in a certain structure, vehicle or process. Again, this is where we all lightly think about this stuff at the front and then as we really get into it, realize, “Well, wait a minute, that’s not what I thought I was working for!” So, it can change and shift. You see folks who basically drive a certain business model and end up “cashing out” or being bought out because they actually want to go off and do what they really thought they were trying to do 10 years ago, but they got misdirected into these different vehicles that didn’t necessarily get them there. The trick is that it’s all good. Each of these are the right answer at a certain point in time for where a certain set of stakeholders are in their understanding of what this “is.” It’s not so much that any one of them are best or are the ones we all should gravitate toward. These are all simply different options in front of us. They’re all different tools from the toolkit that we can pull out and apply, and it’s critical to look at what the ultimate and deeper intent and purpose is. In the book and in my conversations, I’m trying to say that we actually know how to do a lot of this stuff. It is this idea of needing to spend that 55 minutes really thinking through very deeply what our intent and purpose is because it actually only takes about five minutes for you to figure out the vehicles that’ll get us there most effectively.

Gino Borges:
Very thoughtful in terms of understanding how form really is and how the medium actually becomes the message in a lot of ways. I want to again thank Jed Emerson, the author of the book, The Purpose of Capital and to thank you for joining the first Making Money More episode on the series of the Journey to Impact.