Social Capital Markets 2008 Recap – January 19, 2009 Kerri Golden, Karim Harji and Michael Lewkowitz

The Future of Social Capital Markets Katherine Fulton October 2008

A convergence of forces Money seeking diversification Values driven investors and consumers Growing inequity and environmental crisis Track record of early success Openings for policy change Talent pushing new careers Investing for impact is now “ locked in” CAN IT TAKE OFF?

The question for today is whether the bar will be set high enough —whether pioneering leaders will provide the talent, discipline and resources that will be needed to create a coherent marketplace with high standards for impact .

Building a Marketplace for Impact Investing Unlock Latent Supply of Capital by Building Efficient Intermediation Build Enabling Infrastructure for the Industry Develop the Absorptive Capacity for Investment Capital Uncoordinated Innovation Marketplace Building Capturing the Value of the Marketplace Maturity

High Net Worth and Ultra High Net Worth Individuals North America 3,300,000 HNWI 41,200 UHNWI Europe 3,100,000 HNWI 25,000 UHNWI High Net Worth Individuals (HNWIs) have assets of at least $1 million (excluding primary residence). Ultra High Net Worth Individuals (UHNWIs) have assets of at least $30 million (excluding primary residence). Asia-Pacific 2,800,000 HNWI 20,400 UHNWI Latin America 400,000 HNWI 10,200 UHNWI Africa 100,000 HNWI 2,100 UHNWI Middle East 400,000 HNWI 4,400 UHNWI Merrill Lynch and Capgemini World Wealth Report 2008

A convergence of actions Create industry defining funds as a beacon for how to address specific social issue(s) Place substantial catalytic, risk-taking capital in mezzanine finance structures Develop impact investing network Set the industry standards for social measurement Lobby for specific policy / regulatory change Coordinated Leadership THAT’S HOW IT COULD TAKE OFF

How Big Could it Be? Impact Investing in 5–10 years? U.S. Philanthropy $0.31 Trillion Impact Investing has the potential to grow to ~1% of total managed assets, which could result in ~$600B of capital channeled towards social and environmental impact All Investing $61.90 Trillion Negatively Screened Funds + Impact Investing $2.71 Trillion

Risk, Returns, Impact

Measurement and Metrics

We need it all…

Social/Financial Returns Will the midway point between zero and market-rate emerge as blended-rate level of financial return for this asset class? As capital emerges looking for blended-rate return, will we see deal-flow move to the centre? What level of social impact needed to lower expectations for financial return?

Allyson Hewitt Director, Social Entrepreneurship T 416-673-8410 E ahewitt @marsdd.com W www.marsdd.com