MSFS-622 Financing Social Impact
Spring for 2016-2017
Walsh, Brian
In December 2015, Facebook founder Mark Zuckerberg and his wife Pricilla Chan launched the Chan Zuckerberg Initiative, a limited liability corporation (LLC) dedicated to “advancing human potential and promoting equality.” They ultimately intend to deploy 99% of their Facebook stock through this vehicle (estimated to be worth $45 billion at the time of the announcement). They chose the legal form of a LLC, instead of a charitable trust or private foundation, so they can have maximum flexibility to deploy their capital in pursuit of the social impact they seek. With the LLC, they are free to make donations to nonprofit organizations, investments in for-profit companies, political donations, or engage in lobbying. This decision reflects a clear recognition that the way to finance social impact is rapidly changing.

Every time capital is deployed into a company or organization, there is impact; some of it positive, some of it negative, and some of it neither particularly positive nor negative. This course will cover all the different ways that people and organizations deploy capital in pursuit of net positive social impact. Government spending involves the deployment of public capital (collected via taxes on private capital) for public benefit. Traditional investing involves the deployment of private capital for private benefit. Traditional philanthropy involves the deployment of private capital for public benefit. The emerging practice of impact investing involves the deployment of private capital for both private benefit and public benefit.

Specifically the course will consider:

All the ways that asset owners are engaging their asset managers to make investments aligned to their values
The role of technology in social innovation
Trends in responsible investing (in the public markets), impact investing (in the public markets) and effective philanthropy (especially by institutional philanthropy)
The policy environment around philanthropy, impact investing, and responsible investing
New enterprise forms like Benefit Corporations and certification mechanisms like “B Corps”, as well as investment vehicles like Donor Advised Funds
Systems and approaches to measure and report on social impact
“Pay for Success” contracts for public/private financing models (also known as “Social Impact Bonds” or “Development Impact Bonds”)
Impact theses, logic models, theories of change, and approaches to monitoring & evaluation
Program related investments & mission related investments from foundation endowments

Specific skills gained or enhanced will include:
Understanding of major financial concepts and a demystification of financial jargon
Understanding of major impact concepts and a demystification of the jargon of social and environmental impact
Critical thinking, crisp writing, and dynamic oral presentations
“Human Centered Design” and other design-based approaches to problem solving and challenge mapping

Applicability to MSFS Concentrations
Since the course will cover a range of issues related to impact – from investing to philanthropy to policy, which relate to the private, social and public sectors – and since it will help develop the application of critical thinking and communication skills, it has intended benefits for all MSFS students.
Course Format
The course will be conducted in an experiential format. Students will form teams and act as consultants, hired by the Board of Directors of a fictional Foundation and charged with coming up with a strategic plan for allocating the Foundation’s capital and other resources – from the endowment to program related investments to grants to advocacy efforts to collaborations with other actors – to achieve measurable social impact.

Over the course of the semester, students will write a series of memos, beginning with an impact thesis where they stake out a specific issue area on which the Foundation should focus and culminating in a strategy memo and presentation for how the Foundation should effectively deploy its range of resources in pursuit of addressing that issue area. The course will be taught using key readings, selected case studies, lectures, and guest lectures from experts in the field. There will be a heavy emphasis on collaborative engagement during the class – active participation from each student will be expected.
Credits: 3
Prerequisites: None
More information
Look for this course in the schedule of classes.

The academic department web site for this program may provide other details about this course.