Guaranteed ImpactSocial Impact or Your Money BackSubmitted by Daniel Blumberg, Dave Goodman, and Anna Hurley, Zicklin School of Business, Net Impact Chapter

Innovativeand Effective

In our society we guard against all sorts of risks—car accidents,

illness, floods, job loss—so why not guard against the misuse of our charitable donations?

By offering Impact Insurance, we acknowledge the reality that giving money away is risky, just as it's risky to invest in the stock market.

Stock market investors demand a return on their investment. However, many

charitable donors do not. Guaranteed Impact would change that mindset.

The Need

• Decision: Jesse wants to donate $10,000 to fight poverty. He is choosing between “Tried & True Organization” and “Game Changer New Organization.”

• Dilemma: Jesse is excited about Game Changer’s potential, but is afraid of wasting money on an unproven organization.

• Solution: Game Changer is a “Guaranteed Impact” organization. Jesse is offered “Social Impact or Your Money Back.”

How It Works

• Jesse pays 5% ($500) to Guaranteed Impact. (The percentage is based on the charity’s expected impact. Higher premiums will be paid for unproven organizations.)

• After 1 year, Guaranteed Impact (or a respected 3rd party) will determine whether Jesse’s money has been spent wisely.

– If Jesse’s money IS spent wisely: Guaranteed Impact will donate half of Jesse’s $500 to Game Changer and keep the remaining half to cover administrative costs, payouts on other policies, and to make a small profit.

– If Jesse’s money is NOT spent wisely: Jesse gets his $10,000 back, courtesy of Guaranteed Impact.

Benefits of Impact Insurance

• Enables more risk-taking: Guaranteed Impact encourages donors to give to innovative, but less well known, organizations.

• Carrot & Stick: (Carrot) If an organization performs well, it receives half of the insurance premium paid by the donor. (Stick) If an organization does not perform well, its insurance premium will increase or the organization could be removed from the Guaranteed Impact program.

• Guarantees are impressive: The marketing value of a guarantee is very strong. Even people who do not elect to pay for impact insurance will be impressed by the “Social Impact or Your Money Back” guarantee.

• Raise awareness of impact metrics: Guaranteed Impact will use the latest social impact evaluation metrics. We are guaranteeing social impact. We are not necessarily promising low overhead.

Implementation

1.) Partner with a major insurance company to acquire appraisal & actuarial expertise needed to run Guaranteed Impact.

Benefits for the insurance company: • Corporate Social Responsibility – Guaranteed Impact will enhance the

insurer’s image• Potential profits – Guaranteed Impact is designed to be economically

viable• New customers – Customers who purchase “Impact Insurance” will be

more likely to purchase auto or home insurance from the same company

2.) Pilot the program by inviting 50 innovative social organizations (in need of fundraising help) to be a part of Guaranteed Impact’s test phase.

Implementation(continued)

3.) Launch Marketing Campaign• The campaign will encourage more risk-taking in giving,

feature some of the innovative organizations, and promise “Social Impact or Your Money Back”

• Guaranteed Impact Seal. The organizations will display the “Social Impact or Your Money Back” pledge on their websites.

4.) Evaluate and Expand. Once Guaranteed Impact is shown to be viable, double the number of organizations. Then double it again…

Additional Ideas

• Student-organized effort will encourage universities to place at least 2 % of their endowments into Social Investments

• Dual goals of educating future leaders (the students) as well as shifting dollars from passive to active

• Universities are implicit donors by accepting lower returns for socially-screened portfolios

• The "screening" tool is archaic, ineffective and fiscally irresponsible.

• > $400 Billion in University endowments in 2008

Universities Allied for Social Investment

Additional Ideas

• Social Investor Rewards is a program offered through credit cards

• Participants use their credit cards to donate to organizations they expect to have high social impact

• The lending institution promises to match a predetermined sum in donations to the highest performing social impact organizations

Social Investor Rewards

Additional Ideas

• The “Why We Don’t Just Give” campaign features prominent impact investors telling their stories of how accountability and measurement transforms lives

• Celebrities featured in short video vignettes might include:– Brad Pitt: Make it Right– Christy Turlington: Global Fund– John Legend: Show Me Campaign

• Vignettes will be widely distributed on the web, radio, and tv and conclude with: “Learn more at MarketsForGood.com”

We Don’t Just GiveWe Invest