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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 percent of their assets in generating environmental and social value (through grantmaking) and 95 percent in generating financial returns (through the endowment or corpus). Emerson argued that foundations should actively align their financial and social investments.
Emerson believed that there were 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.
By 2005, an increasing number of foundations were working to align their financial investments with their programmatic goals. Examples included the Nathan Cummings Foundation, the Jesse Smith Noyes Foundation, the Abell Foundation, the F.B. Heron Foundation, and the Rockefeller Foundation’s ProVenEx Fund.
In planning for the future, Emerson wondered how to overcome the challenges associated with encouraging more foundations to a dopt a value-maximizing strategy of financial asset management. He aspired to help foundations assess the tradeoffs between the costs and benefits associated with each value-maximizing approach and to develop and disseminate strategies for mitigating various risk factors.
Emerson 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.
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Case No: SI76