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Responsible and Impact Investing Symposium November 10, 2016
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Responsible and ImpactInvesting Symposium

November 10, 2016

Responsible and Impact

Investing SymposiumTable of Contents

Agenda

Speaker Biographies

Glossary

Speaker Materials

Responsible and Impact

Investing SymposiumAgenda

Thursday, November 10, 2016 | 2 p.m. to 6 p.m.

Convener Welcome: Roberta G. Gordon, Bryan Cave LLP, New York Gabelli Welcome: Donna M. Rapaccioli, Ph.D., Fordham University, Dean, Gabelli School of Business

Directing Your Impact: Defining Responsible Investing and Related Endeavors – Drianne Benner, CFA, Appomattox, New York

• Examine the Differences

— Responsible Investing

— Impact Investing

— Environmental, Social and Governance (ESG) Focused Investing

— Community Investing

— Social Venture Capital Investing

— Angel Investing

Keynote – Aligning Personal/Community Value Systems With Investment Strategies – Thomas P. DiNapoli, Comptroller, State of New York

• Fiduciary Duty, Shareholder Activism and Investing to Advance Social Goals

Responsible and Impact

Investing SymposiumAgenda

Impact Investing and Private Foundations – PANEL

Moderator: Dana K. Bezerra (Pancrazi), Vice President, Capital Markets, Heron Foundation, New York

The use of endowments by private foundations (PFs) to achieve charitable and social goals, particularly utilizing Program-Related Investments (PRIs), an increasingly popular tool deployed by entrepreneurial-minded philanthropists.

• The Laws Under Which Private Foundations Operate – Keith J. Kehrer, Bryan Cave LLP, St. Louis

— Jeopardizing Investments Under Section 4944 of the Internal Revenue Code

— Evolving Legal Parameters and Tax Implications

• Program Related Investments and Private Foundations – John J. Oddy, Senior Philanthropic Director, Foundation Source, New York

— What is Impact Investing for PFs?

— What are PRIs?

— Types of PRIs

• Loan

• Loan Guarantee

• Equity Investment

— The PRI Agreement

Q & A / BREAK

Responsible and Impact

Investing SymposiumAgenda

Strategies for Achieving Impact Without Compromising the Bottom Line Addressing the Challenges Facing Mature Companies – PANEL

Moderator: Jackie S. VanderBrug, Managing Director and Investment Strategist, U.S. Trust, Bank of America, Boston

Interest in impact through public companies is at an all-time high. Changes in the regulatory landscape, additional data sources and increasingly educated investors fuel the debate around the potential for impact across portfolios. This panel will unpack the questions and opportunities and address the elements of responsible investing and the impacts that actually are materializing.

• Responsible Public Companies and Responsible Investing at Traditional Investment Firms – Kimberly Ryan, CFA, Social Impact Investing Team, Wells Fargo Private Bank, San Francisco

• The Duties of Directors and Companies With Socially Positive Missions and Benchmarks (Benefit and B Corporations) – Kenneth L. Henderson, Bryan Cave LLP, New York

• SEC and other Disclosure on Sustainability – Steven J. Poplawski, Bryan Cave LLP, St. Louis

Investing From the Bottom Up – Seed Stage, Venture and Private Equity Funding to Achieve Impact – PANEL

Moderator: Carrie A. Endries, Ph.D., Senior Portfolio Manager and Director of Impact Investments, Reynders McVeigh Capital Management, LLC, Boston

Explore strategies, considerations, risks and opportunities for impact investing. Topics will include funds and co-investment opportunities, investment in individual enterprises, innovative investment trends, investing in start-ups and entrepreneurial ventures, measuring impact, as well as a case example from an impact entrepreneur.

Private Equity Impact Capitalism – Silda Wall Spitzer, Senior Advisor, NewWorld Capital Group, New York

Angel Investing – Bonny Moellenbrock, Executive Director, Investors’ Circle, Durham

— Why invest in start-ups/entrepreneurs

— Innovative investment trends

— Risks – accredited investors

— The role of the home office

• Case Example: Food Tech Solution for Wasted Food – Ricky Ashenfelter, CEO, Spoiler Alert, Boston

Q & A / BREAK

Responsible and Impact

Investing SymposiumAgenda

Responsible Investing Diligence: Green Lights and Red Flags, Early Stage Due Diligence/When to Walk Away – Garrett Melby, Co-Founder & Executive Director, GoodCompany Ventures, Philadelphia

• Diligence

— How to align due diligence resources with key risks and critical assets that frame investment opportunity and manage diligence time and expense in the early stage context.

• Walking Away

— Litmus Tests

• Product Issues

• Management Issues

• Financial Issues

— Missing Good Deals versus Avoiding Bad Deals

The Future of Sustainable Investing: From Individual Values to Corporate Value – Daniel C. Esty, Hillhouse Professor, Yale School of Forestry and Law School; Director, Yale Center for Environmental Law and Policy, New Haven

• Green to Gold

• How smart companies are using sustainability strategy to innovate, create value, and build competitive advantage

• Why mainstream investors have decided that sustainability matters

• Recasting corporate sustainability metrics for broader investor use

Q & A

Reception to Follow

Responsible and Impact

Investing SymposiumSpeaker Biographies

KEYNOTE - THOMAS P. DiNAPOLI

New York State Comptroller

Office of the New York State Comptroller,

New York

Thomas P. DiNapoli is the 54th Comptroller of

the State of New York. He is known for his integrity, independence

and steadfast leadership. Since taking office in 2007, Tom DiNapoli

has aggressively fought misuse of public resources, strengthened one

of the nation’s top public pension funds, and consistently spoken out

against fiscal gimmicks and government inefficiency.

Comptroller DiNapoli has changed the way the $178.1 billion state

pension fund operates to increase transparency and establish strong

internal controls, ensuring the strongest investment performance

and ethical operations. He barred investment firms contributing

to his campaign from doing business with the state pension fund.

He was also a leading voice in getting the Securities and Exchange

Commission to impose tough new rules on “pay to play” to prevent

improper influence on investment decisions.

Protecting public funds from waste, fraud and abuse is part of

Comptroller DiNapoli’s core responsiblities. His audits and efforts

have identified billions in misuse, waste and savings. He has also been

relied on to examine public finances and provide an independent,

credible analysis of government finances.

In January 2013, his office launched a Fiscal Monitoring System to

score localities on their fiscal condition, sending an early warning to

those in trouble. He has consistently advocated for budget and debt

reform to give New York State a more secure fiscal future.

RICKY ASHENFELTER Co-Founder & CEO

Spoiler Alert, Boston

Ricky Ashenfelter is the CEO of Spoiler Alert,

a Boston-based technology startup offering a

collaborative online platform that enables food businesses to recover

value from unsold food inventory. Born out of MIT in 2015, Spoiler

Alert was a 2015 winner of MassChallenge and member of the 2016

cohort of Techstars. Prior to Spoiler Alert, Ricky was a sustainability

consultant at Deloitte, where he led energy and supply chain analyses

for major food, retail, and CPG companies. Ricky holds a B.S.B.A. in

Finance & Environmental Studies from Georgetown University and an

MBA from the MIT Sloan School of Management.

DRIANNE BENNER

CFA, Managing Director

Appomattox, New York

Drianne Benner is a Managing Director for

Appomattox. She is responsible for business

development and client service. Previously, she was Global Marketing

Director at Cadogan Management LLC, where she was responsible

for overseeing firm-wide marketing and client communications for

institutional and family office clients. Prior to joining Cadogan, she

spent ten years, most recently as a Managing Director, at U.S. Trust

Company, where she developed and led client and marketing initiatives

focused on investment communications, initiated an institutional

consultant relations program and serviced large institutional clients.

Earlier she worked at Paribas Asset Management, a global asset

management firm, in a variety of roles including institutional and

consultant relations to some of the largest U.S. pension funds and as

a manager of portfolios in an enhanced quantitative strategy.

She earned a BA from Pennsylvania State University and attended

graduate studies in regional planning in international development at

Cornell University. She serves on the Board of the New York Society of

Security Analysts, Peconic Green Growth as well as on the Philanthropy

Committee of the Peconic Land Trust. She is a CFA Charterholder and

a member of the New York Society of Security Analysts.

Responsible and Impact

Investing SymposiumSpeaker Biographies

DANA K. BEZERRA Vice President, Capital Markets

Heron Foundation, New York

Dana K. Bezerra (Pancrazi) joined Heron in 2006.

She is responsible for deal sourcing, identifying

and developing relationships across a spectrum of investors,

syndicating capital when possible, and cultivating opportunities to

deploy the full range of Heron’s “toolbox” including grants, program

related investments and market-rate mission related investments.

Prior to joining Heron, Ms. Bezerra was with Merrill Lynch in the Private

Banking & Investment Group where she specialized in Philanthropy

and Nonprofit Management.

Ms. Bezerra is currently on the Board of Capital Impact Partners, a

$1B CDFI. She also serves on the steering committees for Mission

Investors’ Exchange and Markets for Good, and as a reviewer for

the Bill & Melinda Gates Foundation as part of its Grand Challenge

Exploration Program.

Ms. Bezerra is a native Californian and earned a Bachelor of Science in

Agricultural Business and Public Policy from Cal Poly, San Luis Obispo.

CARRIE A. ENDRIES, PH.D.

Senior Portfolio Manager and Director of Impact

Investments

Reynders, McVeigh Capital Management,

Boston

Carrie A. Endries, Ph.D., is Senior Portfolio Manager and Director of

Impact Investments at Reynders, McVeigh Capital Management, an

investment firm with more than $5 bil. under advisement that works

with individuals, families and foundations. Prior to finding her way to

the investment world, Carrie was a professor, teaching consultant and

technology analyst. She serves on several nonprofit boards, enjoys

mentoring social impact start-ups and is a current member of the

Boston Economic Club. Carrie graduated from Bowdoin College and

holds a Ph.D. from Harvard University.

DANIEL C. ESTY

Hillhouse Professor

Yale School of Forestry and Law School;

Director

Yale Center for Environmental Law and Policy,

New Haven

Dan Esty is the Hillhouse Professor at Yale University with primary

appointments in Yale’s Environment and Law Schools. He serves

as Director of the Yale Center for Environmental Law and Policy.

He has written extensively on environmental protection, energy,

and sustainability — and their connections to corporate strategy,

competitiveness, trade, performance measurement, and economic

development. From 2011 to 2014, Dan served as Commissioner of

Connecticut’s Department of Energy and Environmental Protection.

Prior to taking up his Yale Professorship in 1994, he served in the

US Environmental Protection Agency and was a senior fellow at the

Peterson Institute for International Economics in Washington, DC.

ROBERTA G. GORDON

Bryan Cave LLP, New York

Ms. Gordon represents clients on the

environmental aspects of business transactions,

litigation, compliance, remediation and insurance

and on brownfield redevelopment and lender environmental liability.

She was awarded a Gold Medal for Exceptional Service as an attorney

at the United States Environmental Protection Agency and served

in New York State Department of Law’s Environmental Protection

Bureau. She clerked for the Hon. Leonard B. Sand of the United States

District Court, Southern District of New York. She obtained her law

degree from Yale Law School, where she was Senior Editor of the Yale

Law Journal and undergraduate degree with highest honors from the

University of California. Ms. Gordon directs a foundation focused on

responsible investing.

Responsible and Impact

Investing SymposiumSpeaker Biographies

KENNETH L. HENDERSON

Bryan Cave LLP, New York

Kenneth Henderson’s corporate and securities

transactional experience is focused on mergers

and acquisitions, public and private financings

and domestic and international joint ventures. He has advised strategic

and financial buyers and sellers and special board committees in M&A

transactions as well as boards of directors and committees regarding

governance and other matters. Mr. Henderson also provides day-

to-day corporate, securities, governance and business law advice

to publicly held and privately owned business clients in the United

States and abroad in a variety of industries, including fund managers

and family office structures and companies in the financial services,

technology and services industries. Mr. Henderson serves on the

board of directors of Small Business Majority Foundation, Inc.

KEITH J. KEHRER Bryan Cave LLP, St. Louis

Keith Kehrer leads Bryan Cave’s Tax-Exempt

and Nonprofit Organizations Team. He advises

clients on various legal issues related to tax-

exempt organizations. Mr. Kehrer has extensive experience counseling

clients on nonprofit corporate and tax-related issues under Section

501(c) of the Internal Revenue Code, and has also advised numerous

private foundations, including grantmaking, family, and operating

foundations, on issues related to self-dealing, minimum distribution

requirements, excess business holdings, jeopardizing investments,

taxable expenditures, and foreign activities. Other organizations he has

advised include supporting organizations, community foundations,

and donor advised fund sponsors. Mr. Kehrer is also a certified public

accountant, and teaches a class regarding tax-exempt organizations

as an Adjunct Professor at Washington University School of Law.

GARRETT MELBY

Co-Founder and Executive Director

GoodCompany Ventures, Philadelphia

Garrett Melby is co-founder of GoodCompany

Ventures, a nonprofit accelerator for social

entrepreneurs that has mobilized over $60mm in private capital

to scale their impact. Garrett is also the founder of Iolite Impact

Capital, the developer of MAPS (Mission Aligned Portfolio Strips), a

patented structure that improves returns and reduces risk for impact

investors while also generating capital for aligned nonprofit partners.

Garrett is an active angel investor with Investors’ Circle, and serves

on the Investment Committee for the Wharton Social Venture Fund.

Previously, Garrett was a VC with Safeguard Scientifics, Inc. He began

his impact investment career as an emerging market finance attorney

with Skadden Arps. Garrett holds a B.A. from Yale University and a J.D.

from Boston University.

BONNY MOELLENBROCK Executive Director

Investors’ Circle, Durham

Bonny Moellenbrock is the Executive Director

of Investors’ Circle, the largest and most active

early-stage impact investing network in the world. Since 1992, IC has

propelled over $200 million into 320+ for-profit enterprises dedicated

to improving the environment, education, health, and community.

Previously, Bonny was a Managing Director at SJF Ventures, a

leading impact venture fund investing in high-growth, positive impact

companies in the cleantech, sustainability, and tech-enhanced

services sectors. Before joining SJF in 2000, she served as COO and

CFO of Preservation North Carolina and on the management team of

an entrepreneurial recycling company.

Bonny serves on the GIIRS Developed Markets Standards Advisory

Council, the Advisory Board of AMCREF Community Capital, and the

Board of the CAHEC Capital Loan Fund. She holds an MBA, a Master of

Regional Planning, and a BA in Environmental Policy from UNC-Chapel

Hill, and is a graduate of the Venture Capital Institute. Bonny enjoys

gardening and making music with her husband and two daughters at

their historic bungalow in Durham, NC.

Responsible and Impact

Investing SymposiumSpeaker Biographies

JOHN J. ODDY Senior Philanthropic Director

Foundation Source, New York

John Oddy, Senior Philanthropic Director at

Foundation Source, is an expert in the field of

philanthropy and private foundations. He helps clients accomplish

their philanthropic goals in various ways including research, strategic

planning, grant-making and evaluation, governance and family

engagement. He has over 20 years of experience in the nonprofit

sector.

Before coming to Foundation Source, Mr. Oddy was Executive Director

of The Royal Oak Foundation, a U.S. charity supporting the National

Trust of England, Wales, and Northern Ireland. Prior to that, he was

Program Officer at the Getty Grant Program, the philanthropic arm

of the J. Paul Getty Trust, supporting conservation of significant art

and architecture internationally. He also launched and managed

various grantmaking initiatives in previous positions he held at The

Judith Rothschild Foundation and The J.M. Kaplan Fund of New York.

Mr. Oddy studied Art History as an undergraduate at Bard College and

Urban Planning at New York University’s Robert F. Wagner Graduate

School of Public Service.

STEVEN J. POPLAWSKI Bryan Cave LLP, St. Louis

Steven Poplawski leads Bryan Cave’s

Environmental group. He provides compliance

counseling regarding a wide range of regulatory

issues in all major environmental areas, including air, waste, and water.

He has also represented corporations on enforcement matters, and

has handled environmental litigation matters throughout the U.S.,

and has represented clients with regard to environmental liabilities in

bankruptcy and cost recovery actions. In addition, Mr. Poplawski has

advised publicly traded clients on their environmental disclosures and

both private and public companies on their sustainability policies. Mr.

Poplawski served as the chair of the Environmental Committee of the

St. Louis Regional Chamber where he worked on enhancing business

development consistent with sustainability goals for the St. Louis

Region. He is also the chair of the firm’s sustainability committee.

DONNA M. RAPACCIOLI, PH.D. Dean, Gabelli School of Business

Fordham University, New York

Dr. Donna Rapaccioli is Dean of the Gabelli

School of Business at Fordham University, where

she holds the rank of University Professor. As an administrator, Dr.

Rapaccioli has earned a reputation for creating academic programs

that emphasize applied learning, a global perspective, interdisciplinary

thinking, and strong ties with industry. Her philosophy centers on

business with purpose, grounded in the Jesuit-influenced principle

that commerce should advance society in a greater way. She earned

her bachelor of science degree in business administration from

Fordham University’s Gabelli School of Business and her master’s

degree and PhD in accounting from New York University’s Stern

School of Business. She also serves on the Board of Directors of

Fordham University’s London Centre, the Steering Committee for

Fordham’s Consortium for Social Justice, and the Board of Advisors of

the Fordham Corporate Law Center.

Responsible and Impact

Investing SymposiumSpeaker Biographies

KIMBERLY RYAN CFA, Social Impact Investing Team

Wells Fargo Private Bank, San Francisco

Ms. Ryan is an equity portfolio manager for the

Social Impact Investing team and member of

Wells Fargo Private Bank in San Francisco, California. She manages

several equity strategies designed to address the concerns of

traditional social investors and those interested in the integration

of fundamental analysis and environmental, social and governance

factors. Most recently Ms. Ryan was a partner, senior portfolio

manager with Nelson Capital Management. In that role, she served as

a member of the investment and corporate engagement committees.

Before joining Nelson Capital, Ms. Ryan spent 11 years as an investment

manager and equity analyst with Wells Fargo Private Bank. She was a

member of the Growth Equity Team and focused on the technology

sector. In preceding years, she covered stocks in the consumer and

telecommunications sectors.

Prior to her time at Wells Fargo, Ms. Ryan worked in the consumer

healthcare and investment banking industries. At Deutsche Banc

Alex Brown, she worked on numerous deals in the media industry

including equity and fixed income financings, as well as mergers and

acquisitions. She has been in the financial industry for more than 19

years.

Ms. Ryan holds the Chartered Financial Analyst® designation and is a

member of the CFA Institute and CFA Society of San Francisco.

Ms. Ryan holds a B.B.A. from the University of Notre Dame with a

double major in Finance and Government.

SILDA WALL SPITZER Senior Advisor, NewWorld Capital Group,

New York

Silda Wall Spitzer is Senior Advisor at NewWorld

Capital Group, a private equity firm investing

in growth equity and infrastructure project finance within the

Environmental Opportunities sector (energy efficiency, clean energy,

water, waste-to-value and environmental products/services). Also

an entrepreneur, lawyer, former First Lady of New York State and

nonprofit leader, she has devoted her efforts to sustainability, youth

service/education, and human rights/women’s empowerment. Her

environmentally-related not-for-profit activities include serving as

Vice-Chair of Urban Green Council, Ceres Presidents’ Council member

and Advisory Board member of The Sustainable Endowments

Institute.

Responsible and Impact

Investing SymposiumSpeaker Biographies

JACKIE S. VANDERBRUG Managing Director and Investment Strategist

U.S. Trust, Bank of America, Boston

Jackie VanderBrug is a managing director

and investment strategist at U.S. Trust, Bank

of America Private Wealth Management within the Global Wealth &

Investment Management division of Bank of America. In this role,

she is responsible for defining and executing investment strategies

focusing on U.S. Trust® Impact Investing initiatives across all asset

classes. She is a regular contributor of the thought leadership reports

— IMPACT FORUM — with topics on sustainability, millennials and

corporate strategy that align with investment strategies for high net

worth individuals, families and foundations. She is a regular speaker

and presenter representing U.S. Trust at conferences including the

Nantucket Project, Clinton Global Initiative, Aspen Ideas Festival, and

Social Capital Media (SOCAP).

Prior to joining U.S. Trust, Jackie was managing director at Criterion

Ventures, a hybrid consulting firm where she worked with high net

worth individuals and large non-profits on impact strategies and led

the development of the field of Gender Lens Investing; she also led

the Business Development of the start-up team at iBasis; and, co-

founded WORK IN PROGRESS, a non-profit social enterprise focused on

career development for underprivileged youth. She started her career

as an domestic policy analyst for the U.S. Congress and as a strategy

consultant for Fortune 500 firms.

Jackie received her M.B.A from the Ross School of Business at the

University of Michigan and her B.S. in Mathematics from Calvin College.

Jackie is an Aspen Institute First Mover Fellow and serves on the Board

of the Trustees of the Donations.

Responsible and Impact

Investing SymposiumGlossary

Accredited Investor: A person or entity deemed to be qualified to take on the economic risk of investing in unregistered securities. To qualify as an accredited investor the person or entity must satisfy one of the requirements defined by the SEC in Rule 501 of Regulation D regarding income, net worth, asset size, governance status or type of entity.

Angel Investor: An accredited investor who provides capital for entrepreneurial startups.

B Corporation: For-profit companies certified by the nonprofit organization B Lab to meet rigorous standards of social and environmental performance, accountability and transparency. A B Corp may or may not also be a benefit corporation.

Benefit Corporation: A type of for-profit corporate entity, authorized by 30 U.S. states and the District of Columbia that includes positive impact on society, workers, the community and the environment in addition to profit as its legally defined goals. Variously referred to as “benefit corporations,” “social purpose corporations” or “public benefit corporations” depending on the particular jurisdiction.

Community Investing: Investments targeted locally to provide beneficial returns, often in underserved communities, such as safe and affordable housing, job opportunities, education and other services.

CRA (Community Reinvestment Act): An act of Congress (1977, updated in 1995, 2005) which encourages depository institutions to help meet the credit needs of their communities, particularly low- and moderate- income neighborhoods. The CRA requires federal regulators to assess the record of each depository institution in helping to fulfill its obligations to the community.

CSR (Corporate Social Responsibility): A form of corporate self-regulation integrated into a business model including initiatives to assess and take responsibility for the company’s effects on environmental and social wellbeing. Also referred to as “corporate conscience,” “corporate citizenship” or “responsible business.”

ESG (Environmental, Social and Governance): Three central factors in measuring the sustainability and ethical impact of an investment in a company or business.

GIIN (Global Impact Investing Network): A nonprofit organization, based in New York, dedicated to increasing the scale and effectiveness of impact investing. The GIIN builds critical infrastructure and supports activities, education and research that help accelerate the development of a coherent impact investing industry.

GRI (Global Reporting Initiative): An international, independent organization that helps businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others.

Impact Investments: Investments made with the intention to generate social and/or environmental impact as well as a financial return.

Responsible and Impact

Investing SymposiumGlossary

LC3 (Low-Profit Limited Liability Company): A for-profit, social enterprise venture, formed as a limited liability company that has a stated goal of performing a socially beneficial purpose, not maximizing income. As a limited liability company, an LC3 generally is treated as a “flow through vehicle” for tax purposes.

MRI (Mission-Related Investment): Investments that align a philanthropic or charitable organization’s management of assets with its mission and goals, while sustaining long-term financial return.

Place-Based Investing: Techniques for investing capital locally, via community ownership and access mechanisms, such as local banks, crowdfunding, municipal bonds or participation. Also referred to as “local investing.”

PRI (Program-Related Investment): “Recoverable grants” made by private foundations where the primary motivation is to achieve a charitable goal, rather than financial return. The funds are returned to the foundation in a specified period of time and the financial terms of the investment are often below market and/or preferential to the recipient. The three main types of PRIs include: loans, loan guarantees, and equity investments. PRIs qualify toward a private foundation’s 5% minimum distribution requirement and may be made to a range of non-profit and for-profit entities. Additional information and guidelines are available at (www.irs.gov/charities-non-profits/private-foundations/program-related-investments)

Responsible Investing: see SRI

SASB (Sustainability Accounting Standards Board): A board whose mission is to develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors in a cost-effective way. More than 2,800 individuals, including investors representing more than $23 trillion in assets under management and corporate professionals representing more than $11 trillion in market capitalization, participated in SASB’s industry working groups. (http://www.sasb.org/)

SRI (Socially Responsible Investment): An investment strategy which seeks to generate both financial and sustainable value. Traditionally SRI was accomplished with negative screens, removing certain companies or industries based on the products they produced, or by pursuing shareholder engagement. It can now consist of a set of investment approaches that integrate environmental, social and governance (ESG) as well as ethical issues into financial analysis and decision-making, in addition to negative screening and shareholder engagement.

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Impact Investing and Private Foundations

Laws Under Which Private Foundations Operate

Keith J. Kehrer, Partner, St. Louis

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• Private Foundations (“PFs”): Many PFs want to invest their fundsthrough impact investing– PFs have an estimated $732 Billion of investment assets– From 2000 – 2010, around 400 foundations invested $3.4 Billion in so-

called program-related investments (“PRIs”), a specific type of impactinvestment that enjoys special tax treatment for PFs.

– Gates Foundation has set aside $1.5 Billion to fund PRIs– MacArthur Foundation has set aside $.5 Billion to fund PRIs– Numerous other high profile foundations are actively using PRIs, including

the Heron Foundation, Rockefeller Foundation, Wal-Mart Foundation, FordFoundation, and Packard Foundation, to name a few

• For-Profits: For-Profits that seek capital may turn to PFs as asource of funds– L3Cs were originally created to attract PRIs– Benefit corporations and B corporations often seek PRIs

• Public Charities: Charities also seek capital through PRIs and/oruse the PRI guidance to engage in impacting investing

Who Is Impacted by these Rules?

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• Section 4942 imposes an annual “minimum distribution”requirement on PFs– A PF must make annual “qualifying distributions” equal to

approximately 5% of the FMV of the PF’s assets

– Qualifying distributions must be made by end of the following taxyear (2016 obligation is due by the end of the 2017 tax year)

– Qualifying distributions include grants for exempt purposes andrelated administrative expenses

– Qualifying distributions also include PRIs

– Failure to satisfy Section 4942 results in imposition of 30%excise tax on the “undistributed income”

Section 4942 Minimum Distribution Requirement

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• Section 4943 imposes limitations on the maximumamount of a business interest a PF may own– PFs and “disqualified persons” may not own more than a 20%

interest in a for-profit business

– 2% de minimis exception

– 5 year rule for gifts

– PRIs are not subject to the limitations under Section 4953

– Failure to satisfy Section 4943 results in imposition of 10%excise tax on the excess business holdings

Section 4943 Excess Business Holdings

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• Section 4944 imposes a “prudent investor” standard onPFs

• Must exercise ordinary business care and prudence in providing for the longand short term financial needs of the foundation to carry out its exemptpurposes.

– Effectively prohibits overly risky investments

– No per se prohibitions, but certain investments scrutinized:• Trading in securities on margin, commodity futures, investments in working

interests in oil and gas wells, the purchase of “puts,” “calls,” and “straddles,”the purchase of warrants, and selling short

– Encourages diversification and sound investments

– Requires consideration of risk and reward

– PRIs are not subject to Section 4944 standard

– Failure to satisfy Section 4944 results in imposition of 10%excise tax on the amount of the investment

Section 4944 Jeopardizing Investments

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• In general, Section 4945 restricts a PF’s grants to non-public charities:

• Applies to grants to other PFs, non-501(c)(3)s and for-profits

• Such grants are basically prohibited unless the PF exercises“expenditure responsibility” (additional due diligence)

– Pre-grant inquiry, written grant agreement, grantee reporting,disclosure on Form 990-PF

• PRIs are typically investments in a non-public charityand thus subject to the expenditure responsibility rules

• Failure to satisfy Section 4945 results in imposition of20% excise tax on the amount of the grant

Section 4945 Taxable Expenditure Rules

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• Uniform Prudent Management of Institutional Funds Act(“UPMIFA”)– UPMIFA is a uniform act that provides rules and guidance

regarding the investment of “endowment funds”

• Endowment funds are funds that under the terms of a gift instrumentare not wholly expendable by a foundation on a current basis

• Endowment funds do not include any board restricted or boarddesignated funds

– UPMIFA imposes prudent investor standard

• Managers may take into account any special relationship between aproposed investment and the organization’s charitable purposes

• UPMIFA generally does not apply to PRIs

UPMIFA

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• A board member shall discharge his or her duties as adirector in good faith, with the care of an ordinarilyprudent person and in a manner the director reasonablybelieves to be in the best interests of the corporation

• Directors should pay attention to fiscal matters,conscientiously decide matters that come before them,and serve as a check or veto on management

Duty of Care

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• A board member shall act and make decisions in theinterest of the corporation rather than in own personalinterest or interest of others (including other entities towhom the director also owes duties)

• Protect the confidentiality of corporate information

• Recusal from discussions with respect to matters as towhich a director has a personal interest

Duty of Loyalty

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• Duty to fulfill the organization’s mission and purposes

• Duty to follow the law and the organizational documents

Duty of Obedience

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Program Related Investmentsand Private Foundations

New York, NY

November 10, 2016

Page 2

Leveraging the “Other” 95% of Private Foundation Endowments

Aligning your investment portfolio with your charitable values –

beyond your grants.

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Page 3

Private Foundations and Impact Investing

Understanding the evolving

nomenclature of:

• Socially Responsible

Investing

• Mission Related Investing

• Program Related

Investing

Page 4

Impact Investing: An intention to create positivesocial impact and financial return. Impactinginvesting encompasses:

Socially ResponsibleInvesting (SRI)

• Private Foundations• Institutions and

Individuals• No legal definition

Mission RelatedInvesting (MRI)

• Private Foundations• Institutions and

Individuals• No legal definition

Program RelatedInvesting (PRI)

• Private FoundationsOnly

• Legal definition (IRSsection 4944)

3

Page 5

Socially Responsible Investing

• Do no harm

• Screen out the bad (alcohol,

tobacco, oil, etc.)

• For private foundations, SRI is

treated by the IRS as part of their

investment portfolio – does not

meet the definition of a PRI.

Page 6

Mission Related Investing

• More focused

• Seeking out tangible public goods

- Sustainable practices, good employeerelations, transparency

- ESG (Environment, Social, Governancemetrics)

• Stated goals or interest areas:

- Sustainable alternative energy

- Lowering the cost of health care

- Recycling to reduce landfills

• For private foundations, MRI is treated by

the IRS as part of their investment portfolio

– does not meet the definition of a PRI.

4

Page 7

September 2015IRS ruling onImpact Investing

Notice 2015-62

• For example, a private foundation will not be subject

to tax under section 4944 if foundation managers who

have exercised ordinary business care and prudence

make an investment that furthers the foundation’s

charitable purposes at an expected rate of return

that is less than what the foundation might obtain

from an investment that is unrelated to its

charitable purposes.

Page 8

Program Related Investing

History:

• Technical term only applies to U.S.

Private Foundations

• Established by IRS in the 1969

• Recent IRS updating of PRI rules in

April 2016 make it easier for PFs to

engage in PRIs.

5

Page 9

What is a Program Related Investment?

• PRIs take three main forms:- Loans- Loan guarantees- Equity investments

• Sometimes called “recoverable grants”

• PRIs are investments that meet the IRS’s and thefoundation’s definition of “charitable” - not justsocially beneficial

• PRIs are “qualifying distributions” countingtoward the foundations 5% minimum distributionrequirement (MDR)

• Not subject to normal prudent investmentstandards

• An opportunity to leverage and recycle limitedresources

Page 10

The Three Types of Program Related Investments - Examples

Loans

• Making a below-market rate loan to a business

enterprises in a rural area damaged by natural

disaster that lacked access to conventional funding

sources for rebuilding.

Loan Guarantee

• Guaranteeing a loan made by a bank to a childcare

public charity for the purposes of constructing a

new facility

Equity investments

• Investing in a pharmaceutical company to develop

a vaccine for a rare disease (and benefit financially

if successful)

6

Page 11

Defining a PRI: IRS Tests to Qualify

1. Primary purpose of the investment must be to further one or more

exempt charitable purposes of the foundation.

2. The production of income or the appreciation of property must not

be a significant purpose of the investment.

3. No electioneering and only very limited lobbying purposes may be

served by the investment.

Other factors:

• There is inherent risk or financial terms unattractive to traditional/

commercial investors

• The “but for” test – but for the charitable aspect of the investment,

the foundation would not otherwise participate

Page 12

The Agreement – The Cornerstone of a PRI

Describes all terms, deliverables, and

expectations related to the PRI such as:

- Interest rate if structured as a loan (varyingrates, usually below market)

- Term of loan

- Alternative scenarios – conversion of loan tostock

- Charitable concessions (discounts fornonprofits, etc.)

- How is the foundation is to be credited, or not?

- Equity investments:

• Agreement may take the form of a “sideletter” modifying a general stock offering

• A separate investor class agreement couldbe created if other private foundations areinterested.

7

Page 13

Discussion & Questions

Thank You!

John Oddy

Senior Philanthropic Director

Foundation Source

[email protected]

917-209-8271

[email protected]

8

Page 15

Managing a PRI

Minimum Distribution Requirement

• Foundation’s MDR is decreased by the amount of the PRI in the year it was

made

• As the funds are returned to the foundation, the MDR is increased by the

amount returned in the following year

Other

• All income and returns related to a PRI are subject to excise tax (1% or 2%)

• PRIs may be forgiven or renegotiated by the foundation

• PRIs are disclosed and tracked on the foundation’s tax return

• PRIs may be undertaken by foundations as a one-off or an ongoing program

• Foundation consequences for a PRI that is found not to meet the tests and

standards expected by the IRS

• Some PRIs are forgiven by lender foundations or do not meet their goals

Classically, a private foundation makes investments to increase or maintain the size of its endowment and to generate income so that it may make grants and otherwise engage in charitable programs and activities. Increasingly, foundations seek investments that further their charitable work (i.e., impact investments or mission-related investments in specifi c companies that actively promote social welfare and further the foundation’s mission). They also shy away from making investments in companies they deem socially irresponsible such as those that manufacture tobacco, fi rearms, or alcohol.

However, in addition to making “social purpose” investments from its endowment, a private foundation can consider making a program-related investment or “PRI” in commercial ventures from its grantmaking budget.

PRIs are mission-driven investments that are not subject to the normal prudent investment standards. For legal purposes, PRIs are considered to be more akin to grants because they are made purely to further a charitable purpose without regard to any return on investment. PRIs, by defi nition, do not have to be prudent, and they are not subject to an excise tax for jeopardizing investments.

There are three typical types of PRIs: loans, loan guarantees, and equity investments in for-profi t organizations, such as corporations, limited partnerships, and limited liability companies. This article will focus on PRI equity investments because it is less understood than the other two varieties.

Under what conditions can a foundation make a PRI in a for-profi t entity?

In order to make a PRI, the foundation must meet three requirements:

• The primary purpose of the investment must be to further one or more charitable purposes of the foundation. In larger measure, this is a determination specifi c to each foundation, its mission, and the proposed PRI.

For example:

A foundation’s mission is to improve the health and wellbeing of people living in poverty. The foundation invests in an organic fruit and vegetable stand that would not otherwise be built in a very poor neighborhood. Although there is nothing inherently charitable about operating a fruit stand, having the fruit stand in this neighborhood furthers the foundation’s charitable purpose.

Program-Related Equity Investments

The information provided in this document is for general information purposes only, and does not constitute legal, tax, or investment advice.

1

Jeffrey D. Haskell, J.D., LL.M. (Taxation), Chief Legal Offi cer, Foundation SourceDavid A. Levitt, J.D., and Robert A. Wexler, J.D., Adler & Colvin

THE TRUSTED PARTNER BEHIND AMERICA’S FOUNDATIONS

• The production of income or the appreciation of property may not be a signifi cant purpose of the investment. In the above example, note that the foundation is not investing in the fruit stand because it expects to turn a profi t.

• As is true of any foundation grant, the PRI cannot be used to fund electioneering or lobbying activity. As this is not generally a concern with PRI equity investments, this is not further addressed in this paper.

How does the IRS determine whether an investment in a for-profi t entity furthers a foundation’s charitable purpose?

Not every investment that furthers a charitable purpose automatically qualifi es as a PRI. In order to do so, an investment must pass the primary exempt purpose test. There are two parts to this test: First, the investment must signifi cantly further the accomplishment of the foundation’s charitable purpose. Second, the investment must be such that it would not have been made but for its relationship to the foundation’s charitable purpose.

Note that the for-profi t entity receiving the PRI does not itself have to intend to engage in a charitable activity; rather, its activity must further a charitable purpose of the foundation. Consider an example:

The foundation is dedicated to eradicating a rare disease. A large pharmaceutical company is close to developing a promising vaccine, but because there isn’t a sizeable market for it, the vaccine will not be fully developed and submitted for the long and costly FDA approval process, and it will therefore never be made available. To induce the pharmaceutical company to develop the vaccine, the foundation purchases shares of the common stock of a subsidiary of the pharmaceutical company established explicitly for researching and developing the vaccine.

Because the foundation’s investment in this vaccine is directly aligned with its charitable purpose, the development of the vaccine would signifi cantly further the foundation’s mis-sion, and the foundation is making the investment only because doing so could help it fulfi ll its mission, the investment would pass the primary exempt purpose test. However, if the foundation were to make an investment in the same subsidiary without the intent of thereby advancing its mission, it would probably fail to pass this test.

Practice Points:

• Where a for-profi t entity has only one activity for which it is seeking funding (e.g., building a fruit stand in a poor neighborhood), the foundation must evaluate the activity to ensure that it furthers its charitable purpose. Where the entity has multiple activities (e.g., the large pharmaceutical company, which presumably has multiple product lines), the foundation must ensure that its funds are going toward one or more of the activities that actually furthers its charitable purpose.

• The foundation’s own purpose, as set forth in its articles or certifi cate of incorporation, is also relevant in determining whether any given PRI furthers the foundation’s particular charitable purpose or purposes. If a private foundation has a very broad mission (e.g., “to bring about a happier, verdant, and peaceful world”), it will have a broader array of PRIs that it might fund. A foundation with a narrow purpose (e.g. “to fi nd a cure for cancer”), could only fund PRIs that furthers its narrow charitable purpose.

The information provided in this document is for general information purposes only, and does not constitute legal, tax, or investment advice.

2

Program-Related Equity Investments

How does a foundation know if a PRI has no signifi cant purpose of generating income or the appreciation of property?

As there can be a signifi cant opportunity for generating a profi t, a foundation needs to be careful when making a PRI equity investment. The single test here is whether no signifi cant purpose of the investment is the production of income or the appreciation of property. As a practical implication, a PRI should be less attractive to traditional investors. The Regulations point out that the IRS will consider whether investors solely concerned with profi t would be likely to make the investment on the same terms. However, the fact that an investment actually produces signifi cant income or capital appreciation is not, in the absence of other factors, conclusive evidence that income or appreciation was a signifi cant purpose of the investment, and therefore does not preclude the investment from being a valid PRI.

Consider the vaccine for the rare disease in the previous example. What if, during the FDA approval process, the pharmaceutical company discovered that the vaccine also happened to prevent the common cold? Now, instead of having an unprofi table vaccine on their hands, they’ve got a potential goldmine, and investors are taking notice. Although the foundation didn’t invest in the vaccine for a fi nancial return, it now stands to reap a substantial return on its investment. The fact that this “bad investment for a good cause” ultimately proved to be an excellent investment does not render the PRI invalid.

A private foundation could make its motives manifestly clear by developing an exit strategy that would cash it out of its investment as soon as it appears to be profi table, removing itself from participation in any fi nancial gain. However, the foundation should consider the private benefi t that may be bestowed upon other investors if the foundation gives up its share. (See discussion of private benefi t below.) In addition, while investing without the potential for any fi nancial gain may help demonstrate the lack of fi nancial motive, a founda-tion should not rely exclusively on divestment to justify a PRI that is expected to generate a return for others; the foundation’s analysis of the investment should still support a conclusion that an investor would not make the same investment if the production of income or the appreciation of property was a signifi cant purpose.

Although the no signifi cant investment purpose test is easily satisfi ed if a PRI is made in the form of a loan at below-market interest rates, when a foundation makes an equity investment PRI, it must consider, among other things:

• Whether there are already individual and corporate investors ready to invest or the likelihood that the company could fi nd other investors.

• Whether the lack of liquidity and/or high-risk nature of the investment would fail to meet the foundation’s investment policy criteria for its normal investment portfolio. (Remember: to qualify as a PRI, it needs to be unattractive as a fi nancial investment.)

Must the PRI recipient demonstrate that it was unable to secure fi nancing from traditional sources before the foundation makes its investment?

A common fact pattern in PRI examples provided by the IRS is that funding would be unavailable if the foundation did not invest, because other investors were either unable or unwilling to participate. A lack of alternative funding can be a signifi cant factor in dem-onstrating that other investors solely concerned with profi t would not invest on the same terms as the foundation. However, neither the Internal Revenue Code nor the Regulations require a lack of alternative funding to qualify as a PRI. A foundation may wish to be an

The information provided in this document is for general information purposes only, and does not constitute legal, tax, or investment advice.

3

Program-Related Equity Investments

The information provided in this document is for general information purposes only, and does not constitute legal, tax, or investment advice.

4

early investor, rather than the investor of last resort, in order to infl uence the way in which a business will develop or to provide credibility or expertise that will help attract other investors. The IRS has not provided examples that clearly support this fact pattern; however, many practitioners would not limit PRIs only to recipients that already have tried and failed to obtain funding from traditional sources.

Does a foundation need to be concerned about whether a PRI equity investment creates a private benefi t?

Wholly apart from the private foundation rules, general principles under Section 501(c)(3) prohibit any charity, foundation or otherwise, from providing an undue private benefi t to individuals or for-profi t entities. The foundation needs to be cautious if it is being asked to invest on terms that are signifi cantly less favorable than terms that are being off ered to other investors. Are for-profi t investors likely to do very well as a result of the foundation taking less favorable terms? Could the foundation’s charitable purpose in making the invest-ment be accomplished without providing this benefi t to private parties? In other words, is the private benefi t to private parties avoidable?

As an example:

Assume a start-up drug company that will develop and sell a vaccine that will eradicate Ebola is off ering two classes of stock, one for foundations and one for individual investors, the foundation should not accept a class of stock with less favorable terms just to satisfy the “no signifi cant purpose” test or because the foundation is not interested in making a profi t, but it may accept a less favorable class of stock if doing so is reasonably necessary in order to attract other investors to properly capitalize the company.

How do the other private foundation rules come into play?

As a PRI is a qualifying distribution that counts toward meeting the foundation’s annual minimum distribution requirement, the foundation will need to plan for appropriate ac-counting of PRIs, both when investments are made and also when they are repaid. When the foundation exits a PRI, either by being redeemed by the recipient or by selling its interest to a third party, the foundation’s tax liability is computed on any resulting capital gain at the usual one or two percent tax rate. Moreover, any such recovery of a PRI will result in a commensurate increase in next year’s annual minimum distribution requirement.

Because a PRI is reported as an “exempt function” or charitable asset on the foundation’s balance sheet, the PRI is excluded from the investment asset base referenced to calculate the foundation’s annual minimum distribution requirement. For example, an investment of $1 million in a traditional stock that does not appreciate or depreciate in value would give rise each year to a $50,000 minimum distribution requirement. By contrast, an investment of $1 million in an equity PRI that likewise does not fl uctuate in value would not give rise to any annual minimum distribution requirement because the PRI would be excluded from the asset base referenced to calculate the requirement.

A PRI is not included in the calculation of excess business holdings, so a foundation may own more than 20% of an entity if its investment is a PRI.

A foundation needs to be very careful to avoid self-dealing if it co-invests in any company, including via a PRI, with its substantial contributors or its offi cers or directors.

Program-Related Equity Investments

The information provided in this document is for general information purposes only, and does not constitute legal, tax, or investment advice.

5

Program-Related Equity Investments

When a foundation invests in a for-profi t entity, it must exercise expenditure responsibility, including:

• A pre-grant inquiry• A written contract containing the PRI and expenditure responsibility terms set forth in

IRS Regulations, including the right to have the PRI repaid if the PRI recipient does not use the PRI funds properly

• Proper reports and certifi cations back from the PRI recipient • Proper reporting of the PRI to the IRS

What do the investment documents look like?

In a PRI involving a loan, all of the proper PRI contract language can go in a carefully drafted loan agreement. In an equity investment, the entity seeking the PRI typically will provide the foundation with an off ering document, a subscription agreement, and perhaps a share-holder agreement or a partnership or LLC operating agreement. None of these documents is likely to contain proper PRI language or meet the expenditure responsibility requirements described above, and so, the foundation often ends up drafting and negotiating a “side letter” agreement with the entity. Without this side letter, in most cases, the PRI will fail to meet the PRI requirements. In addition, in some situations where the organizing documents of the recipient entity are not limited to furthering a charitable purpose of the foundation, the side letter will contain affi rmative covenants and obligations of the PRI recipient to make sure that PRI furthers the charitable purpose of the foundation. For example, a side letter in connection with an investment in the stock of a drug company that is developing a vaccine might clearly require the drug company to off er the vaccine to the poor and to sell the vaccine to them at a low cost.

How can a foundation insist on getting repaid if the recipient misuses PRI funds?

One of the PRI requirements is that (with limited exceptions) the foundation will get its investment repaid if the recipient fails to use the funds for the purposes stated, fails to provide proper reports, or uses the funds for something inappropriate, such as lobbying. With equity investments, it can sometimes be diffi cult to convince the recipient to put repay-ment language in the side letter, but foundations must have this language, and they often underestimate their bargaining power in the deal. There are also subtle issues to consider in repayment: Does the foundation merely get its principal investment back? What if the investment has appreciated? Questions also may arise regarding how quickly the investment must be repaid, or whether another investor could be found to purchase the equity interest instead of the company returning foundation funds. When and how a PRI must be repaid are often the most highly negotiated terms of the investment.

How can a foundation keep track of all of this?

PRIs can be handled eff ectively and effi ciently and are a great way to further the founda-tion’s charitable purpose. It is important, however, to have a dedicated and knowledgeable staff member or an outside expert, such as Foundation Source, on hand to monitor the paperwork, reporting, and compliance requirements.

The information provided in this document is for general information purposes only, and does not constitute legal, tax, or investment advice.

6

55 Walls DriveFairfi eld CT, 06824800.839.0054www.foundationsource.com

Boston | Los Angeles | New York City | Philadelphia | San Francisco Seattle | South Florida | Washington D.C. | Winston-Salem

©2015 Foundation Source Philanthropic Services Inc. All rights reserved. v0515

About Foundation Source (www.foundationsource.com)

Foundation Source is the nation’s largest provider of comprehensive support services for private foundations. The company can set up a new private foundation quickly and easily, and for established foundations, our administrative services, proprietary online foundation management tools, and philanthropic advisory services provide a complete outsourced solution. Our clients provide the philanthropic vision; we supply everything else.

Now in our second decade, Foundation Source provides its services to more than 1,200 family, corporate, and professionally staff ed foundations, of all sizes, nationwide. We work in partnership with wealth management fi rms, law fi rms, and accounting fi rms, as well as directly with individuals and families. Foundation Source is headquartered in Fairfi eld, Connecticut, with offi ces in Boston, Los Angeles, New York City, Philadelphia, San Francisco, Seattle, South Florida, Washington, D.C., and Winston-Salem.

About Adler & Colvin (www.adlercolvin.com)

Adler & Colvin is a law fi rm based in San Francisco, California, committed to serving the legal needs of the nonprofi t sector. The fi rm represents tax-exempt organizations, nonprofi t service providers, and individual and corporate donors.

Program-Related Equity Investments

Foundation Source supports and advises more than 1,300 private foundations, of all sizes, nationwide. Now in our second decade, we are the nation’s largest provider of comprehensive support services for family, corporate, and professionally staffed foundations, bringing unparalleled knowledge and expertise to clients across the country.

Our clients turn to us for help with everything from establishing their private foundations to developing their philanthropic strategies. The only functions we don’t offer are investment manage-ment and legal counsel—but we coordinate closely with the advisors our clients designate.

Our foundation management, advisory services, and online resources provide a total outsourced solution for private foundations.

EVERYTHING YOU NEED, DAY ONE We offer everything you need to establish a foundation and keep it running smoothly. Our comprehensive portfolio of support services simplifies and streamlines all aspects of your foundation. And because you get all of these services in one place, nothing ever “falls between the cracks.” You get the seamless support your foundation needs along with the convenience that you deserve.

AS YOUR FOUNDATION GROWS, WE GROW WITH YOU You get the horsepower and expertise you need to make a real difference without overseeing a team of advisors or building a bureaucracy. Whether you need support for basic functions today, or guidance to explore some of the more complex capabilities of a private foundation

Get everything you need to run your foundation under one roof.

FOUNDATION SOURCE IN BRIEF

tomorrow, you can rest assured that we’ll be with you every step of the way. Services include:

Foundation ManagementOur professional staff handle all of your founda-tion’s administrative functions, including grant and expense processing, compliance monitoring, tax preparation and filing, and financial and regulatory reporting.

Advisory ServicesWith Foundation Source, you gain access to a team of private foundation experts who serve as your virtual staff. Your Private Client Advisor is just a phone call away. He or she is backed by in-house philanthropy, tax, legal, and accounting professionals to provide top-tier expertise, responsive service, and comprehensive support.

Online ResourcesConnect with your foundation anytime, anywhere from any Internet-enabled device. Your secure web console enables you to research nonprofits, make grants, and maintain oversight of founda-tion activities. View the foundation’s investment balances across all accounts, track progress toward its 5% distribution requirement, review grant history, and generate online reports. The console makes it easy to communicate with foundation members and collaborate on decisions while maintaining total transparency into founda-tion activities.

A Guide to What We Can Do for You

Please see the other side for a detailed list of our services.

55 Walls Drive, Fairfield, CT 06824 P 800.839.0054 F 800.839.1764 www.foundationsource.com

©2016 Foundation Source Philanthropic Services Inc. All rights reserved. v1016

FOUNDATION MANAGEMENT

New Foundation Creation• Provide corporation structure

(State of Delaware)• File IRS Form 1023 for

tax-exempt status• Define foundation’s policies

and guidelines• Configure foundation’s web

console and provide orientation• Coordinate with client’s financial,

legal, and tax advisors

Existing Foundation Implementation• Configure foundation’s web

console and provide orientation• Enter foundation grant history

(up to five years)• Set up budgeting and any multi-

year commitments• Assess current state(s) filing status• Coordinate with client’s financial,

legal, and tax advisors

Administration and Governance• Undertake foundation

recordkeeping› Funding and income› Expenses and fees› Assets and valuations› Grant history› Substantial contributors

• Track 5% minimum distribution• Archive corporate, tax, and other

foundation documents• Manage online access rights

Compliance• Verify grantee’s 501(c)(3) public

charity status• Provide USA PATRIOT Act

due diligence• Identify supporting organizations• Monitor “Advance Ruling”

expirations• Monitor grants and expenses

to help prevent:› Self-dealing› Jeopardizing investments› Taxable expenditures› Excess business holdings, etc.

• Monitor affiliations with other nonprofits

• Track substantial contributors

Transaction Processing• Process contributions to

the foundation• Prepare grant checks and

transmittal letters• Pay fees and expenses• Provide payroll services

(if applicable)• Provide transaction accounting

Tax Preparation and Filing• Calculate and pay quarterly

estimated taxes• Prepare and file federal

990-PF return• Prepare and file 990-T UBIT

return as needed• Prepare Forms 1099 and 1042

for independent contractors• Prepare and make state filings• Provide donor substantiation

receipts• Maintain tax records in

foundation archive

Financial and Grant Reporting• Grant activity and transaction

reporting• Expense reporting• Financial reporting

ADVANCED FOUNDATION MANAGEMENT

Specialized Grantmaking Services• Expenditure responsibility grants• Equivalency determination• International granting• Program-Related Investments

and recoverable grants• Scholarship, fellowship, and

award programs• Direct charitable activities• Set-asides

Specialized Compliance and Tax Services• Compensation benchmarking• Transition-year tax returns and

amended tax returns• Audit support (not IRS audit)• Limited partnership, trust, and

S-corporation investments• Foundation DBA (doing business

as) filings

ONLINE RESOURCES

Web-Based Foundation Management Tools• Online foundation “command

center”• Orientation and training

Online Research• Database of more than 1 million

IRS-approved charities• Access to GuideStar® and

Charity Navigator• Charity research requests

Online Granting• Automated granting to

IRS-approved charities and others• Customized grant approval

workflows• Favorite charities list for

expedited granting• Hardship, emergency, and medical

distress grants to individuals• Grant certificates

Online Tracking• 5% minimum distribution

requirement• Grant history by date, donor,

and program area• Pending grants• Funding history by date and donor• Foundation expenses

Online Reporting• Over 25 customizable report

templates• Financial activity, expenses,

grant history

Online Administration• Foundation document archive• Personal profile• Report codes• Contact file

ADVANCED ONLINE RESOURCES

• Foundation Source Requests®› Customized grants

management platform› Online applications› Online eligibility quiz to

vet applicants

› Communication and collaboration tools

› Correspondence management• Foundation Source Results®

› Online portal to monitor grant performance and impact

• Uploading additional grant history• Multi-year commitments• Program areas with budgeting• Multi-payment grant management

› File management

ADVISORY SERVICES

Private Client Advisors• One-on-one customer service• Set up customized web-based

command center• Configure granting permissions

and grant-approval processes• Provide orientation and technology

support for website users• Monitor qualifying distributions• Manage schedules for state and

federal filings• Review and process foundation

expenses• Review grants for compliance

with IRS regulations• Review grant letters to help

avoid compliance issues• Provide implementation support

for advanced services• Facilitate board meeting

preparation

ADVANCED ADVISORY SERVICES

Philanthropic Directors

Governance and Family Engagement• Mission and focus• Strategic planning• Succession planning• Board development• Retreats and meeting facilitation• Best practices review

Effective Philanthropy• Field research• Program design• Impact evaluation• Innovative grantmaking strategies• Leadership and

next-generation coaching

FOUNDATION SOURCE SERVICESThis list details all of the services offered by Foundation Source.

Enterprise

Download Heron Strategy Document 2012 (415kb)

(http://heron.org/sites/default/files/Strategy%20%28The%20World%20Has%20Changed%29%20Website%20version.pdf)

Heron began as a grantmaker in 1992 and has continued to issue grants since then. If you would like to learnmore about the early focus of of the foundation, you can find more information here.(http://heron.org/enterprise/evolution/grantmaker) It didn’t take long to realize that it would take more thanour own endowment to address poverty in a meaningful way. That is why we began mission investing over adecade ago, which you can read about here. (http://heron.org/enterprise/evolution/mission-investor) Below, wediscuss the evolution of Heron and how we operate today.

For years, Heron has aligned an increasing portion of its assets with mission. Until relatively recently (2011), wewere investing in programs and organizations that were meant to connect people and communities in need witha main stream that, if it could be entered, would flow steadily toward fair opportunity, employment and withthem, steady income.  We funded home ownership, education, access to credit and similar programs in service tothis assumption

After the economic crash of 2008, and the financial crisis that followed, we reassessed.  In 2011, followinga strategic review, we came to believe that in the United States, poverty had become structural, and the reliableopportunity that was a cornerstone of our national promise was available to fewer and fewer of us. And whilethe programs we had funded for years were important and necessary, they were not sufficient. We were winningbattles, but not the war. The world had changed.  

THE EVOLUTION OF HERON

2011-presentView Timeline (2011) (/enterprise#2011)

Heron’s mission is to help people and communities help themselves out of poverty. The foundation works with adiverse set of investment strategies focused on fostering economic innovations and practices that lead to long-term economic opportunity and prosperity for all. 

Grantmaker

Mission Investor

Enterprise

 

The World Changed... So We Did TooThe urgency and size of the job of shifting an economy to greater accessibility and fairness required a full-on approach.  

We fundamentally altered our strategy(/sites/default/files/Strategy%20%28The%20World%20Has%20Changed%29%20Website%20version.pdf) tofocus primarily on investing in enterprises that create reliable income streams for people striving to get out ofpoverty. We also looked to invest in organizations that shifted the metrics of the economy as a whole, bymeasuring the positive and negative social impacts of enterprises of all sizes and kinds, as well as by providingdata standards and comparability for like-minded investors and managers.

With a change of strategy came a change to Heron as an enterprise. We removed the division between theinvesting and the giving operations (traditional in virtually all private foundations), creating a “team of thewhole” to deploy all of Heron’s capital in concert for mission. We now look to find and deploy the bestcombination of financial, human, knowledge and social capital within and outside our walls on behalf ofenterprises allied with us. Staff members combine the skills of financial analysis, investing, research andcommunity-building to this end and undertake initiatives focused on engagement (/engage), market segmentsand reinvention of the foundation's business model.

The Early Years: Traditional Grantmaking » (/enterprise/evolution/grantmaker/)

Our First Foray: Mission Investing » (/enterprise/evolution/mission-investor/)

Heron Today: Foundation as Enterprise » (/enterprise/foundation-as-enterprise)

Responsible and Impact

Investing SymposiumSpeaker Materials

Mature Companies Panel Kenneth L. Henderson

Strategies for Achieving Impact Without Compromising the Bottom Line:

Addressing the Challenges Facing Mature Companies

Kenneth L. Henderson

Bryan Cave LLP, New York

Benefit Corporations and Director Fiduciary Duties

I. The Current Fiduciary Duty and Governance Landscape

A. Fiduciary duties of directors Duty of care Duty of loyalty Act in good faith

B. Business Judgment Rule – normal level of review and broad discretion Highly deferential to Board decisions as long as in good faith, disinterested and in the Board’s views in the long term interests of the company and stockholders. Many bases for approving social focused activities and considerations (recruiting, long term sustainability of business, better markets, better workers, better products, market acceptance) Gives substantial leeway to boards to include social benefit activities and expenditures if the Board concludes that the corporation and stockholders will benefit Many favorable cases that allow consideration of other constituencies if determined by board to be in best long term interests of the corporation and stockholders Shlensky v. Wrigley (Wrigley Field lights case) Dodge v. Ford Motor (dictum on shareholder value maximization; upheld broad discretion under business judgment rule)

C. Stockholder Value as Fiduciary Duty Expectation that board will always seek to increase stockholder value as its primary responsibility, but short term profit maximization and pure self-interest to the exclusion of all else is not mandatory: no legal obligation to use child labor or maximize externalities or minimize wages Heightened Scrutiny Several situations where heightened scrutiny under Delaware (and other) law that can override social goals as core values defensive measures – Craigslist/eBay case change of control – Revlon – auction for best price (generally), will override other stakeholder interests Many states responded with constituency statutes, allowing boards to consider other stakeholders (33 states); permissive only, no obligation to consider other interests besides stockholders.z

Responsible and Impact

Investing SymposiumSpeaker Materials

Mature Companies Panel Kenneth L. Henderson

Strategies for Achieving Impact Without Compromising the Bottom Line:

Addressing the Challenges Facing Mature Companies

Kenneth L. Henderson

Bryan Cave LLP, New York

D. Market and Governance Challenges Activist pressure can cause a board to override consideration of other stakeholders– pressure on directors to focus on shorter term profit maximization, cost reduction and other actions that may be inconsistent with the social concerns that are part of the company’s values statement or culture. Activists can also push in the other direction as well, encouraging socially responsible investments and business activities Revlon duties in sale context and permissive nature of constituency statutes

II. Benefit Corporations

A. Background Project of B-Labs, a nonprofit focused on giving “good citizen” certification to companies. Strict requirements for certification, including strict standard for social and environmental performance and a corporate governance model that mandates good corporate citizenship. See www.bcorporation.net B-labs encouraged this legislation. Note: “B Corporation” is not necessarily a benefit corporation. A “B Corporation” is a company that has received the B Lab certification.

B. Basic Concepts Fundamental Shift in fiduciary obligations – requiring balancing of multiple stakeholders Response to permissive nature of constituency statutes and to hardwire positive goals 30 states plus DC and PR have adopted legislation Benefit corporations (MBCL), public benefit corporations (DE), social purpose corporations (CA)

C. Structure and Requirements All similar in structure, with some differences in implementation:

1. Must balance three considerations: stockholders’ pecuniary interests, best interests of stakeholders materially affected by the corporation’s conduct and a specific or general public benefit, as set out in the charter.

2. Large percentage to opt in or out 2/3 vote (Delaware) or other very high percentage

3. Must identify a specific public benefit or benefits, or general public benefits (depending on legislation) in certificate of incorporation

4. Commit to address issues as they affect other stakeholders affected by the company’s conduct

5. Traditional fiduciary duties and profit motive

Responsible and Impact

Investing SymposiumSpeaker Materials

Mature Companies Panel Kenneth L. Henderson

Strategies for Achieving Impact Without Compromising the Bottom Line:

Addressing the Challenges Facing Mature Companies

Kenneth L. Henderson

Bryan Cave LLP, New York

6. Transparency - annual, biennial or other periodic reports - to stockholders or on web or with secretary of state Some require report that measure performance of the social benefits against third party standards Delaware does not require third party standards, but permits a company to include such a requirement in it charter

7. Derivative actions Expressly permitted (DE), if hold minimum ownership Model Statute allows substantive challenge to decisions that affect stakeholder (“benefit enforcement proceedings” in CA)

8. No ability of stakeholders other than stockholders to bring derivative or other actions to question or enforce social goals or question Board balancing decisions. DE statute specifically disclaims any statutory duty to any person on account of that persons’ interest in the public benefits pursued by the benefit corporation; MBCL also does not create any rights of action on the part of any stakeholders (other than stockholders)

D. Other Issues Can be public companies – Etsy, Laureate Education Benefit corporation subsidiaries of public and private companies – Method (Ecover), Ben & Jerry’s (Unilever), Plum Organics (Campbell Soup), New Chapter Vitamins (P&G) Double derivative issues, allocation of capital, pursuit of benefit corporation objectives No review by state or other authorities of the periodic disclosure required under benefit corporation statutes; mixed quality of reports; some commentators have suggested that most benefit reporting has not been effective Potential 10b-5 liability from such statements for public companies; liability for greenwashing?

Responsible and Impact

Investing SymposiumSpeaker Materials

Mature Companies Panel Kenneth L. Henderson

Strategies for Achieving Impact Without Compromising the Bottom Line:

Addressing the Challenges Facing Mature Companies

Kenneth L. Henderson

Bryan Cave LLP, New York

E. New Fiduciary Duty Regime Explicit override of stockholder primacy notion No law yet as how directors are to balance all of these interests at the same time, particularly in sale context. Can to an extent look at how courts have applied the constituency statutes (substantial deference to Boards) Business judgment rule should continue to provide protection for most other decisions taken in good faith and consistent with duty of loyalty and duty of care. (DE specifically codified the business judgment rule into its statute as to all allocation decisions) Provides takeover defense and impediment (super-majority vote required to exist benefit corporation status) Activist hedge

III. Other Business Forms or Structures

A. L3C – Low-Profit Limited Liability Company. Introduced some years ago as a for-profit vehicle that could automatically qualify for program oriented funding from private foundations. Not broadly adopted, in part due to tax uncertainty

B. Customary Limited Liability Companies Opportunity to accomplish the same thing in an operating agreement, which allows almost complete private ordering of fiduciary and other duties and obligations, virtual elimination of fiduciary duties and identification of business objectives Not ideal vehicle for capital formation

C. Constituency Statutes Allow a Board of Directors to take other stakeholder interests into account Balancing not mandatory

Responsible and Impact

Investing SymposiumSpeaker Materials

Strategies for Achieving Impact Without Compromising the Bottom Line:

Addressing the Challenges Facing Mature Companies

Steven J. Poplawski

Bryan Cave LLP, St. Louis

I. RESOURCES REGARDING ESG DISCLOSURE

A. SEC Concept Release, 81 FR 23916, 23969- 23973 (April 22, 2016) – Section IV. F “Disclosure of Information Relating to Public Policy and Sustainability Matters” https://www.gpo.gov/fdsys/pkg/FR-2016-04-22/pdf/2016-09056.pdf

B. Index of an links to Comments on SEC April 22, 2016 Concept Release https://www.sec.gov/comments/s7-06-16/s70616.htm

C. Sustainability Accounting Standards Board, “Climate Risk” Technical Bulletin (October 2016). Available at http://using.sasb.org/sasb-climate-risk-framework/

D. SEC, Commission Guidance Regarding Disclosure Related to Climate Change, 75 FR 6290 (February 8, 2010) https://www.sec.gov/rules/interp/2010/33-9106fr.pdf

E. World Federation of Exchanges (WFE), WFE Sustainability Working Group – UN Sustainable Stock Exchange Model Guidance available at http://www.sseinitiative.org/wp-content/uploads/2015/11/WFE-ESG-Recommendation-Guidance-Oct-2015.pdf

MANAGING YOUR WORTH WITH U.S. TRUST

Your wealth is not measured

by numbers alone, but by the

extraordinary opportunities

and complex challenges that

define your life. At U.S. Trust,

we apply our deep insight

and broad expertise to help

you make the most of the

things that matter most to you.

We understand you’re uniqueWe begin by listening to you, learning about your life, and we work with you to understand your priorities. Then we build a plan that aligns with your personal values, family goals and business interests.

We work with you as a teamTogether with your advisor, your team may include a portfolio manager, trust officer and other specialists to suit your situation, such as a highly credentialed wealth strategist. Each team focuses on a select number of clients, so we can thoroughly understand your needs and build a wealth plan that aligns with your personal values and family goals.

We apply the highest standards of careWhen we serve as your fiduciary, whether we are managing your portfolio or administering a trust, our focus is what best meets your objectives and expectations.

We take a wealth planning approachYour team works closely with you to create and sustain a plan designed to help you pursue your goals, whether that includes building, preserving, enjoying or transferring your wealth. By bringing together investment management with your personal, family, business, legacy and philanthropic goals, we can craft a comprehensive wealth management plan that addresses the issues you face today as well as those of future generations.

We deliver distinctive investment insights and strategiesYour portfolio manager can craft an investment plan that is customized to your objectives and fully integrated into your wealth strategy, while reflecting the best thinking of our investment strategists and market analysts, whose guidance informs every client portfolio.

We have the depth and breadth to help you reach your goalsAs a full-line private bank, we balance a boutique client experience with access to extensive resources, including traditional and specialty asset management, alternative investments and capital market investment solutions as well as customized credit and banking offerings.

Banking products are provided by Bank of America, N.A., Member FDIC.Investment products:

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

Certain U.S. Trust associates are registered representatives with Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) and may assist you with investment products and services provided through MLPF&S and other nonbank investment affiliates. MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). U.S. Trust operates through Bank of America, N.A., and other subsidiaries of BofA Corp.Please see back for important disclosure information.

We can advise you across the many aspects of your wealth, today and for future generations.

Reynders, McVeigh Capital Management LLC121 High St., 5th Fl., Boston, MA 02110 I tel: 617.226.9999 I fax: 617.226.9998 I twitter: @ReyndersMcVeigh I web: reyndersmcveigh.com

At Reynders, McVeigh, we believe that socially responsible investing (SRI) done right is simply smart investing. It’s our belief that opportunities “away from the herd” can yield superior longer term returns- especially for the socially progressive investor.

We provide investment guidance to a wide range of clients including individuals, families, family offices, endowments, foundations, retirement plans, and trust departments. Our success is rooted in the belief that the traditional socially

responsible paradigm of screening out so-called “sin stocks” is not effective on its own. Instead, we “screen in” equities demonstrating strong balance sheets, stable management, and an awareness of their role in the global community.

In our decades of maximizing financial andsocial returns, we have seen the markets rewardinvestors and companies that engage in socialchange.

WHO WE ARE

• Our goal: To outperform major global indices over full market cycles

• Long-term investment horizon directing capital toward progressive industry leaders and driving social improvement and innovation

• Quoted in leading publications like Barron’s, New York Times, Wall Street Journal and others

THE FOREFRONT OF SRI

We are beholden solely to our clients, not outside product providers. This allows us to make truly objective investment selections.

PASSIONATELY INDEPENDENT

Our vision lies on the horizon—for investments we believe will, in the near future, bear considerable fruit for our clients and the world around us. To that end, we seek out low-debt companies with progressive management teams, operating in industries that enjoy consistent or growing demand.

PROGRESSIVE VISION. INDEPENDENT THINKING. UNCOMMON SENSE.

OUR APPROACHWe believe that following consensus seldom leads to real opportunities. Rather, we combine meticulous research and a multi-year strategy to uncover companies most others may have overlooked. We do this by:

• Evaluating balance sheets• Scrutinizing income statements

This disciplined approach has helped our portfolios achieve solid financial and social cumulative returns since 2006. Today, we are trusted with over $1 billion in assets under management and an additional $4 billion in assets under advisement.

ENVIRONMENTAL TECHNOLOGIESRecyclingCleaner ProcessesPollution Solutions

HEALTHLow-Cost Drugs & TreatmentNew Medical FrontiersHigher EfficacyWellness & Natural Food Systems

INFORMATIONMOBILITYGlobal Information Access Mobility New Technology Frontier

CLIMATE CHANGEEnergy SolutionsEcology Change/Water/Food AccessCarbon Efficiency & Mitigation

Reynders, McVeigh Capital Management LLC121 High St., 5th Fl., Boston, MA 02110 I tel: 617.226.9999 I fax: 617.226.9998 I twitter: @ReyndersMcVeigh I web: reyndersmcveigh.com

CURRENT INDUSTRY FOCUS

This material is proprietary and may not be reproduced or transmitted to any third party or used for any other purpose without the prior written consent of Reynders, McVeigh Capital Management, LLC. (“RMCM”). This material is for informational purposes and should not be construed as a research report or as a recommendation to invest in a particular sector or in a particular manner. This material does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security in any particular sector. It does not take into account any investor’s

particular financial needs, investment objectives, strategies, tax status, risk tolerance or investment horizon. You should consult your tax and financial advisor. The opinions expressed in this material are subject to change and represent the current, good-faith views of RMCM at the time of publication (August 2016). All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed,

and RMCM disclaims any duty to update any of the information and data contained herein. Certain statements may be deemed forward-looking, but any such statements are not guarantees of any future performance and actual results or developments may differ materially from those discussed. There is no guarantee that investment objectives will be achieved or that any particular investment will be profitable.

Past performance does not guarantee future results.

• Reviewing multiple valuation metrics• Understanding catalysts for growth and potential revaluations

NewWorld Capital Group, LLC

Environmental Opportunities in North America’s Middle Market

Environmental Opportunities in North America’s Middle Market OVERVIEW

ENVIRONMENTAL OPPORTUNITIES IN NORTH AMERICA’S MIDDLE MARKET

Theme:

Environmental Opportunities in North America’s Middle Market

NewWorld is a specialized private equity firm founded in 2009 that provides capital and business assistance to rapidly growing companies and projects in the environmental opportunities sector.

Attractive Upside – Investments in rapidly growing and sustainably differentiated businesses with compelling exit opportunities Downside Protection– Investments in projects characterized by predictable cash flows and low correlation to other asset classes Customized Structuring – Structuring transactions according to risk profile (Equity or Structured Equity in company or project) Diversification – Balancing technologies, investment horizons and risk-return profiles to achieve portfolio targets Active Ownership – Influencing/driving operating performance; seeking board positions and/or warrants in parent company Risk Mitigation – Rigorous risk mitigation strategy at individual investment and portfolio levels

• Collaborating for more than 7 years • Complementary skills and experience • Led transactions exceeding $6.6B prior to forming

NewWorld • Expertise in origination, structuring and execution • Strong industry relationships / deal flow • Extensive sector and technology expertise in the

environmental opportunities sector • Practical experience in building company value • Research-driven organization

• Targeting a $440B sector growing at 2x to 7x GDP driven by long-term macro-trends such as U.S. infrastructure obsolescence, resource scarcity and price volatility, climate change, and transfer of assets to environmentally conscious millennials

• Sector encompasses: ¾ Clean Energy ¾ Energy Efficiency ¾ Water Reclamation and Re-use ¾ Waste-To-Value ¾ Environmental Products and Services

Characteristics:

Environmental Opportunities in North America’s Middle Market

• Investments in the $15 to $70 million range

• Focused on single bottom line investments fostering the “clean” or “resource productivity” economy

• Targeting companies and projects producing “free rider” environmental co-benefits

Team:

• 1

Tactics:

WHAT DIFFERENTIATES US

ENVIRONMENTAL OPPORTUNITIES IN NORTH AMERICA’S MIDDLE MARKET

527 Madison Avenue New York, NY 10022 212-486-3400 www.newworldcapital.net

Lou Schick Partner & CTO

• GE Energy - GE Global Research • Cornell University (MS, Physics) • Union College (BA, Physics)

Karine Khatcherian Partner (pending)

• GE Capital - ABB Equity Ventures - AB Bernstein • ENS de Génie Industriel (MS, Industrial Engineering) • Ecole Sup. des Affaires (MS, Financial Management)

Carter Bales Chairman & Managing Partner

• The Wicks Group - McKinsey • Harvard Business School (MBA) • Princeton University (BA, Economics)

Bill Hallisey Managing Partner

Ali Iz Managing Partner

Principals

Background/Education

• GSC Group - ING Capital • Harvard Business School (MBA) • Stanford University (BA, Economics)

• GE Energy • Columbia University (MS, Industrial Management) • University of Michigan (BA, Operations Engineering)

Investments:

Environmental Opportunities in North America’s Middle Market

• 9 investments (includes 29 projects); 6 realizations

Investors’ Circle is the world’s largest and most active early-stage impact investing network. Our members are dedicated to moving capital into early-stage, for-profit companies that address social and environmental challenges. Since 1992, IC members have invested over $200M into more than 300 high-growth, high-impact enterprises, and we aim to move $100M more by 2020.

Impact Investing Happens Here

S A M P L E P O R T F O L I O O F I C I N V E S T M E N T S

EXECUTIVE DIRECTOR Bonny Moellenbrock | [email protected] INVESTMENTS Justin Desrosiers | [email protected] STRATEGIC PROGRAMS Alexandra LaForge | [email protected] BUSINESS DEVELOPMENT Jill Newbold | [email protected] COMMUNICATIONS & MARKETING Meredith Martindale | [email protected] INVESTMENT & ENTREPRENEUR SERVICES Andrew Cousins | [email protected] PROGRAMS Rebecca Price | [email protected]

investorscircle.net @investorscircle 919-296-1166

Mailing AddressP.O. Box 3612

Durham, NC 27702

INVESTORS

MEMBERSHIP PROFILEQ� Members: 185+ angel investors,

family offices, foundations, and funds

�Q Annual investment activity:– $25K–$500K average for

individual investors– $250K–$2M average for

institutional investors�Q Gender diversity: 30% women

GLOBAL & LOCAL NETWORK�Q IC is an international network with local networks in:

––

Boulder-Denver

––

IC COMMUNITY BENEFITS Q� High quality deal flowQ� Local and national gatherings

Q� Peer networking and experience

sharingQ� Shared and facilitated due diligence

Q� Impact assessment toolsQ� Diversification and professional management through PCC funds

ENTREPRENEURS

COMPANY PROFILE �Q Measurable social or environmental impact

�Q Raising between $50K and $3M�Q Proven market traction �Q Projected annual revenues of $5M+ within 3–5 years

�Q Plans for scale and pursuing an exit strategy

APPLICANT BENEFITS �Q Posting on IC’s secure online deal database

�Q Inclusion in the next monthly member e-news

Q� Consideration to present live at upcoming IC gatherings

SELECTED COMPANIES RECEIVE: �Q Opportunity to present at a Beyond the Pitch event

�Q Pre-event pitch review and coaching �Q Free GIIRS rating and assessment�Q Exclusive networking opportunities with IC’s active investor network

�Q IC-facilitated due diligence (pending investor interest)

EVENTS

BEYOND THE PITCH NATIONAL EVENTS IN MULTIPLE LOCATIONS

Quarterly events include:�Q Company pitches�Q Extensive networking opportunities�Q Investor debrief & due diligence kick-off

�Q Entrepreneur workshops

IMPACT SPOTLIGHT FOCUSED IMPACT

Pitch events highlight:Q� Individual impact sectors, and/or Q� Regional opportunities

LOCAL NETWORK MEETINGS BUILDING COMMUNITIES OF IMPACT Monthly local network meetings: Q� Present 2–3 regional companies Q� Engage local investorsQ� Syndicate with other angel groups

VIRTUAL MEMBER MEETINGS CONTINUED ENGAGEMENT

Monthly webinars allow members to:�Q Engage with the IC network�Q Share updates on deals and projects�Q Discuss impact investing trends

RETURN HIGHLIGHTS

Q� Historical 14% return on investment, per 2004 Harvard-McKinsey report

IMPACT SECTORS

Energy & Environment

Sustainable Consumer Products

Community & Economic Development

Impact Software & Media

Global Health & Wellness

Education

Q� Monthly virtual member meetings

2012-2015 INVESTMENTS Q� $34M into 122 investments

Q�Nearly 50% of companies that pitched ata national Beyond the Pitch event received funding

Q� IC funded companies' median GIIRS ratings exceeded the developed

market median

Q� 37 Exits: 26 M&A events, 11 IPOs

IC IN ACTION Q� Consistently ranked as one of the Top 10

most active angel groups by The Angel Resource Institute’s HALO Report

BostonNew York Philadelphia North Carolina Washington D.C.

Join IC for monthly meetings in New York: November 8, 2016

December 13, 2016January 10, 2017

More information & links to register on the IC website.

2015 IC NETWORK INVESTEES

Agora for Good | NEW YORK, NYPlatform for charitable giving that connects donors to a custom portfolio of vetted, high-impact charities and non-profits

Aunt Bertha | AUSTIN, TXSoftware platform that connects people in need with the agencies that serve them for food, health, housing, and employment programs

Ayzh | FORT COLLINS, CODeveloper and distributor of low-cost, high-quality health technologies, such as clean-birth kits to reduce maternal and neonatal deaths in resource-poor countries

B the Change Media | LAWRENCE, KANSASDigital and print media company that tells compelling and inspiring stories of companies using business as a force for good

BlocPower | BROOKLYN, NYEmploys solar and energy efficiency technology to help churches, non-profits, and small businesses to reduce energy costs

Chia Star | DENVILLE, NJProduces healthy, organic chia-based beverages and informs and funds programs that educate and nourish children

Double Time Capital | CHARLOTTE, NC Creates opportunities to participate in and shape the emergence of cleaner, smarter and profitable energy

EV Connect | EL SEGUNDO, CAPlatform for managing electric vehicle charging stations, their interaction with utilities, and the EV driver experience

Indow | PORTLAND, ORInnovative window inserts improving energy efficiency and reducing waste

Isidore | LOS ANGELES, CAElectronics recycler serving as a job training and employment program for people with work barriers

KickUp | PHILADELPHIA, PAPeer-to-peer platform that allows teachers to find, match, and collaborate with fellow teachers and earning professional learning credits

KnipBio | BOSTON, MAAquaculture biotechnology for healthier, sustainable food

LearnZillion | WASHINGTON, DC Cloud-based solution that aligns open curriculum, assessment, and professional development for teachers

LUXTECH | PHILADELPHIA, PADesigns, develops, and engineers LED modules that enable light fixture manufacturers to enter or expand their offerings in the lighting industry’s fastest growing segment

Medolac | PORTLAND, OR Providing affordable and high quality donor milk for hospitalized infants

MPOWERD | NEW YORK, NYLuci® inflatable solar lanterns and other microsolar energy products for use by people living and playing off the grid

My MilkCrate | PHILADELPHIA, PAConnecting consumers to sustainable local businesses through an app and website

NurturMe | AUSTIN, TXOrganic quinoa-based food products for infant and toddlers that is sourced from fair-trade Andean farms

OtoSense | CAMBRIDGE, MAApplications using a new generation of sound recognition engines to keep people safe

Portapure | CHICAGO, ILManufacturing water filtration products for families who lack access to clean drinking water

Querium | AUSTIN, TXA personalized platform that helps students master critical STEM education skills

Rezzcard | HAWORTH, NJElectronic payments and mobile service provider for affordable housing tenants that helps the under-banked pay rent and build credit

SunFunder | SAN FRANCISCO, CAFinancing solar beyond the grid

SevaMob | ATLANTA, GAOnline health exchange and primary healthcare delivery

Thread | PITTSBURGH, PAResponsible fabric from ground to good

United by Blue | PHILADELPHIA, PA Sustainable brand of outdoor lifestyle apparel with a focus on ocean and waterway conservation

UtilityAPI | OAKLAND, CACollecting and delivering energy data to lower the cost of customer acquisition and customer management for solar, storage, and energy management companies

VOZ | NEW YORK, NYTrend-driven fashion design that enables skilled indigenous artisans to prosper in the global market

Wash Cycle Laundry | PHILADELPHIA, PAThe fastest, most convenient, and most sustainable for urban businesses and linen provider

Zagster | CAMBRIDGE, MADDesigns, builds, and operates bike sharing programs for communities across the US

IMPACT INVESTING HAPPENS HERE. Investors’ Circle is the world’s largest and mostactive early-stage impact investing network. Our network of angel investors, venture capitalists, foundations, and family offices has invested over $200 million into more than 300 enterprises dedicated to

improving the environment, education, health, and community.

INVEST WITH IC IN 2016CONTACT Jill Newbold 919-225-2070 or [email protected]

1

WITH GARRETT MELBY OF

Early Stage Due Diligence:

WHEN TO WALK AWAY

Responsible and ImpactInvesting Symposium

2

•What are acceptable transaction costs,relative to deal size (and speed).

•What is the incremental value of informationin reducing early stage risk?

•Unknown Unknowns

•Known Unknowns

•Known Knowns

•Company Killers

•Mitigated Risks

•Validated Assumptions

3

•Unknown Unknowns •Company Killers

The Ron Conway premise:

Given the limitless number of unknowable variables:(i) the ROI on diligence is negligible; and(ii) resources are better allocated to sourcing.

•Known Unknowns •Mitigated Risks

Risk Mitigation Model

What are the top three reasons this deal will fail?

What is the most effective mitigant to each risk?

How can I validate my risk mitigation hypothesis?

4

•Known Knowns •Validated Assumptions

What is my investment hypothesis?

1. Identify unique advantages that will cause thiscompany to beat the odds.

2. Identify the least cost path to testing the validity ofkey assumptions.

•Proof of concept not complete•Management weak and uncoachable•Product competing in crowded space•Product for current trend and not long term•Problem not significant – Not a huge market•Available technology leapfrogging product•Entrepreneur doesn’t understand industry•Poor/Sloppy Business Plan•Valuation too high•Company is still underfunded overall

5

•Proof of concept not complete•Management weak and uncoachable•Product competing in crowded space•Product for current trend and not long term•Problem not significant – Not a huge market•Available technology leapfrogging product•Entrepreneur doesn’t understand industry•Poor/Sloppy Business Plan•Valuation too high•Company is still underfunded overall

•Proof of concept not complete

•A stage issue –may be reflected in valuation

•Stages –•Functional Prototype (technology risk)•Early Adoption (behavioral risk)•Paying Customers (pricing risk)•Replicable Sales (business model risk)

6

•Product competing in crowded space•Product for current trend and not long term•Problem not significant – not a huge market•Available technology leapfrogging product

•Narrow value proposition = makes all other problems worse.

•Litmus TestsoProduct vs. company?oTest = 20% market position

Social externalities offer hidden value proposition:See Social Impact Projection presentation at

LinkedIn/GarrettMelby

7

•Management weak and uncoachable•Entrepreneur doesn’t understand industry•Poor/Sloppy Business Plan

•You can fix the business, but not the founders•They will never look better than they do now•You may want to coach them, but should not need to.•You must invest in the company they present, not theone you wish they were presenting

•Company is still underfunded overall

•Raise should provide 150% of funding neededto at least double the valuation.

•Raise should be tied to developmentalmilestones, not burn/time.

•Bad for both sides -- pledge your support butonly if minimum raise is met.

8

•Valuation too high

•10X Rule = (Revenue * Exit Multiple) > Valuation * 10

•This rule is scalable and a key reward for Impact Investing

•Investors price risk – FOMO is your enemy.

• How do you feel about the deal the next day?

– Can you you defend it? (known risks are mitigated)

– Can you pitch your colleagues? (hypothesis is clear)

2.6X

9

• The Sage of Omaha –– Rule No. 1 – Never Lose Money

– Rule No. 2 – Never Forget Rule No. 1

• The good deals you miss won’t hurt you,but the bad deals will.

• If you struggle to walk away from bad deal,you need to see more deals.

• Join an Angel Network

– Broad sourcing and screening

– Shared dilligence

• Participate in Impact Accelerators

– Broad sourcing and screening

– Deep insight

– Pre-market valuation

10

75+Pipeline Partners

15mmSocial Media

Reach

Investor Support: GCV has graduated 76 graduates that have raised nearly $60mm in capital, not only from

leading impact investors but also from top-tier VC firms.

Impact at Scale: The collective social impact of GCV graduates is estimated to exceed $5bn, deployed in

innovations that address urban hunger in Philadelphia, recidivism in Chicago, sexual violence in Delhi and child

health in Kenya.

Media Exposure: GCV and its graduates have been celebrated in Forbes, The New York Times, Fast Company,

CNN, USA Today, Inc. Magazine and TechCruch.

Global Reach: GCV has attracted entrepreneurs not only from start-up hubs like San Francisco, New York, Boston

and Chicago, but also from South America, Europe, India and China.

Sourcing Network: GCV attracts hundreds of applicants through its network of 50 Pipeline Partners, including

universities, fellowships, foundations and investors with direct access to entrepreneurs and a social media reach

in excess of 15 million followers.

Partner Programs: GCV’s proven accelerator model has been developed with support from the Knight

Foundation, Halloran Philanthropies and has been chosen by national policy leaders to develop custom

programs to engage entrepreneurs in their challenges:

Bloomberg Philanthropies: Bloomberg awarded a $1mm Mayor’s Challenge Prize to the FastFWD program,

designed by GCV in partnership with the City of Philadelphia and Wharton to address urban issues.

The White House: The White House has supported our creation of Climate Ventures 2.0, a world class

accelerator, to engage entrepreneurs in response to climate threats and help them apply the resources committed

by the CDI partners.

GCV is seeking sponsors to participate in the launch Climate Ventures 2.0 in Philadelphia in 2016.

CATHER INE@GOODCOMPANYGROUP .ORG@GOODCOGROUPWWW .GOODCOMPANYGROUP .ORG

In 2009 GoodCompany Ventures, a 501(c)3 non-profit, created the first accelerator designed toengage social entrepreneurs to apply new technologies to unmet social needs, design businessmodels to take their innovations to scale, and attract investment capital to fuel their impact.

PROGRAM RELATED INVESTMENTS:AN INTRODUCTORY GUIDE

RESEARCHED AND WRITTEN BY:

JULY 2016

Program Related Investments areused as high impact tools tostimulate private-sector driven

innovation, encourage market-drivenefficiencies and attract externalcapital to priority initiatives.

The Bill & Melinda Gates Foundation"

"

As part of a broader strategy involvingimpact investing and the market-based

solutions of target recipients, PRIs stand totackle tough social issues on a scale neverbefore seen by moving beyond traditionalnotions of charity that, in many ways,

continue to restrain large-scale progress.

The Ashoka Organization"

"

As a result of PRIs, ultimate beneficiarieshave greater opportunities to improve their

livelihoods and quality of life.

The Rockefeller Foundation"

"

CONTENTS____________________

DEFINITION : PROGRAM-RELATED INVESTMENT (PRI)

QUALIFICATIONS OF A PRI

PREREQUISITES TO MAKING A PRI

MAKING A PRI

MONITORING AN INVESTMENT

COMPARISON : GRANT VS . PRI

HANDLING CAPITAL FROM A PRI

COMPLETING A PRI

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This document was created and vetted by students and supervising attorneys at the University ofPennsylvania Law School’s Entrepreneurship Legal Clinic (the “ELC”). This is intended for educational andinformational purposes. As such, this guide is designed to be simple and accessible and may omit terms orlanguage relevant to your specific circumstances.

Although the ELC takes every reasonable effort to ensure that the information in this document is up­to­date,the information is not legal advice and is not guaranteed to be correct, complete or up­to­date. The law is apersonal matter, and no general information or legal resource like this can fit every circumstance.

You acknowledge that your use of this document does not create an attorney­client relationship between youand the Clinic or you and the individual members of the Clinic and does not constitute the provision of legaladvice or other professional advice. You should seek advice from a licensed attorney before using or relyingon this document. Additionally, this document does not constitute tax advice. By using and relying on thisdocument, you assume all risk and liability that may result.

DEFINITON:PROGRAM RELATED INVESTMENT___________Program-related investments (PRIs) are an alternative way for foundations tofund social ventures while still fulfilling their charitable purposes. Specifically,PRIs are investments principally made for a charitable purpose, with the potentialof a modest return. These investments can serve as qualifying distributions andcount towards a foundation’s annual 5% distribution.

QUALIFICATIONS OF A PRI___________An investment must meet the following three criteria, established by the U.S. taxcode, to qualify as a PRI:

Its primary purpose must be to accomplish one or more of the foundation’sexempt purposesIt does not have the production of income or appreciation of property as asignificant purposeIt is not intended to influence legislation or take part in political campaigns onbehalf of candidates.

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The first thing we look at when

making a PRI is mission alignment.

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______________________________________________________Stephanie Rupp, Threshold Group

Foundations have long recognized that grants have limited ability to solve socialproblems, so they have sought debt and equity investments in line with theirmissions to create greater impact. These investments are usually categorized asPRIs. Investments that qualify as PRIs can act as qualifying distributions — they cancount towards a foundation’s annual minimum distribution of 5% of the fair marketvalue of its assets.

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To qualify as a PRI, the primary purpose of an investment must be charitable.What does “charitable” mean in practice?

PREREQUISITES TO MAKING A PRI ____________Before making a PRI, a foundation must investigate the intended investee’shistory, level of experience, management, activities, and practices to ensure theinvestment will meet the foundation’s intended purpose.

After the due diligence period, a foundation must design the specific terms of theinvestment, keeping in mind how the investment’s structure will meet the threecriteria to be a PRI.

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The diligence process for PRIs is

not that different from the diligence

process for other investments.

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______________________________________________________Gabe Mandujano, Wash Cycle Laundry

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In determining whether an investment’s primary purpose is charitable, the IRSconsiders two factors:

Does the investment significantly further the accomplishment of thefoundation’s specific exempt activities?

Would the investment have been made but for the foundation’s exemptpurpose?

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MAKING A PRI____________

The IRS requires foundations to monitor their PRIs. Therefore, foundations areresponsible for the following:

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There’s a lot of ongoing diligence to makesure that the mission is being carried out.

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______________________________________________________Teresa Wells, Threshold Group

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Are there limits on the entities that are eligible to receive PRIs?

There are no limits on the types of entities that may receive a PRI. The IRS hasbeen clear: PRIs may be made in charitable or non-charitable, non-exemptentities. The only real limitation has to do with conflicts of interest. A foundationcannot make a PRI in an entity that would create a conflict of interest by unfairlybenefitting a foundation’s managers, major contributors or their families.

Are there limits regarding the form of investments a PRI can take?

The IRS is indifferent as to the form a PRI may take. A PRI can come in any form,including debt, equity, convertible notes, or even loan guarantees.

MONITORING AN INVESTMENT ____________

Making all reasonable efforts and establishing sufficient procedures to ensure a

PRI is spent solely for the purpose for which it is made

Obtaining full and complete reports regarding how its investment is spent

Submitting full and detailed reports to the IRS prior to making, at the time of

making, and during term of a PRI

Are foundations required to monitor their PRIs?

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Potential ofgenerating return

Eligibility for 5%

qualifyingdistributions

Can the funds beused towards for-profit targets?

Do the funds providean incentive structureto bolster likelihoodof success?

Availability of flexibleterms to tailor tofoundation's andrecipient's needs?

Provides flexibilityfor greatest socialimpact

Reportingrequirements

GRANT PRI

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____________COMPLETING A PRI

IdentifyPRItarget

Ensure that3 IRScriteria aremet

Perform duediligence soinvestment isused forintendedpurpose

Design thecontractualterms ofthe PRI

MAKETHEPRI

Monitor theinvestment;regularlyreport tothe IRS

Redistribute theinvestmentreturns for thecharitablepurpose within

a year of receipt

STEP 1

STEP 2STEP 3

STEP 4STEP 5

STEP 6STEP 7The following are steps a foundation must

take, start to finish, to complete a PRI

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____________HANDLING CAPITAL FROM A PRI

If the foundation receives a return of its original investment, it must redistributethat money for a charitable purpose within the next taxable year.

In contrast, any interest, income, or earnings from PRIs do not need to bereinvested. Instead, these funds will be treated as investment income, and subjectto the 1% excise tax.

Of course, foundations should seek advice from their tax advisors in anycircumstance.

Gabe Mandujano, Wash Cycle Laundry______________________________________________________

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PRI interest rates are somewhat of a red herring;

we should focus on credit."

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Please note that this document does notentail a comprehensive discussion of PRIs.______________For more information on the Penn Law Entrepreneurship

Legal Clinic please visit:

https://www.law.upenn.edu/clinic/entrepreneurship/

To learn more about GoodCompany Ventures' work and to find

additional resources for social entrepreneurs please visit:

www.goodcompanyventures.org

JULY 2016

WWW .GOODCOMPANYGROUP .ORG @GOODCOGROUP CATHER INE@GOODCOMPANYGROUP .ORG

CL IMATE VENTURES 2 .0

No challenge poses greater threats to future generations than climate change ... We shouldstart acting like it - President Barack Obama, State of the Union 2015

As a foundation for his climate agenda, President Obamalaunched the Climate Data Initiative (CDI), a public/privateeffort designed to stimulate innovation in support of national

climate-change preparedness.

Leaders in the technology, NGO and academic sectors have committed resources to CDI, including:Google, Amazon, Microsoft, IBM, Intel, Monsanto, Walmart, Coca-Cola, Nestle, United Nations,

World Bank, Rockefeller, USAID, MIT, Columbia and Wharton.

The White House has supported our creation of Cl imate Ventures 2.0, aworld class accelerator,  to engage entrepreneurs  in response to cl imate

threats and help them apply the resources committed by the CDI partners. 

CV2 has created global reach and pilot opportunities with the following organizations:

CV2 is raising a million dollar investment facility for the entrepreneurs with:

CV2 has recruited a global sourcing networks of 50+ partners: http://goodcompanyventures.org/partners

Responsible and Impact

Investing SymposiumSpeaker Materials

The Future of Sustainable Investing: From Individual Values to

Corporate Value

Daniel C. Esty

Hillhouse Professor, Yale School of Forestry and Law School;

Director, Yale Center for Environmental Law and Policy, New Haven

1. Sustainability Investing • Definition i. Account for impact of investments on society and environment • Diversity of sustainability investors i. Socially Responsible Investors ii. Social Return on Investment iii. Risk-oriented mainstream iv. Mainstream v. Green Alpha • Evidence of interest i. United Nations Principles for Responsible Investing • 6 guiding principles • 1200 investment managers, $59 trillion in assets ii. Global Sustainability Investment Alliance • $6.57 trillion 76% increase since 2014 Only 15% of total US assets $4.5 trillion in SRI negative screen or exclusionary funds • Sustainable, responsible, or impact investment strategies iii. Thought leaders • Michael Bloomberg – disclosure of climate change impact • Larry Fink (BlackRock) – letter to corporate leaders • Global Reporting Initiative (GRI) • AccountAbility • Sustainability Accounting Standards Board (SASB) • International Integrated Reporting Council (IIRC) • Key Puzzles 1. Rising investor interest, but persistent doubt about returns • Perceived trade-off between ESG goals and performance 2. Why haven’t SRI funds performed better? • Hypotheses i. “Green to Gold” = not always true – Some (but not all) ESG factors improve performance ii. “Sustainability” not clearly defined iii. Data and methodologies of analysis are underdeveloped2. Sustainability and Market Value • Meta analyses i. Does sustainability leadership lead to improved performance? • Positive correlation? • Evidence of mixed correlation

Responsible and Impact

Investing SymposiumSpeaker Materials

The Future of Sustainable Investing: From Individual Values to

Corporate Value

Daniel C. Esty

Hillhouse Professor, Yale School of Forestry and Law School;

Director, Yale Center for Environmental Law and Policy, New Haven

3. Moving Toward a more Investor-Responsible Understanding of ESG • The need for metrics i. Definitional confusion • What is sustainability? • Proliferation of sustainability metrics ii. Diversity of investors’ interests – salience and direction • E.g. nuclear power, stem cells • Context is key to measurement • Alignment requires individual tailoring • Today’s metrics: i. Backward looking instead of forward looking ii. Reputational instead of operational iii. Poor predictors of environmental performance • No confidence in who is a leader versus a laggard • Next generation of metrics: i. Improved methodological rigor and theoretical logic • Handprints as well as footprints • Upside opportunities above and beyond downside exposure • Materiality • Broad frameworks ii. Standards needed: • Mandatory frameworks of reporting • Measured data (vs. modeled) • Coverage • Verification • Gap filling • Normalization • Time frames and updating4. Data Quality Principles –> ESG Methodological Standards • Need for government regulation? i. Lessons learned from • Financial Accounting Standards Bureau • Security Exchange Commission requirements • Sustainable Accounting Standards Board (SASB) • Rise of reporting rules in European Union, India, USA, Norway, UK, etc. • Data as a “public good” • Government mandated methodological standards i. Legal frameworks for ESG reporting • Emerging SEC sustainability obligations • Legal penalties to ensure accurate reporting • Encourage normalization and improve confidence

One Firm - Located in 25 Cities Worldwide » 17 U.S. cities: Atlanta, Boulder, Charlotte, Chicago,

Colorado Springs, Dallas, Denver, Irvine, Jefferson City, Kansas City, Los Angeles, Miami, New York, Phoenix, San Francisco, St. Louis and Washington, D.C.

» 5 European cities: Frankfurt, Hamburg, London, Paris and an affiliated firm in Milan

» 3 Asian cities: Hong Kong, Shanghai and Singapore

» Offices in 7 countries: U.S., China, England, France, Germany, Italy and Singapore

Founded in 1873

Our lawyers are admitted topractice in over 160 jurisdictions

Over 35 languages spoken by professionals within the firm

More than 1,000 lawyers

We represent more than 175 Fortune 500 Companies

We have provided legal services to more than 650 of our current clients for 25 years or more

Ranked in the 2016

“BTI Client Service 30”for delivering superior client service

2015 AmLaw 100: ranked #56 by revenue

2015 National Law Journal 350:ranked #26 by number of lawyers

2015 Global 100: ranked #65 by revenue; ranked #48 by number of lawyers

Named 2014 Innovative Law Firm of the Year by the International Legal

Technology Association

2016 Best Lawyers: 168 lawyers

2015 Chambers USA: 84 lawyers

2015 Chambers Global: 4 lawyers

Best Places to Work:Los Angeles, 2007-2014

Best Places to Work:Orange County, 2009-2014

Top 150 Privately Held Companies:St. Louis Business Journal, ranked #31

Pro bono » The American Bar Association Pro Bono Publico Award.

» Wesbury Leadership Award, presented to lawyers in the Chicago office for their outstanding work and dedication in support of the city of Chicago’s TIF grant for the American Red Cross.

» Top 50 Pro Bono Attorneys In Arizona Award, Phoenix lawyers chosen by the Arizona Foundation for Legal Services & Education were recognized as Arizona’s top pro bono attorneys.

» Volunteer-of-the-Year Recognition for Pro Bono Work, an attorney in Atlanta has been named as one of the 2013 Volunteer-of-the-Year honorees for her pro bono work with the Truancy Intervention Project.

» Firm Earns Award for Pro Bono Immigration Help, Bryan Cave earned recognition from Interfaith Legal Services for Immigrants (ILSI) for the firm’s assistance in pro bono immigration cases.

Diversity » For the eighth year in a row, Bryan Cave scored 100% on the Human

Rights Campaign’s Corporate Equality Index. Bryan Cave was one of 366 employers nationwide to meet all of the criteria and score 100%.

» Earned WILEF 2014 Gold Standard Certification. WILEF – the Women in Law Empowerment Forum – is an organization exclusively dedicated to advancing the careers of women at the largest law firms and corporate law departments in the United States.

» Named one of MultiCultural Law Magazine’s ‘Top Law Firms for Diversity’.

» Honored with the M. Katherine B. Darmer Outstanding Community Service Award. Orange County Lavender Bar Association (OCLBA) honored Bryan Cave and the Family Equality Council (FEC) as joint recipients. The award recognizes individuals and organizations that make extraordinary contributions to the advancement of LGBT equality.

bryancave.com | A Global Law Firm

Antitrust and CompetitionBryan Cave’s antitrust lawyers have served in senior positions with enforcement agencies (including the U.S. DOJ and the FTC), as well as the Judiciary Committees of the U.S. Senate and the House of Representatives. Clients seek our counsel, compliance and litigation services on all aspects of federal and state antitrust law, as well as in Europe. Bryan Cave also has a world-class reputation as a firm of choice in franchise law, and has more California Board Certified franchise specialists than any other law firm. We have litigated and arbitrated franchise disputes in virtually every state. Our transactional franchise lawyers provide counsel and advice to franchise systems operating across the globe with respect to agreements, contracts, disclosure documents, compliance, distribution, and mergers and acquisitions. Finally, Bryan Cave’s consumer protection and data privacy lawyers provide representation for our clients in the U.S. and Europe. Our data privacy team regularly advises clients on how to draft, implement and audit privacy policies, and has conducted training on how to investigate and respond to data security incidents that implicate consumer and employee privacy. Our consumer protection team frequently handles complex advertising compliance matters and represents our clients in all aspects of consumer protection, including counseling and litigation.

Bankruptcy, Restructuring and Creditors’ RightsMembers of Bryan Cave’s restructuring practice have long been known for their creative problem-solving abilities, responsiveness and networks with financial institutions, restructuring advisors and other attorneys. The combination of these resources allows us to develop the most appropriate business solutions based upon our clients’ needs and goals. We have the ability and experience to resolve, promptly and cost-effectively, novel and difficult legal issues in restructurings, out-of-court loan workouts, Chapter 11 reorganizations, distressed sales, litigation matters and other insolvency proceedings.

Class and Derivative ActionsDefense of class actions has been at the heart of Bryan Cave’s litigation practice for more than 25 years, including defending class claims in antitrust, securities and derivative actions, as well as class consumer fraud, breach of warranty, contract, environmental tort and other regulatory claims against manufacturers, retailers, financial institutions and insurance carriers. We have handled more than 915 class action lawsuits in the past five years, and we are currently handling more than 240 class actions. In 2014 alone, approximately 260 of our lawyers worked on class action defense matters in 80 venues in 33 states.

Commercial LitigationBryan Cave’s Commercial Litigation group regularly handles jury trials, bench trials, arbitrations, mediations and administrative and regulatory proceedings for all manner of complex business disputes. We also counsel clients on how to avoid litigation and resolve business disputes without litigation. We have more than 400 business litigators across the firm. Our clients range from private family-owned businesses to some of the largest publicly traded companies, in industries such as manufacturing, transportation, retail, technology, energy, financial services, pharmaceutical, health care, hospitality and real estate.

Corporate Finance and SecuritiesThe firm’s securities practice includes regular ongoing advice to public corporations, an active transactional practice in connection with public and private issuance of debt and equity, acquisitions and mergers, and other securities-related matters. Our relationships with major public company clients enable us to develop legal solutions based on a broad overview of the marketplace and to provide quality legal services.

Employee Benefits and Executive CompensationOur attorneys help employers meet these challenges by providing traditional employee benefits services, as well as innovative and practical solutions to complicated employee benefit issues. The broad array of services we offer reflects the depth of our attorneys’ abilities. From plan design and administration to litigation and corporate transactions, our attorneys handle all types of benefits and executive compensation matters for employers and the benefit plans they sponsor.

Energy and Natural ResourcesThe lawyers of Bryan Cave’s Energy and Natural Resources Client Service Group work closely with experienced lawyers across the firm’s practice groups including environmental, tax, litigation, corporate, international, project finance, construction, real estate, government relations, public incentives, government contracts, antitrust and intellectual property practices. We couple these practices with an array of strategically located regional domestic and international offices to offer clients in natural resources, energy and energy-related businesses a set of tools and resources that few firms can match. Bryan Cave assists clients in navigating contractual and financing issues, environmental issues, regulatory issues, public land issues and surface owner issues. Most recently, Bryan Cave has developed an active practice to assist clients with emerging energy technologies, helping them identify opportunities from recent public policies related to climate change and the promotion of renewable sources of energy.

EnvironmentalThe more than 40 lawyers who practice environmental law at Bryan Cave have the experience and reach to assist clients in the wide variety of matters they face in the field, in the courtroom and at the negotiating table. The hallmarks of our practice are deep technical expertise in environmental and occupational health and safety law and a record of success in the litigation and trial of significant environmental and related insurance-coverage lawsuits, including class actions and mass torts. Our lawyers are well aware that it is often essential for corporate and other institutional clients to maintain a working relationship and reputation for integrity, cooperation and environmental excellence with federal and state agencies and other public stakeholders. Bryan Cave has many years of experience working with agencies and other stakeholders to represent clients effectively and with appropriate sensitivity to their reputational interests.

Financial ServicesWith over 100 lawyers, our financial services group has extensive experience representing both “lenders” and “borrowers” in all manner of financings, including: asset-based loans, bi-lateral, “club” and syndicated financings, CBOs, CLOs, credit support facilities, debt restructurings and workouts, ESOP financings, factoring, infrastructure and project finance, intercreditor arrangements, LBO’s, letter of credit facilities, liquidity facilities, margin securities financings, mortgage warehousing facilities, multi-currency facilities, repurchase agreements, senior, mezzanine and subordinated financings, structured products and trust indentures.

Intellectual PropertyBryan Cave has more than 100 experienced attorneys, and professionals, with a diverse array of scientific and technical backgrounds dedicated to the protection, enforcement and exploitation of intellectual property rights around the globe. We represent clients across the full range of intellectual property issues, including patents, trademarks, copyrights, trade secrets, rights of privacy and publicity, comparative advertising, and Internet/new media/cyberpiracy. Over the past five years, we have handled more than 100 patent litigation matters in more than 30 jurisdictions, including the well-known patent venues of California, Texas, Delaware, Illinois, New York, Virginia and New Jersey.

International TradeBryan Cave’s International Trade Client Service Group consists of dedicated trade lawyers across the United States, Europe and Asia who serve our clients on a 24/7 basis. Our team is internationally recognized in Chambers. We offer comprehensive services regarding nearly all aspects of international business throughout the life cycle of a company. The strategic and operational advice we offer clients includes the following areas: Anti-Corruption/Anti-bribery (including the U.S. FCPA and the UK Bribery Act); Export Controls and Economic Sanctions; Technology Transfer and Encryption; Customs Law (including Customs Compliance and Customs Counseling); International Business Expansion and Outsourcing; the Antiboycott Regulations; and Cross-Border Investment, Market Access and Trade (particularly involving Greater China and Asia).

Labor and EmploymentOur labor and employment lawyers are skilled in all areas of traditional labor law, employment law and all aspects of litigation. One of the distinctions of Bryan Cave, through our advanced technology, is we readily use lawyers from different offices to work together on cases or projects to bring our clients the best and most efficient service possible. For example, our group has developed a Rapid Response Client Advice Team to assist clients quickly and knowledgably with labor and employment issues as they arise.

Private ClientPersonal service and attention to individual, business, and family circumstances are hallmarks of Bryan Cave’s private client practice. Members of the group counsel and represent clients throughout the United States and Europe, ranging from individuals, families, and closely-held businesses to major trust and charitable institutions. Our lawyers have served the trusts and estates and related needs of a large number of distinguished families for many years, assisting and advising them in perpetuation of their personal wealth and investments for later generations. We serve a large number of senior executives and important shareholders of Fortune 500 and other corporate and financial clients, as well as many entrepreneurial and “new venture” investors and owners. Through our overseas offices and affiliations, we represent U.S. citizens who have interests overseas and foreign nationals who have investments or other business interests in the United States.

Product LiabilityProduct liability is one of the fastest-growing and most dynamic practice groups in the firm. Bryan Cave’s trial lawyers, locally, regionally and nationally, represent companies in cases involving a wide range of products, including tires, pharmaceuticals, automobiles, trucks, children’s products, aviation components, medical devices, forklifts, all-terrain vehicles, military equipment and railroad equipment. Bryan Cave in recent years has been involved in some of the nation’s most high profile product liability litigation.

Public Policy and Government AffairsBryan Cave offers advice and consulting in the complex matters of regulatory affairs, public policy and legislation. The lawyers and non-lawyer consulting professionals on our team represent clients before a variety of federal regulatory agencies, the United States Congress, state legislatures, governors, attorneys general and county and municipal governments. Our clients include corporations, trade associations, governmental entities and non-profit organizations.

Real EstateWith nearly 150 lawyers, Bryan Cave’s real estate practice is one of the largest and most dynamic in the world. With the experience and reach to have handled many of the most exciting and sophisticated transactions in the United States and internationally, Bryan Cave’s Chambers USA rated real estate group provides comprehensive legal services addressing all facets of real estate ownership, development, use, investment and financing. Operating out of our offices worldwide, we react with the speed and sound judgment necessary to tackle the business and legal challenges that arise in ever changing real estate markets. We take our commitment to our clients personally.

Securities Litigation and EnforcementThe group includes lawyers who have held senior positions at the SEC, United States Attorneys’ Offices, and other government agencies, as well as other lawyers with years of experience advising on and litigating securities matters. Our clients include corporations, officers and directors, broker-dealers, investment advisers, hedge funds, mutual funds, audit firms, registered persons and others involved in the capital markets.

Tax Advice and ControversyOur tax practice services a broad and diverse client base ranging from individuals and small closely held businesses to Fortune 500 companies. We represent our clients in civil and criminal tax proceedings before federal, state, local, and foreign tax authorities, administrative tribunals and courts involving a spectrum of income, estate, gift, excise, franchise, property, license, sales, use and value added tax matters. Our tax practice also includes a team of professionals who specialize in tax credit transactions. These include the representation of developers, lenders, syndicators, investors, and community development entities. Additionally, the group includes a team that focuses on tax exempt organizations, including sports, religious, educational and community-based nonprofits.

Technology, Entrepreneurial and Commercial PracticePrivately held businesses have traditionally represented the largest segment of our client base and the largest number of the lawyers in the firm are dedicated to serving this sector. The Technology, Entrepreneurial & Commercial Group brings together lawyers who practice in many different areas of law from around the firm to offer privately held businesses, their shareholders, directors and officers a broad base of services.

TransactionsTransactional matters are a “core practice” of Bryan Cave. We are ranked among the top 10 legal advisors for M&A work involving a U.S. target. Among the types of projects which we regularly handle for clients are: mergers and other acquisitions and dispositions of businesses and related assets, on either a friendly or negotiated basis or in “hostile” transactions, tender offers, proxy contests and similar transactions, takeover and antitakeover planning, joint ventures and other methods of combining business operations, and spin-offs, split-offs and other methods of restructuring the ownership of business operations.

White Collar Defense and InvestigationsOur white collar group has substantial trial experience and includes a former United States Attorney, as well as lawyers who have held other significant positions at United States Attorney and state prosecutors’ offices around the country, and in other federal agencies. We represent companies and individuals in white collar criminal investigations, trials and appeals. We handle a full range of matters involving white collar crime, including securities, financial institutions and money laundering, government contracts, public corruption, health care, political campaign contributions, criminal antitrust, environmental, tax, the Foreign Corrupt Practices Act and export control.

Bryan Cave Client Service Groups

6/2015


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