Good Intentions, Bad Outcomes: Social Policy, Informality and Economic Growth in Mexico

A Global Economy and Development and Wolfensohn Center for Development Event
A communication from: Brookings Institution

Event Summary
Despite a decade of macroeconomic stability, Mexico’s growth and productivity performance has been lackluster. A significant factor restricting the Mexican economic growth rate is a social policy that gives workers incentives to seek informal, low-productivity jobs and restricts firms from making strides in growth and investment opportunities.
Event Information
When

Tuesday, May 13, 2008
4:00 PM to 5:30 PM
Where

Saul/Zilkha Rooms
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC
Directions

Contact: Brookings Office of Communications

E-mail: events@brookings.edu

Phone: 202.797.6105
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On May 13, the Wolfensohn Center for Development at Brookings will host a discussion with Santiago Levy, Brookings nonresident senior fellow and former deputy minister of finance of Mexico. Levy, along with a panel of leading experts, will discuss his new book Good Intentions, Bad Outcomes: Social Policy, Informality and Economic Growth in Mexico (Brookings Institution Press, 2008). In 1997, Levy created Progresa-Oportunidades, an anti-poverty program, focusing on nutrition, health and education. The program has been replicated in over 25 countries and New York City and has helped more than five million families escape from poverty by means of cash transfers. In his book, Levy recommends that these social programs should not be eliminated, but rather improved so that productivity and real wages will increase for all workers and contribute to bringing Mexico’s poor out of poverty.

After the program, speakers will take audience questions. A reception will follow the event.

Participants

Introduction
Lael Brainard
Vice President and Director, Global Economy and Development

Moderator
Johannes F. Linn

Executive Director, Wolfensohn Center for Development

Panelists

Santiago Levy
Nonresident Senior Fellow, Global Economy and Development

Jere Behrman
W.R. Kenan, Jr. Professor of Economics and Director of the Population Studies Center, University of Pennsylvania
Nancy Birdsall

President, Center for Global Development
Francisco Ferreira

Lead Economist, Development Research Group, The World Bank

Deloitte Makes its 2008 Report Available and highlights environmental sustainability and globalization as top priorities

From: Deloitte


Deloitte: The Business Issues That Will Matter Most in 2008
Published: 1/14/08
Contact: Francine Fiano
Deloitte Services LP
(203) 708-4254

NEW YORK, January 14, 2008 – The 2008 Presidential election. Energy costs expected to continue their upward climb in 2008. Customers demanding more environmentally friendly products than ever before. Each are challenges and opportunities that will frame 2008, and are three areas that will have dramatic impacts across multiple industry sectors in the coming year, according to a Deloitte report being released today by Deloitte & Touche USA LLP.

“Executives who deeply understand the issues in their industry sector can better position their organizations for competitive advantage in an uncertain marketplace,” said Ed Carey, vice chairman and national managing partner, U.S. Industries, Deloitte & Touche USA LLP. “Our experience tells us that breakthrough ideas in one industry sector are often realized by adapting leading practices from other industry sectors. Our analysis takes a ‘horizontal view’ of leading practices that transcend industry sectors and helps to give executives new insights about issues and trends that are ‘around the corner.’"

The business issues that resonated across multiple industry sectors and could have a dramatic impact this year include:

* Globalization
* Convergence
* Environmental Sustainability
* Rising Energy & Health Care Costs
* Transparency
* Technology Use & Integration
* The 2008 Presidential Election
* Talent Management

The “2008 Industry Outlook: A Look around the Corner” report features the combined insights, analyses and recommendations from Deloitte & Touche USA’s industry sector leaders and more than a dozen subject matter specialists collected during a series of in-depth, one-on-one interviews.

There are outlooks, some with trends and projections, for the following sectors: Aerospace & Defense; Automotive; Banking & Securities; Consumer Products; Energy & Resources; Health Sciences; Insurance; Media & Entertainment; Private Equity, Hedge Funds & Mutual Funds; Process & Industrial Products; Real Estate; Retail; Technology; Telecommunications; Tourism, Hospitality & Leisure; and U.S. Federal & State Government.

As used in this document, “Deloitte” refers to Deloitte & Touche USA LLP. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte & Touche USA LLP and its subsidiaries.

Download a complimentary copy of the report here.

What is a Consortia?

Consortia as it applies to Instituto Conexiones:

An open and informal group of independent organizations and individuals joined by common interests.

A combination or group formed in order to undertake a venture that would be beyond the resources of a single individual/company

Sources: Athabasca University, Pearson Education, IEEE

The Bigger Picture of Rainforest Conservation & Green Investment in Developing Countries

By Kimberly Maria Newton-Klootwyk, 2006

Also published in Dominical Days, Voice of Nosara, & Mariri under the title: "The Bigger Picture ~ Socially Responsible Conservation"

And in TriplePundit under the title "The Hidden Impacts of Conservation and Green Investment Initiatives in Developing Countries"


In Latin America, particularly Costa Rica and Brazil, we are seeing a record-breaking increase in the amount of foreign conservation groups and green investors arriving ready to buy as much land as they can afford in order to "protect the rainforest" and calling on their friends, relatives and business partners to join in – often times at the expense of farming, ranching and indigenous communities that are seen as 'destructive' and contributing to the environmental problems of the region. Foreign-owned private protected areas, organic farms, native tree plantations, eco-communities, summer camps, retreat centers, and other eco-friendly land uses are replacing the clear-cut ranch and pesticide laden farms once owned by the local people. And although there is no denying that the local people are often times mismanaging precious resources and that most of these types of land buyers are hundreds of times better than large scale land development companies or mono-crop plantations that are also coming in by the thousands and openly destroying endangered ecosystems and local communities, eco-minded land buyers are also having an impact, and not always a positive one. And if the goal of 'green' investors and conservationists is to help solve problems such as environmental degradation, cultural extinction, and social injustice, then it is increasingly important for them to see the larger potential impacts of their interventions so they can help advance genuine solutions to these issues, instead of inadvertently contributing to them.

Foreign conservationists and green-minded investors buying land in developing countries for ecosystem protection and to carry out their eco-friendly business visions don't expect to be seen contributing to a problem. Most come to places like Central America with noble ideas and conservation-oriented economic models that are vital for our developing economies. There is also no denying that environmentally and socially responsible land-buyers, conservation groups, investors, etc. are an asset to Central America and similar regions. In many ways, they are the 'saving grace' and the kinds of allies we need to help us face the many challenges we are dealing with. They can help advance sustainable development, enrich society with new ideas, provide green business opportunities for locals, create national green markets, and enhance social and political stability. But what many of these well-intentioned land buyers don't realize is that when land is taken out of the hands of historically marginalized people, such as indigenous or farming communities, even when for the right reasons, social tensions and other types of ecological impact are increased. It takes a local perspective and a wide-angle view of the dynamics involved to understand how this is possible.
I speak from experience. I am a Central American and have spent years studying these issues and conducting applied work in social and ecological justice organizations both in the U.S. and at home. I did not grasp this concept for a long time either. It wasn’t until 2003, when I helped start Costa Rica Conservation Trust (CRCT), a U.S. non-profit dedicated to protecting the rainforests of Costa Rica, my father’s country, that the error of my previous assumptions about how to help my people and endangered ecosystems came into clear focus. Along with this, came the harsh realization that well-educated Central Americans, like me, are often just as disconnected from the reality of our own countryside-dwelling people as the foreigners that are coming in to try to help us are. This is important to note because we are usually the sector that foreign investors and organizations like CRCT speak to or reach out to about their projects and where most of our political leaders come from. Little do these well-intentioned foreigners know that we educated urbanites are often times just as clueless about the true impact their ventures will have on our most marginalized people. Luckily, with my involvement in CRCT and my decision to volunteer as their field researcher, the wool fell from my eyes.

CRCT’s original approach was to buy farms that were for sale bordering an ecologically sensitive Costa Rican reserve on the northern portion of the Path of the Tapir Biological Corridor, home to the highly endangered Baird’s tapir and jaguar. This is a typical conservation strategy employed by hundreds, if not thousands, of conservation groups worldwide and I had supported other similar groups in the past. It seemed like a good idea at the time because we would prevent destructive entities, which are increasingly coming into Costa Rica, from buying these lands by taking them off the market and putting them in the hands of ‘responsible’ owners. We envisioned expanding protected areas, consolidating biological corridors, and establishing eco-campgrounds and educational trails where visiting guests could learn about the rainforest and thus, be inspired to ‘save it’ and donate money to help us put more land under ‘trust.’ After coming up with this plan in meetings and desks far away from the actual site of action, I moved out to the target area and began meeting with the farmers and ranchers of the areas where CRCT intended to buy land. As I attended these meetings and conducted one-on-one interviews with farmers that were selling their land, very important questions quickly emerged that I simply could not ignore. I felt these questions needed to be answered before moving forward, as I was no longer convinced that our efforts would actually save the rainforests or help anyone over the long term.
Why are the farmers selling their land even though they express a desire to not do so? What will happen to the farming families that are displaced by these land purchases? Will they ever be able to buy land again? How will this transfer of land ownership to foreign organizations and individuals affect the social and political stability of this region, especially if locals can no longer afford to buy land in their own country? Will displaced farmers create more environmental problems elsewhere as they migrate to overcrowded, overtaxed urban centers? How many of them will end up in the United States, where they will adopt a consumer-based, disposable lifestyle and become part of the ‘20% of the world’s population that consumes 80% of the world’s resources’? What happens when large amounts of arable land are allowed to convert back to forests? Will the local populations have to start importing corn, wood, beans, and other products that they traditionally grew on their small farms? How is that ecologically sustainable? Is sustainable development economically viable enough to help small farmers keep their farms? Is it enough to move small farmers out of poverty and improve their quality of life so that they no longer need to hunt, log or raise cattle in an unsustainable way? Are local farmers able to manage their own lands sustainably and do they even want to? What will enable them to do so? Is socially responsible conservation even possible, or must we always choose between the animals and humans?
In pursuing the answers to these questions, I joined local committees, met with government entities and local grassroots environmental groups around the country, as well as studying similar cases from around the world. In doing so, I found that there were hidden impacts with our plan that could end up being worse for my people and the environment and that the “collateral” damage might not be worth moving forward with our original plan. I also found that countless local groups are equally or even more concerned about their own fragile ecosystems and are trying to convert to sustainable income strategies but are facing multiple threats and obstacles. Ironically, in addition to the threats from agro-businesses and land developers, their culture and lifestyle was also being threatened by conservation groups and foreigners coming in buying them out because they are seen as too destructive to stay on their farms.
I listened closely to the stories of the local people – stories filled with difficult and ironic decisions, such as ‘whether or not to clear a new area for pasture so they can get a few more heads of cattle on the farm to pay for one of their children to go to college so they can eventually stop relying on unsustainable cattle ranching.’ It was obvious that many were causing environmental damage because they did not have any other way to make a living and the way they did things was what was taught to them by the government and the agro-chemical companies in the past. Some are simply stuck on an agro-chemical treadmill that they don’t know how to get off of. Selling their land seemed like the only alternative to many of them.

In response to this, I began implementing a socially responsible approach to conservation through CRCT that included the local people’s ideas and initiatives as the core – I worked to empower them to try out their eco-friendly income-generating ideas and to make the necessary changes to become the caretakers of their own precious rainforest and thus, hopefully make enough money so they would not have to sell all their land. By providing them with the necessary inspiration, education, resources, and inroads to the burgeoning market of conscious consumers, the farming communities I worked continued to prove that they were more than willing to engage in the greening of their local economy. I have seen them help each other build methane-digesters on their pig farms to stop pollution of their waterways. I have seen them establish and manage recycling centers. I have seen them build up ecotourism cooperatives and create a multitude of related sustainable income strategies to replace destructive practices, including establishing eco-campgrounds, organic farms, botanical trails and other sustainable tourism initiatives. I have seen them denounce the illegal hunting and logging activities of their neighbors and relatives. I have witnessed them develop and carry out environmental education programs with their children, and I have been amazed at how they will travel for miles on foot through the rainy jungle to attend meetings where they collaboratively develop these solutions. Their only motivation is saving their farms, simple lifestyle, and the natural resources they depend on. Every time CRCT and other support groups provided the strategies, assistance, and space for collaborative problem-solving, the locals have proven themselves, especially the youth.
On the flip side, I have witnessed many rural farming families in Central America sell all their land because of pressures from conservation groups, agro-businesses and foreign land developers. Because of economic desperation, in large part due to either climate change, the agrochemical treadmill, or the drop in beef and coffee prices (or a combination of these), most start off thinking of a willing buyer as a ‘gift from heaven.’ But all too often, illiterate farmers that sell their land find out too late, that the amount they received for their farm was, in fact, not much money at all. Most of them have to pay off debts, divide the money among their children (sometimes up to 18!) and move to the city. Low educational levels, unfamiliarity with market-driven urban culture, and a desire for material commodities they never had before also contribute to their money quickly running out. Thus, within a few years, many families end up as nomadic migrants living in the ghettos of Latin American and U.S. cities, where drugs, violence, gangs, and prostitution consume many of their youth. With no land to go back to, a disintegrated family, and few marketable skills, many of the honest ones end up living an impoverished nomadic life as day laborers, landscapers, domestic maids, etc. And desperate ones fall prey to the temptations of the underground economy or turn to crime (i.e. armed robbery). This is not to say that there aren’t wonderful ‘success’ stories, but these are the minority. And all too often, ‘success’ includes loosing their cultural identity and adopting a materialist lifestyle.
Many farming families struggle to keep their farms, and make difficult choices in order save their land. Many of the men (and sometimes the women) go up to the U.S. illegally in search of a living wage, and leave their families behind. Once established abroad, some never return because they are undocumented and the journey is too risky to undertake twice, while other migrants die or are killed during the difficult journey north, leaving many fatherless children strewn across the landscape. Increasingly, the mothers are forced to venture into the city to find work to feed her children, all too often in the prostitution sectors.
I also want to highlight that massive illegal migration also causes social and cultural tensions in the receiving cities and countries, to the point that the U.S. is building a wall on its border with Mexico to try to stop the flow of these kinds of immigrants and private militias there are taking it upon themselves to kill any “wetbacks” they find crossing into their “territory.” In the urban centers like Mexico City, San Salvador, Guatemala City, Los Angeles and Chicago, gangs are increasing and underground economies involving weapons and illegal drugs are growing. In the local cities, which are often not prepared for this massive migration of the farming sector into their city limits, a host of other problems are ensuing, including lack of access to clean drinking water, sanitation systems and housing. These ghetto conditions are causing deaths in children due to unsanitary conditions, and frustration, hopelessness, and increase radicalism among the inhabitants that have no where else to go.
In Central America, history has shown us that when indigenous and marginalized people feel unjustly displaced and hopelessly desperate, there is a higher chance that they will turn to armed resistance, political radicalism, and to eventually demand land reforms. In addition, owning the land one tills is a strongly held cultural value. To the displaced farming community or indigenous group who find themselves unable to own land again in their own country and living in desperate conditions, it makes no difference if the new land owner is a large multinational, an elite family or a well-intentioned green-minded entrepreneur or conservation-oriented non-profit group. To them it is the same old story of displacement and injustice. The Zapatista rebellion in Chiapas is an example of this. The Zapatista rebellion was sparked in large part due to a large scale conservation project that drove off thousands of farmers and ranchers from one of the last remaining pristine jungles in Mexico. In El Salvador, my birth country, we watched in horror as hundreds of acres of forest were burned down by disgruntled ranchers upset about a new protected area that would force them off their lands.
Significant cultural impact is also involved in all this. Many leaders of conservation organizations and green-investors understand the need to live closer to the land and many try to live a simpler lifestyle. In part, this is why many buy rainforest farms in places like Costa Rica or help set up eco-communities. But ironically, the farming and native communities that epitomize these values in their centuries-old way of life are becoming extinct to make way for these vacation farms, eco-lodges, eco-communities, meditation/yoga resorts, and private reserves owned and operated by foreigners wanting to “commune with nature.” Along with this cultural extinction, we are losing knowledge of age-old uses of medicinal plants, agricultural techniques and ways to live closer to specific types of lands.
The social and cultural issues involved are multi-faceted and complex, but rural to urban migration contributes to environmental problems as well. For example, urban households create, on average, two to four times the amount of garbage that rural farming households produce. After leaving the countryside, families that once lived on the same farm are now dispersed throughout numerous urban households. As each household rapidly adopts the consumption-based, disposable lifestyle typical of urban areas, they begin to create much more garbage than they did as one unit living on a farm complex. Also, the amount of resources consumed by urban dwellers is exponentially higher than rural people. This ingestion of resources and creation of waste is increased even more if members of the family end up settling in the United States (a very common scenario).
To add to the irony, it is also common for those farmers and ranchers who were considered an environmental threat while living in the countryside to become migrant laborers for large agro-businesses or factories owned by multi-national corporations that cause much bigger environmental problems worldwide. The huge landless and displaced labor force (willing to do anything to make some money) creates an atmosphere in which large manufacturers and processing plants can pay low wages, deny worker rights, and curtail environmental regulations, providing companies with higher profits that can be used to exploit more natural resources globally or lobby for decreased environmental protections. So as a cheap laborer for a timber company or plastic toy factory, it may be that the individual now has a greater negative impact on the environment than as a “destructive” rancher back on his small rainforest farm.

Furthermore, a significant number of displaced families that cannot afford to buy land again and that opt out of horrid conditions in the cities, end up going deeper into the jungle, where they squat new land, and clear whole new areas of virgin rainforest, bringing a host of new environmental problems into sensitive ecological areas and conflict with the local governments, especially when they cross national borders. Poor migrant families also contribute to the hunting of endangered animals for survival. For example, in Costa Rica the green iguana is increasingly at risk because the poor displaced Nicaraguan farmers, who are coming into the country in search of work, are killing it to feed themselves and their families. I hear the same problems are occurring in Africa with endangered monkeys.
In Central America, there is no denying that we need foreign investment and are in desperate need of allies with win-win mentalities that can bring resources and new ideas that will help us develop our local green economies and protect our endangered ecosystems simultaneously. But as our governments sign off on neo-liberal trade agreements and decrease regulations on foreign investors, the large and often illiterate farming and indigenous sector is left defenseless. Small locally owned businesses are also having a hard time competing, as is happening in the eco-tourism sector in Costa Rica where locals are going out of business because of foreign-owned tourism agencies and eco-lodges that have more capital, contacts and access to technology.
Thus, a more complicated and very ironic ‘bigger picture’ surfaces and it soon becomes obvious that green sector businesses and conservation initiatives, particularly those working in developing regions like Central America, must look at as many angles of their impact as possible before embarking on projects that could have negative repercussions down the line. And although they are certainly not the main cause of a lot of these problems, they can be part of the solution and are in a particularly good position to lead and model the way for the ‘less-conscious’ sectors of society. Conservation minded businesses and non-profit organizations are the cutting edge when it comes to finding and implementing creative solutions for long term sustainability, social responsibility and prosperity for all. They are also the ones more willing to hear this message and make the necessary changes to assure a positive ecological and social footprint in all that they do. The growing number of conscious investors and conservation groups can opt to work with us to accomplish mutual goals, rather than unintentionally ignoring the hidden impacts of their projects. I am reaching out to these types of foreigners and entrepreneurs because it seems like these sectors want for us in the developing world what we want for ourselves - long-term prosperity, economic growth, healthy communities, vibrant ecosystems and peace, which will benefit us all as well as our shared planet. Our differences are often simply a matter of awareness levels and perspective.
To help further research and advocate about these issues, an institute is being created called Instituto Conexiones (Connections Institute). Our aim is to help U.S. entities carrying out non-profit or for-profit projects in Latin America become aware of their hidden impacts, and provide hands-on, cross-cultural liaison and project development services to help them become true allies to the local people and environment of their sphere of influence. We invite you to join us in our efforts and to comment on what is presented in this publication. E-mail us at info-at-connectionsinstitute.net
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Special thanks to editing work of Lorna Li and Tanya Ridino

Photos courtesy of Jon Orlando Photography.

Calling for Socially Responsible Real Estate Companies and Land Developers in Costa Rica & Mexico

If you are a socially conscious individual or organization participating in the exchange of land and houses in Costa Rica or Mexico, we want to hear from you! We are collecting real life case studies of real estate brokers and land development organizations on how they interact with those who are selling the lands.

We have been involved in looking at the Costa Rican and Nicaraguan campesino (farmer) and Native American side of this exchange and have received negative feedback from them regarding the impact land issues are having on their lives and communities.

We feel there is more we can do with regards to this issue. The interest foreigners have on buying land in these areas should be a positive thing for the local economies and villages. The potential for positive opportunitities for collaboration between these sectors is huge.

Who is out there working in an integrated way while facilitating real estate contracts? Please contact us or nominate someone you feel should be showcased as a model case study for inclusion in our publications.

Gracias.

Contact: info@connectionsinstitute.net

1Sky Aims to Unite the Voices Calling on the U.S. Government for Sustainability in their Policy Making

Excerpt From: Gillian Caldwell, Campaign Director of 1Sky - 3.19.08

...I honestly feel that the climate crisis, and the opportunity we have to turn it around, represents the defining challenge of our time.

And I just can't look my kids in the eye unless I am working to tackle that challenge.

This is an incredible time for our movement. As last year's Step It Up and Power Shift events so clearly demonstrated, technology and the internet is connecting us in unprecedented ways. And this country -- from our political leaders to our business leaders to our neighbors -- have never been so clear about the severity of the climate crisis.

Thanks to your leadership, what wasn't possible for the climate movement just two years ago is now possible. With your help, 1Sky can build the networks, the alliances, and the political power that we need to turn our country in the right direction.

• As the current Congressional district visits show, we're coordinating a groundswell of activity. In the next few days, 1Sky volunteers have organized and are completing more than 500 planned visits to local Congressional district offices in every state in the country.

• 1Sky is making heavy investments in field. We're busy locating 1Sky organizers in New Mexico, Michigan, Minnesota, Florida, North Carolina, Nevada and Alaska with partnering organizations. And we'll be doubling that number in other states around the country in the coming months.

• We've secured dozens of allies amongst state, regional and national greens, as well as organizations from the business, social justice, student and faith communities. After such a successful year of climate action, there's a groundswell of interest in what we can do together.

• We're also preparing to launch a new website next month with the tools and resources needed to support a truly national movement.

We can do this. But the stakes are high. And we can only do it if we all lean into this together in a truly collaborative and creative way.

It's time for us to speak with one voice. We've identified 3 solutions that will transform America from being part of the problem to paving the way towards a clean energy future. The 1Sky solutions are three bold and inter-related policy solutions, driven by science, that match the scale and severity of the crisis. They are three solutions that our next president and next Congress can implement and transform America from being part of the problem to leading the way towards solutions, here and abroad.

That's what 1Sky is all about -- millions of Americans coming together to make our voices add up. To change the politics of what's possible in Washington, DC and deliver what is necessary.

We're growing, and we're still building the team. If you know anyone passionate about tackling global warming, please send them this link and invite them to apply immediately: http://www.1sky.org/about/jobs

I'm so glad to be working with you,

Gillian Caldwell
Campaign Director

Geraldo Rivera Writes About the Growth of Hispanics in America in his new book, "His Panic: Why Americans Fear Hispanics in the U.S."

Extract from an interview on the Tavis Smiley Show

On PBS/KQED - 3.13.08

Tavis: With all due respect to Eliot Spitzer, let's now turn our attention and talk about something that really does matter, and that is the issue of immigration and specifically, the Hispanic community. I love, as I said earlier, the title of the book, "His Panic." What is this panic all about where your people are concerned?

Rivera: Well, you have a - I'll tell you, I could really encapsulate the whole theme of the book with one phone call I received from a guy named Sergio in Portland, Oregon last week. He's a guy who was brought here by his family at the age of three; his dad got a green card. Sergio ultimately became a citizen of the United States.

He's living now, as I said, in the Portland area, has two children, both boys, five years old and seven years old. So Sergio called me because the boys went home from school crying that they're being called border-jumpers. They said, "Daddy, what's a border-jumper?"

The problem, Tavis, is yes, we have a problem with illegal immigration, no doubt about it. But when you have programs like Lou Dobbs and some of the others who every night are showing pictures of Mexicans jumping over the wall or wading across the Rio Grande River, it casts a taint over the entire community, citizen and immigrant, legal and illegal, alike.

That story I just related to you is part of a generalized phenomenon now. Groups like the KKK and other hate-mongering groups according to the Southern Poverty Law Center with a report released just this week, these groups have been resurgent. They were almost dead in 2000 and now on the backs of this issue, on the backs of these illegal immigrants, they are resurging, they are - hate crimes against Hispanics are exploding.

You have a very, very stressful situation being created because of the demagogues and the savage right-wing talk radio campaign who are scapegoating mainly Latino immigrants for everything from crime to disease to stealing jobs to bringing terrorism in. Next they're going to blame them for acne and eating our sandwiches.

Tavis: You take this head-on in the book. How would you respond to Lou Dobbs or anyone else on that list that you laid out a moment ago that says that it is illegal, first and foremost it is illegal, and from that point on nothing in your book really matters? Geraldo, it's illegal.

Rivera: Well, I point out - and the second sentence is my forebears were also immigrants and they came here illegally. The fact of the matter is in the 19th century, there were no immigration laws. If you weren't a prostitute or a convict and if you were a White person, you could come into this country. The Chinese were excluded in the 1880s, then we had 50 years of White, European immigration, and then in 1924 the National Origins Act, which dispersed visas to foreigners wanting to come to this country on the basis of race.

Seventy-six percent of the visas went to people from the United Kingdom or Scandinavia, and then the percentage went down as you got closer to the Mediterranean and presumably less White. Italians got 3 percent, Greeks got 1.5 percent of the visas. None for Africa, none for Asia, none for Latin America. So we always had a race-based immigration program, so that belies the whole comment that their forebears came here legally; mine couldn't come here legally.

Well, my dad was Puerto Rican, and that's another story; he's a citizen. But my point is that Latinos really had no avenue other than the temporary guest worker programs, the Bracero programs that developed over the years. Right now, you have in the United States a tremendous explosion of the Latino community. Most of it is because of our families having more babies than other families.

We have a very young population, 25 years old on average as opposed to 40 years old for Anglo Americans. So there's definitely something going on. We were four or five million in 1950, 45 million today, and what I believe - and I base my statements on the emails that I've been receiving - racial, racist, racialist, however you want to couch it, Geraldo, go back from where you came from, you brown turd in the nation's toilet bowl. Take these people back with you.

The tone, Tavis, is - and I've been 40 years in public life and I have never received this kind of vibe before. It's an us against them situation that has been created largely by the demagogues and it's very, very troubling.

Tavis: And yet the flip side of that is, which I'm trying to juxtapose here, that everybody wants to make money off of or take advantage of in one way, exploit in one way or another, the fact that they are here. How do you explain that, that there is this visceral maltreatment of immigrants, and yet there's so many people making money - all kinds of American companies.

Every time you go on a plane these days or anywhere you go you hear an English announcement and you hear a Spanish - we know they're here. We're making money off of them. And yet I'm trying to juxtapose that with the hate that you're talking about.

Rivera: Well, we talked earlier about Spitzer and horny hypocrites. There is rampant hypocrisy in the area of illegal immigration as well. I believe that the people who are flogging this issue on a nightly basis are people who have figured out how to cure their ratings problems on cable news or talk radio. They are doing this because it rates.

And then you have situations like Mitt Romney. You've been at our summer house in Massachusetts. For 25 years, I have a real connection to Massachusetts. I was there when Mitt Romney was governor. The person he became when he decided to run for president is not the Mitt Romney that we knew as people from Massachusetts.

This guy is a person who has been exposed. His own lawn crew in the governor's mansion were illegal immigrants, and yet he was demonizing them in a way - I actually had a conversation if you have a minute I could relate to you with Mitt Romney. I was doing Bill O'Reilly's program, as I do every Friday. I came out in the green room. Governor Romney was there and he's a very charming man in person, he couldn't be nicer.

And I said, "Governor, I'm glad I've run into you because I've got to tell you, the extreme rhetoric in your anti-immigration platform is really distressing a lot of Latinos. We're worried; we're hearing stories now where people with mustaches and brown skin are being carded at traffic stops, cops asking them for proof of their citizenship status. This is very troubling."

And he said, "Oh, no, Geraldo, no, no." He's such a sincere guy. "No, no, I only am interested in illegal immigrants." And I told him, I used the word putrid fog. Your rhetoric and the Minute Men and everything that they're doing is creating a climate that's like a putrid fog that lies over the entire Hispanic community now and Governor, I'm telling you, it's going to cost you in Florida.

And he said, "No, Geraldo, I've got 45 Hispanics on my advisory community in Florida." And I said, "Governor, good luck, it's not going to be enough." So sure enough, he spent a fortune in Florida; he drank café con leche; he said, "Cuba is, Castro no;" he wore the Guayaberra shirt; he did all the formulaic things to get the Cubans on his side and guess what? They voted for John McCain five to one. Because even citizens are extremely concerned by the tone of this debate, and finally, we are going to, I hope, hold these public officials accountable.

Tavis: We're just scratching the surface of a fine new book by veteran journalist Geraldo Rivera. The new book is called "His Panic: Why Americans Fear Hispanics in the U.S." Geraldo, always an honor to have you on the program, take care.

Read an exerpt of his book: click here.

Is Corporate America Waking up and Smelling Another Kind of Green??

Corporate America goes green

Thurs. March 13, 2008
By: David Louie

SANTA BARBARA, CA (KGO) -- For years, environmentalists and corporate America have been at odds over sustainability and climate change -- that's changing.

An "eco"-nomics conference in Santa Barbara is taking place where one-time adversaries say they're ready to move forward together.

Wal-mart's president and CEO, H. Lee Scott, says it was tough dealing with environmental critics. Wal-mart's mission was helping Americans stretch their budgets.

"Some were nipping at our toes, some had a full grasp. It was a little bit of both," said Wal-Mart president and CEO Lee Scott.

Now they are working together and attending a Dow Jones "eco"-nomics conference, learning how companies can make money by being green.

"More and more companies understand that the future is going to be individual consumers and governments demanding environmentally sound products and that they see a profit in supplying the demand," said Environmental Defense Fund President Fred Krupp.

Fred Krupp is President of the Environmental Defense Fund.

Wal-mart says Krupp and other nonprofit groups have helped the company reduce waste, boost energy efficiency and promote green products in its stores.

Krupp's new book puts the spotlight on a number of companies with innovative technology -- such as Miasole in Santa Clara that makes thin solar film. Start-up's that will reform energy use and solve global warming issues.

"The technologies being developed in the Bay Area are going to end up being a boom that will dwarf the switchover to personal computers or even the Internet boom. This is going to be a much, much bigger thing," said Krupp.

However, even big, established companies are jumping in with profits in mind.

Andrew Liveris is President & CEO of Dow Chemical. His global company is spending hundreds of millions of dollars to solve environmental problems.

"We have the science, we have the scientists. I employ 6,500 PhD's. If I can just point them and say, bring me a solution, find me some answers, bring them to the table and see whether there's a business response -- The business of making money in environmental issues," said Dow Chemical Chairman and CEO Andrew Liveris.

Hollywood actor and environmental activist Ed Begley, Jr., also spoke at the conference. He thinks it's only a matter of time before government comes to the table.

"When you see many of the financial magazines having a cover story about the emerging green marketplace, I think the time is now. People know that you can have good products that are energy efficient. You can give people a cool beverage and a warm shower, you're just going to do it more efficiently," said actor and environmental activist Ed Begley.

A word often used today was momentum; however momentum can be broken by two potential problems - immigration policy and a potential brain drain. We'll explore those issues as our coverage continues on Friday.

(Copyright ©2008 KGO-TV/DT. All Rights Reserved.)

From The Earth Day Network - 02.28.2008

If You Want to Do One Thing on Earth Day: CALL FOR CLIMATE!

Global warming is our most urgent environmental problem: The time for waiting and inadequate solutions is over. On Earth Day, April 22nd, join Earth Day Network in our global Call for Climate by contacting your national leaders and demanding bold, swift and fair action to tackle climate change. And from now until Earth Day, take action and sign Earth Day Network's Sky Petition.

To buy a poster, click here

If you are in the United States, help us generate one million phone calls to Congress on April 22nd. Call the Capitol Switchboard at (202) 224-3121 and ask for your representatives. Tell them the current global warming proposals in Congress are inadequate. Tell them you want:

- A moratorium on new coal-burning plants,

- Renewable energy,

- Carbon-neutral buildings,

- Protection for the poor and middle class in the new green economy.

Tell five friends about this campaign - have them enter the Capitol number into their phones now. And make sure they call on Earth Day, April 22nd!

This Earth Day, it's time to change the forecast for global warming.

URGENT CALL FOR VOLUNTEERS!

With Earth Day less than 2 months away, we want to break all the records! We are aiming to register 20,000 events this year, and we can't do it without you! If you have some spare time and a computer with internet connection, and would to help us, register at our Volunteer Center or contact Michele Ditto at ditto@earthday.net. Together we can make this the biggest Earth Day yet!

NEW ON EARTH DAY TV

Don't miss our interview with Nobel Peace Prize laureate Professor Mohan Munasinghe, Vice Chair of the Intergovernmental Panel on Climate Change, and Bracken Hendricks, author of the hit book Apollo's Fire. Discover how students at Thomas Jefferson High School plan their next Environmental Impact Club activities and be inspired by the passion of the thousands of people who came to DC to lobby Congress during Power Shift 2007.

On April 16th, tune in to the broadcast of Chill Out: Campus Solutions to Global Warming, sponsored by Earth Day Network organized by the National Wildlife Federation and ClimateCounts.org student-made videos, inspiring presentations from contest winners, solution-focused discussions, and live Q&As with people who really are changing the world.

Invitation: A Critical Look at NAFTA - 2.28.08

A communication from Global Exchange:

Please attend our March 5 forum in Washington, DC: Linking Agriculture, Development and Migration: A Critical Look at NAFTA Past, Present and Future.

Join experts from the US, Canada, and Mexico as they take a critical look at how NAFTA has impacted the region and what we can do to reverse the trends that displaced farmers and workers in all three countries and sent millions of Mexicans into the migration stream.

In addition to the distinguished panelists, Representative Marcy Kaptur (D-OH), Canadian Member of Parliament Peter Julian, and Mexican congressman Victor Quintana will address the forum.

Click here for more information.

Wednesday, March 5, 2008
Carnegie Endowment for International Peace
2nd Floor, Root Room
1779 Massachusetts Ave. NW
Washington, DC 20036
(Close to Dupont Circle metro, south exit)

If you plan to attend, please RSVP by sending an email to Maria@boell.org or call 202-462-7512 by Monday, March 3rd. Also, please indicate in your response if you will need a headset for simultaneous English/Spanish translation.

P.S. Click here to see Global Exchange Human Rights Director Ted Lewis and Associate Fellow of the Institute for Policy Studies Manuel Perez Rocha on Link TV discuss migration push factors, FTAs in Latin America, and how these issues are and are not being addressed by US presidential candidates.

UN World Food Program warns of coming hunger crisis due to new biofuel demands - 2.26.08

From BBC News:

UN warns over food aid rationing

The WFP's budget requirements are rising by millions of dollars a week

The director of the UN's World Food Programme has said it is considering plans to ration food aid because of rising prices and a shortage of funds.

Josette Sheeran told the BBC that the WFP needed increased contributions from donors to make sure it could meet the needs of those who already rely on it.

She said it also faced growing demands from countries like Afghanistan, where people were now unable to afford food.

Food prices rose 40% last year because of rising demand and other factors.

Earlier this month, the UN Food and Agriculture Organisation (FAO) said the rising price of cereals such as wheat and maize had become a "major global concern".

The FAO estimated poor countries would see their cereal import bill rise by more than a third this year. Africa as a whole is expected to see a 49% increase.

The organisation has called for urgent action to provide farmers in poor countries with improved access to seeds and fertiliser to increase crop production.

'Growing needs'

In an interview with the BBC on Monday, Ms Sheeran said the WFP was holding talks with experts to decide whether food aid would need to be stopped or rationed if new donations did not arrive at the agency in the short term.

In some of these developing countries, prices have gone up 80% for staple food Josette Sheeran, WFP executive director

The former US undersecretary of state said she hoped the cuts could be avoided, but warned that the agency's budget requirements were rising by several millions of dollars a week because of the higher food prices.

"If food is twice as expensive, we can bring half as much in for the same price and the same contribution," she said.

"It will take increased contributions to make sure we can meet those already assessed needs."

Ms Sheeran said there was an urgent need for the funding shortage to be addressed because "in many places, we are the only source of food for some people".

"We're also seeing some new growing needs in some places like Afghanistan, where people are being thrown into food insecurity just simply due to the higher food prices."

She said those who had been hardest hit so far were people in developing countries who were living on 50 US cents (£0.25) a day, 80-90% of which was already being spent on food.

Global wheat prices have risen 83% in the past year

"In some of these developing countries, prices have gone up 80% for staple food," she added. "When you see those kinds of increases, they are simply priced out of the food markets."

Even middle-class, urban people in countries such as Indonesia, Yemen and Mexico were increasingly being priced out of the food market or forced to sacrifice education and healthcare, she warned.

Ms Sheeran said Egypt had just widened its food rationing system after two decades and Pakistan had reintroduced ration cards after many years.

China and Russia were meanwhile imposing price controls, while Argentina and Vietnam were enforcing foreign sales taxes or export bans, she said.

The WFP's ability to mitigate the impact of rising food prices has also been hampered by a significant decrease in the past five years of supplies of "in-kind food aid" - food produced abroad and delivered to vulnerable people in emergencies.

In-kind food aid peaked in 2000, when there were large surpluses and low prices for cereals.

The US, the world's largest donor of food aid, has since reduced its surplus and instead chosen to provide funding to international agencies.

Costa Rican Newspaper (La Nacion) Reports on the Environmental Damages Vacation Home Development is Causing in the Osa Peninsula, Costa Rica - 2.15.08

Por Vanessa Loaiza N. | vloaiza@nacion.com

Minae presenta denuncia ante Ministerio Público

Construcción causa graves daños en un bosque de Osa

Inspectores confirman tala y obras ilegales cerca de laguna de Sierpe

Desarrolladores incumplen orden dada en noviembre de frenar obras

La apertura de varias trochas, tala de bosque y la construcción de supuestos planteles provocaron “graves” daños en los alrededores de la laguna de Sierpe, en la Reserva Forestal Golfo Dulce, ubicada en Puntarenas.

Etilma Morales, directora del Área de Conservación Osa (Acosa), en la zona sur del país, no dudó en calificar como “grave” la destrucción provocada dentro de esta área protegida.

En una inspección realizada en setiembre del año pasado por tres guardaparques, en la finca privada Lago Manatí Osa, fue evidente la tala de árboles en los 50 metros de protección de la laguna de Sierpe.

Además, descubrieron varias trochas en las cercanías del humedal y se comprobó que los hombres tiraron tierra sobre los desagües naturales de la laguna, para evitar que los carros se hundan.

Según agregó Morales, “taponear la laguna” podría provocar inundaciones a futuro, pues el agua no tiene salida y buscará por dónde “romper”.

Por último, en la inspección se encontraron los cimientos de 11 supuestos patios de acopio para madera de melina. Sin embargo, como una coincidencia, “todos los patios de acopio tienen vista a la laguna”, precisó Morales.

Acusación. Basada en toda esta evidencia, Acosa ya presentó una denuncia en la Fiscalía de Ciudad Cortes, contra Carlos Luis Quesada Álvarez y Jorge Antonio Rojas Quesada, en representación de la finca Lago Manatí Osa.

Los guardaparques pidieron que se les investigue por violaciones a la Ley Forestal, al realizar tala y trochas sin los estudios de impacto ambiental y sin el visto bueno del Área de Conservación.

Aunque desde noviembre del 2007 el fiscal ambiental de Golfito impuso medidas cautelares y prohibió que las obras continuaran, Morales aseguró que en inspecciones recientes verificaron que la construcción no se suspendió.

Según dijo, los trabajadores siguieron levantando lo que en apariencia son cabinas o cabañas, todas con vista a la hermosa laguna de Sierpe.

Además, ya colocaron postes para cableado eléctrico y siguen utilizando trochas abiertas dentro de un bosque primario, agregó la funcionaria.

La Nación intentó localizar a Jorge Antonio Rojas Quesada, el representante de la finca, pero no respondió al mensaje que se dejó en su teléfono celular.

Además, una de sus hijas dijo el miércoles pasado que Rojas se encontraba en una finca, donde no tenía acceso a teléfonos.

Gravedad del daño. En la denuncia interpuesta en el Ministerio Público, el técnico forestal Daniel Beita Saldaña sostiene que la laguna de Sierpe “es importante en la regulación del régimen hidrológico y la conservación de la flora y fauna” de la zona.

En la laguna viven cocodrilos y caimanes que son especies amenazadas. Además, las plantas que crecen en el humedal son fuente de alimento de dantas y chanchos de monte.

Estos últimos son indispensables en la cadena alimenticia del jaguar, un felino en riesgo de extinción.

Según Álvaro Ugalde, exdirector de Acosa y uno de los fundadores de los parques nacionales en el país, dijo que ya hay un grupo organizado que recurrirá a los tribunales para evitar la destrucción “de uno de los sitios más maravillosos del planeta”. Colaboró el corresponsal Freddy Parrales.

In Memory of Raul R. Salinas (Xicanindio) - 3.17.1934 - 2.13.2008

We would like to take a moment to honor the memory of Raul R. Salinas, who passed away on Feb. 13, 2008. Raul was a poet & international human rights activist - he spent many years documenting and raising awareness about Latin American & Latino American issues from a primary source perspective. We will always be grateful for the work he did to help us understand the perspective of often controversial positions during a very socially dangerous time.

The Hard Numbers on Social Investments

From: The Harvard Business School's Working Knowledge E-Newsletter

Q&A with: Stacey M. Childress
Published: November 10, 2003
Author: Manda Salls

In what is believed to be the largest study of its kind, MBA students at Harvard Business School recently analyzed the financial returns generated by 110 early-stage companies backed by Investors' Circle, a national network dedicated to early-stage investments in companies that "deliver commercial solutions to social and environmental problems."

The goal of the study was to help IC, whose members collectively invested $80 million from 1992 to 2001, the time horizon of the study, develop a fact-based understanding of the financial returns generated by the companies that had received capital through their network. Results would also help IC members discuss the larger question about the relationship of financial returns and social returns. In short, should capital providers expect some lesser degree of financial performance in favor of social returns?

In this e-mail interview, HBS Social Enterprise Initiative executive director Stacey Childress discusses the study and its implications for investors.

Salls: Tell us about the study. What did the team set out to do?

Childress: A team of three MBA 2003 students, Steven Carden, Hank Midgley, and Carolyn Wolff, gathered data on 110 of the 128 IC investments, collecting both the valuation at the time of the initial investment and the current valuation at the time of the study for privately held companies, or the exit value for those that had experienced a liquidity event. After collecting and analyzing the valuation data, the team was able to draw some conclusions about how the companies performed individually and as a hypothetical portfolio. They were also able to make some observations about how investor behavior contributed to the success of individual IC members. The students worked under the supervision of Olive Darragh, a director in McKinsey & Company's Boston office, and me, on behalf of the Social Enterprise Initiative here at HBS.

Q: Why was it important for the Social Enterprise Initiative to sponsor this research?

A: The field of social-purpose investing is growing and becoming more sophisticated. For years an important debate has been raging in the social investing community about the potential of social purpose companies to deliver satisfactory returns to investors.

The conventional wisdom is that capital providers should expect some trade-off between financial returns and social returns, a willingness to accept a social discount to financial returns. However, some in the social investing community believe that this is simply untrue. Because of the increased risk associated with investing in early-stage social ventures, and their ability to dramatically alter conventional approaches to social problems through market solutions, the rate of return on these deals should be at least as high as traditional early stage investments.

Unfortunately, the lack of data about the actual returns of a specific set of companies in this early-stage category has resulted in an ongoing philosophical debate that to date has been based largely on anecdotal investor experience. As far as we could determine in the summer of 2002, this was the largest study ever undertaken to analyze the financial returns of a set of early stage social-purpose companies that had received funding from a discrete group of individual investors.

Q: How did the team determine how the companies had performed as a whole?

A: The team had an important insight during their work. Because of the variability of individual IC member investment expertise, it was difficult to judge the performance of the set of companies solely on the experience of the members. In an effort to evaluate the companies in aggregate, the team created a portfolio containing the 110 companies. The team used the actual initial and current or exit valuation data of the companies, but constructed two hypothetical investment strategies.

In scenario one, the team used a strategy that assumed an initial investment of $175,000, subsequent investments averaging $115,000 in all follow-on rounds, and then cash out, either six months after a liquidity event, or at the current valuation for privately held companies. In this scenario, when treated as a portfolio the 110 companies achieved an IRR of 14 percent.

In scenario two, the team modeled a "buy and hold" strategy that assumed an initial investment of $175,000 but no investments in follow-on rounds, and no cash out (still holds the investment at the current valuation). In this scenario, the hypothetical portfolio achieved an IRR of 8 percent.

During roughly the same investment period, traditional venture capital returns were 33 percent; the Domini Index (investments in socially responsible mutual funds) realized a 13 percent return, and the S&P 500 returned 11 percent. The average returns of traditional angel investing are hard to determine given the fragmented nature of the investment activity, but the team interviewed industry experts who estimated the returns to be significantly lower than professional venture investing due to less investor diversification and capital limitations that prevent investment in follow-on rounds. Given this, the team concluded that the set of companies that received investments from IC members had the ability, as a portfolio, to deliver satisfactory returns, relative both to investor expectations and other investment vehicles.

Q: How did the 110 companies fare?

A: The team collected the current valuation data at the time of the study for companies that were still operating, and exit valuation data for those that had experienced a liquidity event. Of the 110 investments, 95 were operating companies and 15 were other social purpose investment vehicles.

Fifty-five percent of the 95 companies were still in business and privately held. Thirty percent of the companies were bankrupt, 9 percent had been acquired, and 6 percent had experienced an IPO.

The incidence of bankruptcy in these social purpose companies was not unlike traditional early stage companies, but the percentage (15 percent) of companies that were able to achieve a liquidity event either through acquisition or IPO was below average, particularly given the time horizon of the investments (1992-2001).

Q: What were some characteristics of social purpose companies that achieved a positive rate of return for investors?

A: The big winners were in the technology and health care sectors, and in another group of companies that were categorized as industrial. These categories generated higher returns as a group than the consumer goods category. Some of the characteristics of these winners included having a proprietary technology and/or meeting an established market need in an innovative way, attributes not unlike traditional successful ventures.

However, all of the companies in the sample also had some social or environmental benefit as part of their mission. Three success stories in these categories were Sonic Innovations (health care), Evergreen Solar (technology), and Energia Global (industrial).

Sonic Innovations has become the fastest growing hearing aid company in the world since its IPO in 2000. Through the development and use of the smallest single-chip digital signal processor platform ever installed in a hearing aid, they bring to the market small, comfortable and reliable hearing aids. When eight Investors' Circle members invested $2 million in Sonic Innovations, the company had a pre-money valuation of $5 million; seven years later, at IPO, the company's market value was $127 million.

Evergreen Solar is a developer and manufacturer of photovoltaic (PV) modules—the engines of solar electric systems—used in remote power and emerging grid-connected markets. The PV modules produced by Evergreen Solar incorporate proprietary crystalline silicon technology known as String Ribbon. In 1996, seven members invested $3 million; five years later the company was worth $128 million.

Energía Global developed, financed, owned, and operated environmentally sustainable energy generation and electric distribution facilities in Central America. In 1992, seven IC members invested $1.4 million in the company, then worth $4 million. Energia Global was acquired by CHI Energy in 2000 for $74 million. CHI Inc. is now part of Enel Green Power, part of Enel, the world's largest publicly traded electric utility.

There were positive IRR investments in the consumer goods category, Honest Tea and Zip Car being two examples, but this category of companies in aggregate did not perform as well as the technology, industrial, and health care categories.

Q: Do investors expect the same results from social purpose companies?

A: Investors' Circle polled its membership about their return expectations as part of a member survey being conducted at the same time as our study team was conducting the valuation analysis.

The survey showed that 77 percent of members expected an IRR in excess of 10 percent, and that remaining 23 percent expected an IRR between 0 percent and 10 percent. However, in a separate question, 64 percent indicated that they had entered into a deal expecting a lower-than-market rate return in exchange for a high social return.

A key expectation, then, is related to the social or environmental benefit these investments will produce. The member survey indicates that IC members expect a blend of financial and social or environmental returns. Different investors are focused on a variety of social and environmental issues, and the companies receiving investments were involved in businesses as diverse as clean energy technologies, sustainable agriculture, educational toys, and innovative hearing aids.

Our team's analysis showed that only 32 percent of IC members realized a positive IRR on their total investments, 15 percent simply achieved capital preservation, 21 percent experienced a negative IRR, and the remaining 22 percent suffered a total capital loss. These realized financial returns are quite different from the expectations expressed in the IC member survey.

As the field continues to mature, efforts to develop a notion of "blended value," a way to account for social and environmental returns along with financial returns, will be well served by having a clearer understanding of the actual financial returns that can be generated by these types of investments.

Q: Were there common characteristics among successful investing strategies?

A: The team grouped the investors into quartiles based on their realized returns, and was able to identify some differences in the investment strategies of those in the top quartile. The team concluded that, much like traditional early-stage investing, diversification and investing in additional rounds was key to the success of individual investors. Those in the top quartile invested in four times as many companies as those in the lowest quartile and participated in 40 percent more rounds of company financing as compared to all other investors. This allowed them to diversify their holdings across a range of companies and to minimize dilution as the companies raised follow on money.

Additionally, the team observed that members who invested in deals that were also receiving capital from professional investors fared better, as did those who joined other IC members in investing, as opposed to those who were the single IC investor in a deal. In other words, relying on the due diligence and judgment of other experienced investors was an important success factor.

Q: What are the most important things that social purpose investors should learn from this research?

A: While the findings are important because they represent the largest study of early stage social investing of its kind, they are not broad enough to generalize to a recommended investment strategy for all social purpose investors. However, the team did make some recommendations to Investors' Circle based on the findings, and these might be useful to others involved in this kind of investment activity.

One suggestion was that IC should consider creating additional pooled early-stage investment vehicles to take advantage of the specialized expertise of some of its members who have been professional investors, and to create some diversification for its members. IC has experimented with one such vehicle, Commons Capital, LLC, and the team saw this as a model that could be replicated.

An alternate suggestion was that the organization consider performing some basic due diligence on all companies that enter IC's deal flow and screen out some companies before they are presented to broader membership for investment. Traditional investment criteria such as proprietary technologies and experienced management teams are also important in social purpose investing.

The most important finding was that if investors follow a disciplined strategy that incorporates diversification and large enough investment amounts, these social purpose companies have the potential to produce positive IRRs. However, because of the unique problem of exit that these companies seem to exhibit, their ability to provide market rates of return as an asset class are limited. A number of talented people in the social investing community are addressing the question of how to solve this problem, and the field would be advanced by a creative solution.

About the authors

Stacey Childress is Executive Director and Senior Researcher for the HBS Initiative on Social Enterprise.

Manda Salls is the Web editor for Baker Library.