Measuring the Social and Environmental Impacts of Private Equity Investments:

1. Measuring the Social and Environmental Impacts of Private Equity Investments: Meeting the Challenges—Examples from the Field December 11, 2007

2. Agenda • Why measure social return? • Brief Introduction to Pacific Community Ventures • Measuring SROI on Private Equity • Example—CalPERS California Initiative • Process • Challenges/Solutions • For more information

3. Financial return is primary.

4. Why measure social return? • Public pension funds— • Are your ETI’s producing benefits in your geography? If not, why bother? How do you know? • Are you having a bigger impact in your state than you know? • Third party fund managers— • Demonstrating specific, measurable community benefits alongside competitive financial returns is a compelling competitive advantage—will attract more capital. • All investors who care about social outcomes— • Show that you are producing competitive financial return AND significant social return—it can be done! • What you measure, you can increase.

5. $60 million under management Capacity building for small businesses Asset-building for lower income workers • PCV’s portfolio • Consulting clients • Pension Funds • 3rd-Party Mgrs • Foundations

6. Example: CalPERS California Initiative • $975 million ETI • $475 million allocated in 2001, 10 funds, 100+ companies • $500 million allocated in 2006, committed to third-party fund-of-funds manager. • Objectives: • To earn attractive risk-adjusted returns • As an ancillary benefit, to have a meaningful impact on the economic infrastructure of California’s underserved communities. To invest in companies: • Located in areas where access to institutional capital is limited • That employ workers who reside in economically disadvantaged areas • With female and/or minority management or ownership

7. CalPERS California Initiative—Non-Financial Outcomes PCV conducts an annual evaluation of the non-financial outcomes for the entire $975 million commitment.

8. Results: Providing capital to areas that historically had limited access to institutional equity capital.

9. Results: Employing workers living in economically disadvantaged areas

10. Results: Supporting women and minority entrepreneurs and managers

11. Data Categories • Varies with client objectives • Hourly and salaried wages • Job quality • Health insurance • Asset-building • Training • Opportunities for advancement • Employee tenure • Patents • In-state and minority supplier relationships • Community and environmental initiatives • Corporate philanthropy

12. Measuring the California Initiative’s Community Outcomes--Process • Identify key metrics—the “yardsticks” • Develop survey instruments • Work through the funds to collect data from each portfolio company. Very high participation rates (90%+) • Analyze and compile comparative statistics • Report • Conduct annually, beginning in 2005

13. Challenges and Solutions

14. For More Information Beth Sirull Director Pacific Community Ventures 415-442-4315 BSirull@pcvmail.org