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Community Development Venture Capital

M easuring Impacts Toolkit of the Community Development Venture Capital Alliance by Kerwin Tesdell Measuring the Social and Environmental Impacts of Community Based Investing December 11, 2007. Community Development Venture Capital. CDVC

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Community Development Venture Capital

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  1. Measuring Impacts Toolkitof theCommunity Development Venture Capital Allianceby Kerwin TesdellMeasuring the Social and Environmental Impacts of Community Based InvestingDecember 11, 2007

  2. Community Development Venture Capital • CDVC • Invest in underinvested urban and rural markets and in companies that create good entry-level employment, seeking market rates of return • 80 domestic funds, more outside US • $1 billion under management domestically • CDVCA • Trade association of CDVC Fund • Provide training & networking, public policy, research, best practices, consulting, investments in funds and co-investments with businesses

  3. Measuring Impacts Toolkit • Step-by-step methodology for measuring impact • Excel spreadsheets, data map, data definitions, users manual • Result of 18-month project led by practitioners • 5 leading fund groups chosen in RFQ, represented 17 funds domestically and internationally • Iterative approach of designing methodology and gathering data • Practical orientation • Close relationship between funds and portfolio companies allows for gathering extensive information

  4. Measuring Impacts Toolkit • Core Survey • 16 modules plus a qualitative component • Enhanced Survey • 12 modules • Users Manual • Discussion of Methodology • HUD median family income data

  5. Core Survey--Overview • Unit of analysis is the portfolio company • 77 total questions, 18 ‘hard’ questions, 27 questions answered by fund • Three major question areas: • How many jobs? • Who gets the jobs? • What is the quality of the jobs? • Additional impacts, such as environmental, minority and women ownership, and taxes paid • Qualitative questions

  6. Core Survey Modules • Company information and survey tracking • Employment and employment change • Wages • Promotions and career ladders • Benefits—health, retirement, sick leave, vacation, & tuition remission • Wealth-building—broad based stock options, ESOPs, phantom stock program, profit sharing, structured bonuses • Training—trade specific, computer related, customer service/soft-skills

  7. Core Survey Modules • Community impacts • Environmental impacts • Export-oriented sales • Taxes • Minority/woman-ownership or control • Sector classifications—SICC, NAICC, VEIC • Locational characteristics—MSA, census tract, etc., • Qualitative questions

  8. Strengths and Limitations • Strengths of broader industry approach • Standardizes definitions for such variables as full-time equivalents, ‘jobs retained,’ jobs created,’ and ‘low-income’ based on the area median family income • Reduces double counting • Limitations of numerical data • The ‘but for’ question • Effects beyond portfolio company and beyond investment period • Impacts on individuals • Qualitative questions are necessary for fullest impact

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