Thank you. When I look at your current organization, it seems like there are many different areas of focus. The projects I saw on your webpage were quite diverse, ranging from working with Google to create career certificates for specific roles to impact investing. Can you provide an overview of the different kinds of work your organization does?

It's actually much narrower than it appears. Let's step back to around 2009. Social Finance was created to launch the Social Impact Bond in the United States. The logic behind the Social Impact Bond was that most government programs don't work because government individuals are bad at assessing the volatility of outcomes. Capital markets are better at assessing volatility, so the idea was to shift the risk of outcomes from government to private investors who can analyze it better. In practical terms, private investors fund programs and get repaid with a premium return when the programs meet the expected results. Aligning social programs and capital is a great idea on paper, but it doesn't work in reality for a number of reasons. One of the most obvious reasons is that government issuers don't have the capacity, structures, tools, or rules to think that way. Social Finance realized that there was an opportunity to help consult with governments to help them structure the kinds of outcomes-based financing that they were trying to sell. Over the period from 2014 to 2018, Social Finance grew as a consulting firm where they provided social impact bond capacity development advice. This kind of business has developed into their public sector practice, an advisory business where they give advice to the public sector and other public actors on how to structure outcomes-based products or services. They work with governments to structure these kinds of programs and offer a wide range of subject matters on their website related to their advisory practice. The team noticed over time that the consulting revenue pays for itself, with $89 million a year in consulting revenue. It's a decent-sized business that is intellectual and wonky.

So the other thing that I've noticed while going through the same period is that investors were really interested in outcomes. However, there were lots of people interested in impact investing. Lots of people talk about impact investing, but in reality, it's pretty squishy for most people. The idea of being outcome-focused, being able to observe and measure outcomes, and paying only for those outcomes got all the investor groups really excited. So when we added the team, it was time to step back and say, "Okay, if we have investors who are interested in financing this, which is usually the hardest part, let's try to do something that looks like it's outcomes-based, not just looks like it is outcomes-based. That is social change at the heart of it, and we can figure out what that means for social change as we think about it." And then, the exact opposite of what social impact bonds look like. Social impact bonds are pretty long deals, so let's try to do short deals. Social impact bonds are pretty low flow, and you might see one or two potential opportunities a year, so let's try to do things that are really high flow. Social impact markets are complicated because there are lots and lots and lots of counterparties in each deal, so let's try to do things that are bilateral instead of multilateral, at least limited lateral at letter ability. One of the biggest challenges of the social impact bond structure is that the outcomes are really long-dated and difficult to observe. Imagine if you're doing prison reform; it's a 30-year thing. If you're saying investors get paid at the end of 30 years, that's really difficult. So, is there something that we could do that is short-dated and easy to absorb? We ended up in workforce finance. Workforce finance is where we provide financing for people to pursue the training that will allow them to get better jobs and higher incomes, and the training finances outcomes-based, so you only pay if you realize a higher income. We have 345 (depending on how you want to count it, let's just say four) different legal investment vehicles that we manage that deploy capital around workforce finance. We have the upfront Fund, which is a $50 million fund that we raised from impact investors, the kind of classic impact investors like the MacArthur Foundation and then Michael and Susan Dell Foundation and some of the Waltons and some high net worth people. That $50 million finances people's training through training partners. For instance, we just signed a deal with an organization called CRF. CRF trains people to implement clinical trials in the United States for drug tests. Clinical trials are a growing business where they've got trials, luckily, the people they need to do the business need. They need some kind of certification, right? So, if you were a nurse from the Philippines or Indonesia and you were unable to transfer your credentials to the United States, you're probably working either in childcare or in the hospitality industry working as a maid in a hotel. And if you could afford the $9,500 (a big amount) and the 100 hours it took to complete this program, whatever you forego in your income for 100 hours plus the $9,500 of tuition, you would realize an income increase on average (and this is data we used real data) from about $38,000 to about $51,000 in one year to pay for all of your costs in one year, and then it's just a board scraping. We think there's a lot of opportunities like that where we can provide zero-cost upfront financing to individuals to work through training. We've deployed probably $30 million over 50. We've had some hiccups, we're learning to do it better, and we're really having some impact. But in reality, it's pretty small. That organization we just talked about is a $50 million fund. You can't put all your chips into one relationship. If you're managing other people's money, you have to manage it with some kind of prudence. So, the most we could do with a thing like CRF is fight three or $4 million by three or $4 million refinance 200 people, and for those 200 people and their families and their communities, this is a major increase, and it's great, but it doesn't really change the world. So, we started looking at ways where we could have more impact using the same tool, and we ended up with two opposed approaches, which we pursued both. One is to get bigger, and one is to get smaller. To get bigger, we said, "Okay, up until now, our approach has been training provider-centric. Let's go find a training provider who we know is good because we don't want to waste people's time, and we're also using other people's money. So, they have to have data that shows that if I take training at Grossman Institute of training, I'm going to realize a significant and sustained income increase. I'm basically going to get a job, and that job is in my industry, and that job is above the minimum that we said that we consider the living wage, depending on where it is." There's no sense in finding someone to finance who's going to make $36,000 in Boston because even though it might sound like a big number, who can afford to live like your housing is going to be 30,000 of that already, right? So, we set fairly high minima to establish this kind of family-sustaining wage. We said, "So, there's not that many training providers out there with data, but who does have data? Well, perhaps not surprisingly, when we started asking the question who does have data? We ended up at Google. Right? Google has more data than anybody you could possibly imagine. And one of the things Google has data on is a thing that they sell already called the Google career certificate, and the Google career certificate is ADA. The way it sounds is exactly what it sounds like. You get certified by Google that you have been trained in the methodology and the content approved by Google. So, like you could go get a Google career Certificate in Project Management, and then Google would say you have been trained by Google to stamp like the Google School of project management. That's basically what it is. And there's eight of them, like cybersecurity and user interface and the kinds of things you would expect big companies to look for, or entry-level or low-level IT jobs, and not just IT companies, but companies that have IT teams, right? It's been a growing industry. And what Google had found in their data was that the Google career certificate, which is an independent study course, you do it on your own, it's online. If you had a striking correlation between family income level and performance, income people did much better in achieving the Google career certificates than people who didn't. People who are enrolled in the Google career certificate program realized a big income bump. So, we said, "Alright, Google, we observed that this thing works but doesn't work for low-income people. We'll go and find people who are good trainers of low-income people. And we'll put it all together through financing." So, we went out and found a couple of groups. We just signed our second training provider. And we hope to do a total of five that are going to work through the Google career certificates fund. And what they're going to do is they recruit students, etc. And they train them, and we finance that training, or the student pays dollars upfront. They can enroll in one of these five training programs to get one of the seven or eight Google career certificates that they can choose from. And afterward, they go get jobs. And when they get jobs, if they get a job above a minimum income threshold, they pay us back $100 a month for five years, and they cover their costs. And if they don't, they don't. We raise philanthropy, and so we capitalized a fund with philanthropy, and then I borrowed money from Google dot inc, and they made us a commercial loan to this fund. And so, the fund is $100 million, and we expect to lose some of it like with any equity because we're making low-income loans.

And we're really excited. So that's how we got bigger. The Google Career Certificates Fund hopes to finance 20,000 students over five years and create $1 billion in wage gains or financing. We're doing an RCT to understand the implications and see if it really works. It's quite an initiative and has us thinking about how we can do the same thing with other clients, have market-recognized or industry-recognized credentialing that's not specific to individual organizations and is really hard to find. We're trying to think about whether we can do the same kind of structure around HVAC and brain jobs or around jobs in hospitals that are not nurses, such as overlay technicians and other allied health jobs. Is there an opportunity to create or support some kind of industry-recognized standard where we can find the training providers and put the two of you together? We're really excited about that. The other approach was to say, "Let's get smaller and let's get smaller was let's really work at the grassroots level." Through our aforementioned public sector strategy working with advisory, we've done a lot of that right now, particularly because the labor market in the US is so broken. A lot of public sector dollars are available for workforce finance, but most of that is done with grants. We're all favorable and brands, but the idea is that if you're going to grant someone money to get training, and that training leads to a significant, sustained income increase, then they should have to pay some of that back. Paying it back doesn't need to be punitive. We've structured a bunch of restructure so far, and we hope to launch two more in the next three months. SMS separately managed accounts, with different jurisdictions to structure and manage job training loan funds for them. For instance, in the state of New Jersey, which is a big northeast state in the US, we structured a partnership with the state of New Jersey and the nine largest businesses in New Jersey. Between them, we've raised $17.5 million, and $15 million is going to offshore wind technicians, cybersecurity people, and nurses. We're training them because we worked with the state of New Jersey and these nine employers to determine what the market needs and what's going to grow that you don't need a college degree for. Financing technical training so that you can start realizing this income increase right away. Similarly, in the state of Colorado, we found that there were six different philanthropies, each with between one and $2 million that they wanted to do workforce stuff with. We've stitched together the six people into a loan fund that's currently $9.5 million. We were told that if we hit $10 million, the state of Colorado would double it, so we're trying to get over that hump. We're doing the same thing now, training in Colorado for the same industries across the United States that are all suffering, healthcare, green transition jobs, or advanced manufacturing. Everybody's trying to create manufacturing jobs in the US without the workforce basis to do it. We're in the process of negotiating a similar structure with some people in Los Angeles and negotiating something with the people in North Carolina. We expect to roll this structure out to the extent that we can over the next couple of years, and it'll evolve. We're currently attacking this on a place-based basis, but we suspect that we'll increasingly move towards vertical structures, like what can we get for the healthcare industry? What can we do for the HVAC industry? As opposed to what can we do for the people in Ohio in the HVAC industry? Unfortunately, we have to follow the money a little bit because we're an intermediary. We don't have our own sources of capital. That's our workforce strategy. There are a couple of different vehicles that we manage, really around workforce finance.

We have two additional investment strategies that might have a team manager. One is a blended capital strategy focused on providing financing for the dreamers. The dreamers are childhood arrivals in the United States who arrived illegally as children without the appropriate documentation to immigrate, but they're allowed to stay because they're children. So that deferred action they have the right to live and work in the United States, but their right to live and work is temporary and not quite as legally defined as it should be. One of the downsides of that is they don't have the right to borrow to go to college. We're in the process of creating a loan fund using the philanthropy as our equity contribution, and then we'll just borrow the rest like it were any loan fine. We're going to focus on graduate school for a lot of reasons. Graduate student loans are a thing. They're an asset, like there's probably billions and billions of dollars of graduate student loans out there in the market. So people not a price of foreign graduate student loans, also a thing, fairly big market. We understand how the pricing should look for a graduate foreign student loan. Generally speaking, the equity contribution to an individual loan is probably about 17 or 18%. That loan is a 20-year loan and will average about 9% interest. What we're saying is, okay, given the nature of our capital, we can take an equity contribution of closer to 30%. So each loan is over-collateralized because that 30% is our money, and at the end of the day, if we just get 100% of that money back, it's a huge inflow into social finance. So we don't really need a return on equity. We can actually pay lenders a little bit more than they would be getting if they were investing in direct, guaranteed student government, governments, or banks or loans. We're able to offer an attractive price product and an attractive risk product. We believe there's a market to be buying this. We're just rolling this out now. We're starting to do some significant advertising with the students to see if there's demand. We're assuming there's demand because all the pieces say there should be. We've done some anecdotal work and found that there is demand, but now we need to see if there's actually a market for us to build a loan product on. That's what I'm pretty excited about. It's deeply in my own background like to move to Nashville, things available. As we develop products, and this dreamer's product, one of the things that we noticed as a team was that a lot of our capital investors were coming from donor-advised funds. Do you know what a donor-advised fund is? You do? Okay.

So we were discussing the donor advised fund and how it works. Our nonprofit organization, which is a 501(c)(3), received funding from philanthropy to study donor advised funds. We spent about a year and a half studying donor advised funds with tremendous support from two philanthropies. Now, we are in the process of launching two investment strategies that focus on donor advised funds as investors. Our overall objective is to mobilize passive charitable capital into active impact first investing. We are doing this in two ways. First, we are working with the national DAF and local taps. The nationals are legality and national philanthropic trust and Vanguard and Schwab and all the big companies, while the locals are generally community-based organizations like the Federation of Jewish charities of California, the Boston Foundation, the kin bind Foundation, the combined community foundations of Michigan, and the Silicon Valley Community Foundation. We are working with them on an individual basis to develop impact investing strategies for their donor advised fund so they can offer it to their clients. For instance, we recently completed some work with the Boston Foundation, where we spent a couple of months talking to all of their donors who were able to facilitate the donor advised fund donors. They were all interested in affordable housing because that's a big challenge in Boston. So we structured a $7 million portfolio and raised $7 million of impact investments for Boston Foundation clients in Boston to meet their needs. We hope to replicate this more broadly, and hopefully a little bit bigger than $7 million. The idea is that as the Community Foundation's start offering these kinds of investment opportunities to their donors, it attracts more and more capital because it's charismatic and compelling. The other thing which I'm really excited about is we are launching a fund to focus on impact first investing. We are supporting people who are pursuing interesting strategies that have high impact for which we do not believe the investor is being fully compensated for the risk they take. And that is really the key to how we're defining impact first. We expect to generate a positive return on the vehicle level, but that's not the primary focus of what we're doing. We just opened our data room and expect to have our first investor soon. We are very excited about this open-ended fund and expect it to be our flagship product going forward.