YouSaid · the spoken record

Margaret Anadu

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19
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2015-04-15
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2015-04-15
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1
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podcast

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  1. “There is a significant amount of interest from our clients in impact work and that ranges from everything from high net worth individuals to pension funds around the country and actually really internationally to our corporate clients. I think that a lot of these entities have a really long history with, well, of course, asset management, but also philanthropy and are thinking about the way that their various entities, both from the individuals to the corporations, can really merge that work. So if you're running a $5 billion pension fund, even some small allocation of that and really directing it towards impact work in the cities and communities that the funds are focused on makes a real difference. So we've seen that appetite only continue to grow, and we think that trend will continue.”

    2015-04-15 · Goldman Sachs Exchanges · Revitalizing Communities Through Impact Investing · IDENTIFIED FROM THE TRANSCRIPT

  2. “So we also invest client money in this kind of activity. Now we have a fund that does that. What kind of feedback are we getting from clients about impact investment? And is there a real appetite amongst investors who want to earn returns while contributing to more of a social good at the same time?”

    2015-04-15 · Goldman Sachs Exchanges · Revitalizing Communities Through Impact Investing · IDENTIFIED FROM THE TRANSCRIPT

  3. “Exactly. And so being able to use private capital and a whole host of analysis, right? When we think about a new social impact investment, similar to any work that we're doing around the firm, it's incredibly rigorous. Who is the social service provider? What's their history? Are they best in class? And are they providing a service that has a proven track record of delivering the outcome that we're looking for? Because when we invest capital in a social impact bond, we're looking for that financial return. And the only way that we're going to get that financial return is if the outcomes are actually met and achieved.”

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  4. “Exactly. And that's the second exciting thing. That if you think about the social challenges that I mentioned, Harlem, Newark, what have you, these challenges are in some ways there, we're seeing some progress in cities and neighborhoods across the country, but there's still a lot of work to do. And so we look across the country at all of the challenges that need to be addressed. And then since the financial crisis and really even with the recovery, you have many public sector players, both at the city level, state level, and at the federal level there are declining resources. And so there's this mismatch between”

    2015-04-15 · Goldman Sachs Exchanges · Revitalizing Communities Through Impact Investing · IDENTIFIED FROM THE TRANSCRIPT

  5. “Taxpayer capital. And those dollars go out of the door. not necessarily tied to whether the work that's actually being done is working and what the outcomes are. So social impact bonds are exciting. I think for two real reasons. One, the payments are made as the outcomes and success actually occur. So for example,”

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  6. “Our first was approximately $10 million in New York City working with the city and Rikers to reduce recidivism in New York City's jail. A similar investment we also made in Massachusetts, which was also focused on recidivism for at-risk youth, but then also kind of takes it a step further and really focuses on the employment piece. And then there are two more sibs that we've made focused on early education. So both in Utah and Chicago, financing really high impact programs for early education and preschool to then reduce the cost of education in later years. If you think about the way that government has traditionally financed impact work, they basically lay out capital to social providers around the country. and cities and states and”

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  7. “One of the newer things Goldman's been doing is what we call, or some people call social impact bonds, a social impact bond for those who don't know, or a sib also called sometimes pay for success, is basically a financing tool that leverages private capital to address public needs. You talked a little bit about this. So far, we've done four different social impact bonds around the country. Talk a little bit about those and what is innovative about them.”

    2015-04-15 · Goldman Sachs Exchanges · Revitalizing Communities Through Impact Investing · IDENTIFIED FROM THE TRANSCRIPT

  8. “And then there's the catalytic impact that is not always so quantitative, so since we made that investment two years ago and finished the construction in late 2014, there are now other businesses sprouting up. So you see the impact, you know, we're not direct investors in the gap that went in right across the street, but you know that when you start doing the work, block by block on a corridor, and you really start to raise the level of the whole neighborhood, that's going to have that multiplying impact and create more jobs. So I think we're developing new tools to really think about how to measure that impact, especially in connection with our social impact fund, where the first time we're doing our impact work, not just with Goldman Sachs balance sheet capital, but also investing alongside a lot of our clients and really working collaboratively with them to think about what are, how do you measure impact? What are the outcomes you're looking to measure?”

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  9. “In the neighborhood, exactly. And then there's some things that are not as quantitative. So some of our work is literally about the built environment. So we just need a really large investment out in Brooklyn to rebuild the Lowe's King's Theater. So this was a gorgeous theater that was built back in the 1920s historic structure. And really sad. It lay vacant for decades. And so we were able to work with, again, the city and a really great operating partner to rehabilitate that historic structure. And it was fantastic. They had a grand opening with Diana Ross. And the pride that folks in central Brooklyn and who live in that flat bush area feel when they're walking down the street in their neighborhood and see that structure really brought back to life. That's not always something that you can say.”

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  10. “A lot of it is certainly qualitative. So as we think about the work that we do in communities and working with local stakeholders on the ground, part of it is the question of are we meeting the need? So in New York City, a clear need is affordable housing and really market rate housing because it's pure supply and demand. And so there, a quantitative metric might be a little bit more straightforward. How many units have we developed? I think over 10 years we've done about 17,000 units or so. The majority of those which have been affordable to low and moderate income families, you can measure how affordable they are. Are we able to provide housing that's affordable to”

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  11. “So Newark is an interesting market. It's almost a tale of two cities. It's incredibly strong in many ways. It has great corporate anchors. You have prudential there. You have Panasonic, PSNG. It's the second largest college town in the country right after Boston with five major universities. You have a great wealth of office employees there with just the federal, state, and local court system there. And so you have all of this just great sort of fundamentals from a real estate perspective. And then you have the other side of the coin, which is high unemployment, so far higher than both the state average and national average. You have educational outcomes that are just far below the state. So in the state of New Jersey, the high school graduation rate”

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  12. “We've also done more recently a lot of work across the river in Newark. Talk a little bit about what challenges are unique to Newark and why we focus on Newark and what the thrust of our activities there are.”

    2015-04-15 · Goldman Sachs Exchanges · Revitalizing Communities Through Impact Investing · IDENTIFIED FROM THE TRANSCRIPT

  13. “So Empire Outlets is close to 400,000 square foot shopping center, which will create not just 2,000 jobs in its construction. It's a very large project, but also 1,000 jobs on a permanent basis. And working with a really thoughtful development partner, BFC partners, and the city and state, there's a real effort around targeting those jobs to local residents of the St. George neighborhood and working with local city entities to do the training to actually prepare those residents for these jobs. And so if we look at the capital and jobs that are going to be created by Empire outlets, it's actually the largest economic development in Staten Island since the Verrazano Bridge. So this is a significant impact that the firm is making, that the state is making, and that the city is making.”

    2015-04-15 · Goldman Sachs Exchanges · Revitalizing Communities Through Impact Investing · IDENTIFIED FROM THE TRANSCRIPT

  14. “You know, most people think about the more middle income and upper income, low-rise neighborhoods of Staten Island, which is a lot of the borough. But they're also far more dense neighborhoods in Staten Island right around the Staten Island Ferry terminal, the St. George neighborhood is where we've been first focused, where a lot of the same challenges, a lot of low-income families, lack of affordability for housing, and a real problem on Staten Island is the unemployment. And so we have been working with closely with the city and the state to really think about what are the really strong economic development opportunities in Staten Island. And so our first investment in Staten Island, and it's a large one for the firm, it's probably one of our largest actually impact investments that we've made is to finance the development of empire outlets.”

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  15. “Our 10,000 small businesses work. Many of those entrepreneurs are based in Harlem. So you also have to be investing in the businesses so that they're creating jobs for the folks to take advantage of. So once you have a quality place to live that's affordable, a place to send your kids to school. You also just need the basic amenities and services. You need to be able to walk two, three blocks and get some fresh food and buy a quarter of milk. And so it's been It's been exciting to address so many different challenges. It's been daunting, but when we're able to really look back over a decade and see how all of those investments have worked together to rebuild neighborhoods, especially if you drive along 8th Avenue between 114th and 137th, it's just a ton of urban investment group projects in a row, and it's really made a difference.”

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  16. “Exactly. And so that problem, and it's really a citywide problem. So New York City, so 30% of New Yorkers are what we call rent burdened. So you're spending over a third of your income on housing. Then 30% of New Yorkers are what we call severely rent burdened, which means that you're spending over 50% of your income on housing. And so those problems, just given the unemployment in Harlem, the concentration of low-income families were even more exacerbated. And so we through our work over more than a decade in Harlem have been able to approach it in so many ways. It starts with education. Everyone needs to get a quality education so that when there are employment opportunities, they're prepared for them. And then at the exact same time, you have to parallel track that work with really investing in the retail fabric of Harlem, the businesses in Harlem, which we've done a ton of through.”

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  17. “We don't just think about investing in cities, we really do get down to the local fabric of neighborhoods. And Harlem's a great example of really comprehensive impact work. We have invested several hundred million in Harlem. Goldman was the first investor to really take a risk on Harlem and do market rate condominiums in Harlem for the first time in three decades. And we've been able to build upon that investment investing in not-for-profit space, in housing, both market rate, middle income, low income. It's actually, you know, now we're looking at the other side of the coin. There are places of Harlem now that are actually too expensive.”

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  18. “Margaret, we're here in New York City, we have a long history in New York City, and we've been investing in local communities across the city for a while now. Talk a little bit about Goldman Sachs' approach to community development in New York City, specifically our history in Harlem over the last decade, and more recently what we've done in Staten Island.”

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  19. “So impact investing is taking capital that you might have otherwise invested in traditional methods, equity markets, debt markets, what have you, and instead thinking not just about the financial return of that investment, but also being very thoughtful and thinking about a demonstrable social impact that that investment could also have. The way that Goldman Sachs thinks about impact investing, as you mentioned, is across a wide variety of impacts. An impact investment could be an investment to build a new charter school in an underserved area. An impact investment would include building affordable housing in an area where low-income families just simply cannot afford the housing that's available. An impact investment could be a social impact bond where we're investing private capital to finance a high impact social intervention that will not only address a social challenge,”

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