The following is a conversation between Georgia Levenson Keohane, Executive Director of the Pershing Square Foundation & Author of Capital And The Common Good, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer.


Georgia Levenson Keohane

Denver: When the gap between the aspirations of the global community to find solutions to the world’s most urgent social and environmental problems and the resources available to address them is so wide, what are we to do? My next guest suggests it may not simply be a case of more capital, but smarter capital. She is Georgia Levenson Keohane, a Professor of Social Enterprise at Columbia University, the Executive Director of the Pershing Square Foundation, and the author of Capital and the Common Good: How Innovative Finance is Tackling the World’s Most Urgent Problems. Good evening, Georgia, and welcome to The Business of Giving!

Georgia: Thank you for having me!

Denver: You know, in the very title of your book, you speak of innovative finance, and one of the key distinctions you make is between that and financial innovation. What is that distinction?  And give us some examples of each.

Georgia: So the distinction between innovative finance– what I essentially define as financial tools and instruments that are used to serve the public good and to solve problems– and financial innovation is an important one. In the wake of the financial crisis in 2008, Paul Volcker famously said, “The only real innovation in finance that’s ever been useful was the ATM.” And his point was that fancy engineering, shiny new tools in finance… whether they’re speed trading or very complicated derivatives that are really just for efficiency and profitability sake… aren’t necessarily designed to solve problems or to meet the needs of people. And in my book, I explore ways in what I would call innovative finance, which is taking some of the time-tested tools of finance– whether it’s products like insurance or basic lending– and really using them in ways that we haven’t seen to solve problems for the poor and the underserved.

Denver: An important distinction. Well, the impetus for this book came about in the wake of Hurricane Sandy. How did that spur your interest in this topic?


Georgia:  I was reminded of it when I came down to your studio today in Lower Manhattan. In October of 2012, I had just put my earlier book on social entrepreneurship to rest. That book really explored very colorful, charismatic changemakers – people like Wendy Kopp who had founded Teach For America, or Cheryl Dorsey who was at the helm of Echoing Green – and I was really thinking about social change in those terms. And Sandy, as all of you in the New York area and on the Northeast corridor know, was a really  unprecedented hurricane that in New York City, where I’m born and bred, flooded our subway system and really shut down the entire city… and among other things, put a close on the artery of the city, the lifeline, which is our subway. This massive storm surge in Lower Manhattan and elsewhere inundated the tracks and corroded the pretty ancient wiring, and I was pretty surprised to see… and very happy to observe… that very quickly, the MTA had the subways back up and running.

And what I came to learn afterwards was that actually risk managers in the bowels of the MTA – so not the people you see at the social entrepreneurship conferences, not the sort of Wendy Kopps of the world, but people who are really working day in and day out thinking about risk – had discovered that the subways and the public transportation systems in New York had suffered $5 billion in damage from the storm and were therefore uninsurable in the traditional market. So without insurance, the subways and the busses, the subways in particular, would not have been able to restore service.

What they did was they went to what I would call a municipal finance first, a very creative and innovative use of finance. They went to the catastrophe bond markets, the CAT bond markets, which are typically used as a way to reinsure– not necessarily public transport or even public sector utilities– but really using the private markets. And this got me thinking a lot more. I said, “Wow. This is really creative. This is really innovative. This is entrepreneurial.” and “Are there examples where people are looking to the private capital markets to unlock sources of funds to solve social problems?”

And as you said in your introduction, I eventually came to think of this not just as unlocking more capital in some ways, but really unlocking smarter capital. And what I mean by that are new sources of funding or new financial mechanisms that help us make better decisions and investments for the long term.

Now, we all know that prevention pays. And what I mean by that is that we know, for example, that vaccines are infinitely cheaper than full-blown disease. Tackling even a full-blown disease or an outbreak is infinitely cheaper than dealing with an epidemic or a pandemic, and this is true across a range of issues.

Denver: Well, you started your book with a very vivid example of how this can work in the case of vaccine bonds in the U.K. Walk us through that and the impact that it has had.

Georgia: So in some ways, I went from thinking that “This isn’t just about more capital. This is about smarter capital.” And then I realized maybe this isn’t really about money at all. What this really is about are things like trust, really about things like time and time transfer. So, for millennia, finance has given us instruments that are really about what economists call intertemporal transfer. So borrowing from our future selves… and our hope that we will be able to have resources in the future, and essentially frontloading or bringing that money forward to today to solve problems or pay for needs for today.

Denver: Or to live in my house.

Georgia: Or to live in your house. And the mortgage is a classic example where we’re borrowing from our future selves and our future earnings to make down payments and then pay incrementally over time. Now, we all know that prevention pays. And what I mean by that is that we know, for example, that vaccines are infinitely cheaper than full-blown disease. Tackling even a full-blown disease or an outbreak is infinitely cheaper than dealing with an epidemic or a pandemic, and this is true across a range of issues. This is true if we think about job training versus mass incarceration, if we think about early childhood education versus subsequent job training, or even if we think about  that investments in low carbon technologies are expensive, but they’re a heck of a lot cheaper than trying to deal with the long-term and catastrophic effects of climate change.

Denver: Yes. The ROIs are off the charts.

Georgia: The ROIs are off the charts, but we don’t always have either the incentives or the ability to make those very cost-effective investments in prevention today.

So, interestingly, I came upon an example and I started to look at these… as you mentioned, IFFIm, the International Financing Facility for Immunization, where essentially the UK government partnered with some folks at Goldman Sachs. Actually, I was just in the UK last week and got to reconnect with Christopher Egerton-Warbuton, who was leading the team at Goldman Sachs. What they basically did after 2000 when the world got very excited about  the Millennial Development Goals and ambitious global goals in health and economic development. The world and many countries, including the UK, made these really ambitious and spectacular commitments to solve some of these problems and then said, “Lo and behold, we don’t necessarily have the funding to do this, but can we think about finance?” And in the case of IFFIm, it turned out that there were a number of countries, the UK included, that actually had made very substantial and multi-year commitments to development aid. Some of them… even over 20 years. What the Goldman team with the UK Treasuries sorted out—and these were people who’d really had a lot of expertise in structured finance, that were used to issuing bonds, and used to thinking about how we frontload money—they basically said, “Can we take those 20-year aid commitments and frontload them and issue bonds against them, and come up with a financing facility that allows us to raise bonds against those multi-year pledges?  

They worked with the Gavi Alliance, which focuses on vaccines for the world’s poorest, for diseases that are really preventable. Those diseases have an 18% ROI. And since 2006—it took a few years for IFFIm to get up and running—they’ve raised almost $5 billion for vaccines for some of these global diseases. And parenthetically, that financing facility model is now being considered for refugee populations, for other issues of woman and maternal health. It’s a little complicated to structure, but the hope is that it offers a model for really taking multi-year aid commitments for the future and using that money today.

…it was not just what people were paying for but how they were paying for it that struck me as the real innovation in some ways.

Denver: You’ve also seen innovative finance at work in places like Kenya where maybe about 80% of the country are using mobile money on their mobile phones.  But my goodness! So many people are off the electrical grid and depend upon kerosene for lighting. How has innovative finance played a role in that case?

Georgia: A terrific question. When I embarked on this book, a number said, “Oh, you’re writing about innovative finance. You must be talking about mobile money.” This is really a book in some ways about technology, and we’re assuming that you’re looking at the M-Pesa story in Kenya and now elsewhere. Ten years ago, Safaricom entered the Kenyan market; no one had phones. Now, 80% of the population, as you say, have phones, and about 70% of that group are using those phones for mobile money. They use M-Pesa, which is essentially a payment system. And I thought that was very interesting.

But the more I looked at M-Pesa, something like 40% of the Kenyan GDP does flow through the M-Pesa platform. So digital money is clearly transforming the economy there and what we would consider financial inclusion. And by the way, that’s no longer just remittances – people can pay school fees, people can pay for water, people can pay taxes, people can pay nearly everything. But as I start to look at this more closely, I realized that in fact, it was not just what people were paying for but how they were paying for it that struck me as the real innovation in some ways.

So you brought up the point that maybe 80% of the population now can use mobile money, but they don’t have electricity. So they’re still off the grid, and they’re still using single-use batteries, and they’re using lanterns, and they’re using kerosene for their energy needs. And as you know, things like kerosene are not only toxic and it burns; it’s a huge source of global warming, and it’s very expensive.

Denver: It’s very dangerous.

Georgia: Very dangerous. The only reason people can afford it is because they are buying it in small batches. And there have been huge efforts in the global community to introduce solar and other forms of alternative energy affordably, but the issue is that no one has gotten it down affordably. So if you, for example, are a family in Kenya and you’re paying $200 a year or more– which many are for kerosene– it clearly makes economic sense—and these families know this; they’re rational actors—to make an investment of $199 to install a solar panel. The issue is that no one has $199 up front.

So fast forward, M-KOPA is the first. There are now several and actually at Pershing Square Foundation, we are invested in one called Angaza, which are pay-as-you-go financing companies, mostly focused on solar… although you could do this for really almost anything – you could do it for water, you could do it for books – that allow families to pay as you go, essentially do micro-leasing or installment payments for these solar panels that suddenly allow them to pay in increments for something that was otherwise unaffordable. And by the way, that pay-as-you-go mechanism in this whole field has, in the case of solar, increased solar option by fourfold. But as we were discussing, you could imagine applying this—it doesn’t just need to be solar. You could imagine books that people are sort of paying as you go per chapter. You can imagine it for water and for medical needs. So, again, people have been paying layaway for centuries; that sort of incremental financing is nothing new. But to me, bringing that basic utility of finance to underserved populations– that makes it a real innovation.

Denver: And that’s also happened here closer to home. There’s a similar situation– although different– with MetroCards here in New York City. Now, how has that one been addressed?

Georgia: Absolutely! I thought of it this morning when I hopped on the C train to come down to your studio. So that trip, if I had just walked into the subway, would’ve cost me $2.75. And if you think about most commuters in the New York area, they’re probably doing two of those trips a day… so maybe 500 times a year, and that adds up. That’s a lot money. Of course, for me, I have a monthly pass and my kids have discounted student MetroCards and everything else – and so, fortunately, there is a very substantial discount if you’re a regular commuter.

The unfortunate situation– and exactly analogous to the issue of solar panel installation– is that that discount costs you $116 upfront each month. And by the way, and not surprisingly, that $116—and as we were discussing earlier, the fare is going to go up—that $116 is really cost-prohibitive to many New Yorkers or many people even in the tri-state area who are coming in.

So it turns out—and in the old days, we used to think of intercities and poverty concentrated in the city center. Of course, now, people live far distances from the city and are commuting to work and commuting to school. So, again, ultimately, this is a problem you would imagine that the MTA or other government entities would be dealing with, but you have some very innovative startups. I looked at one called Alice Financial, which is essentially a FinTech startup, but they’re really focused on the needs of the underserved. And I said, “This is crazy! We could essentially come up with a layaway program where people can pay for the discount in weekly increments.” So they don’t need the $116 up front and they can pay us and they charge a little bit of float, but it’s only enough that they can essentially recirculate it and run the company. And again, they let people pay on—you can pay on your phone and you can do most of it digitally. But I think that this sort of pay-as-you-go mechanism, which did grow out of the—it’s one of the cases where we really imported this from emerging—

Denver: Reverse innovation.

Georgia: Reverse innovation. It could be transformative. And by the way, as I said, I was in the U.K. this week. So New Yorkers overpay, in aggregate, $500,000 a day because they’re not getting the discount. I was just in U.K. this week and last weekend in London; it’s even more.  So the same thing. This is a very large-scale problem.

…what IFMR Trust is really clear about is that: it’s this person and it’s the human interface and it’s the trust piece that will actually work with individuals and families to make sure that they’re adopting the right products.

But I do think that we sort of lose sight of the fact that that human connection is really vital to make this all work.

Denver: And with these great, new innovative ways for people to improve their lives and those of their families… they just don’t automatically happen, do they, Georgia? I mean, sometimes you need a person to be in there and try to encourage people to take these actions.

Georgia: Exactly. I think the Angaza and the M-Pesa and even the Alice Financial stories, in some ways… people have said to me, “Wow. What you’re talking about are the technology plays – are you essentially saying that innovative finance is the same thing as innovative technology, and it’s just a technology play?” And I think it’s tempting. We all have these hopes and these aspirations somehow that we’re going to have really technological solutions to all of our needs and all of our problems. And in the course of writing this book and my working out of Pershing, I’ve spent some time with what I would consider some really innovative financial service organizations, both in India, by the way, and here in the US, that have thought a lot about how you use technology to improve financial inclusion.

I’ll tell a quick story about an organization called IFMR Trust, which is in India and works as a microfinance in rural India. They were very much initially into lending business and then got into other products and services, which everyone has hoped that microfinance would do, whether it’s pensions or saving products or insurance products or otherwise. They had a client—this was a few years ago—and she was an agricultural laborer and she had come regularly to IFMR for gold loans. Essentially, she would use her jewelry as collateral and they would give her loans and she would go on her way – a very common practice in India and other parts of the developing world. And she, one day, severely unfortunately, is walking to work and also not all that uncommon, is hit by an oncoming truck and is killed. And IFMR discovers that she had five dependents at home.  So she was supporting her parents; her husband had left her; she had two children, also supporting a sibling. And of course what this woman really needed – not a gold loan – was life insurance, and that’s what her family needed.

In the case of IFMR, they actually had life insurance in their product offering, but they did not fully understand her financial needs. They have since really revolutionized  how they think about offering products and services, and they have a community wealth manager who goes door-to-door. They use a tablet. They collect all sorts of financial information about households.  And then through an algorithm, they’re able to determine what products you really need. The person who’s selling it is paid or compensated accordingly, so they’re not selling the wrong products, et cetera. But what IFMR Trust is really clear about is that:  it’s this person and it’s the human interface and it’s the trust piece that will actually work with individuals and families to make sure that they’re adopting the right products.

By the way, and parenthetically, I was relaying the story of the IFMR case to some colleagues of mine in Columbia, and they said, “Well, you must know Justine Zinkin at Neighborhood Trust Financial Partners in Upper Manhattan,” and I said, “I know a little bit.” And they said, “Go up and talk to Justine.” And Justine told me almost an extremely similar story, which is Neighborhood Trust is a very innovative organization. They’re working with all kinds of underserved populations in Upper Manhattan. They have developed a terrific socially responsible credit card. They have developed an app that helps people save. They are now working with companies to really think innovatively about payroll technology and how you could essentially– almost in real time– make sure people get paid rather than having to wait every couple of weeks… so real innovations that involve technology.

And I asked Justine, I said, “Well, for your customers, for your clients, what do you think is the most popular? You have all these technological solutions. It’s awesome!” And she said, “Well, you know it all hinges on Marisol.” When we surveyed, they said Marisol. And so of course, I have my geeky professor hat and a former consultant, and I said, “Oh, Marisol! That must be an acronym, like measurement, accountability…” And she said, “No. Marisol is a lady who lives in Washington Heights who’s convincing people that it’s okay to take the money out from under their mattresses; they’re not going to get deported, and they can actually engage in the financial services sector in a productive way.”

And so it became very clear to me.. and I call it in the book FITT just because I like acronyms, but it’s “finance, innovation, technology and trust.” There are two Ts there. But I do think that we sort of lose sight of the fact that that human connection is really vital to make this all work.

Denver: The trusted neighbor. We depend on other people’s recommendations before we take an action,  and particularly when it comes to your money.  These things will not sell themselves.

Georgia: These things will not sell themselves.

Denver: Well, let’s turn our attention to insurance. And there’s a kind of insurance entity, I guess, which is owned by the African Union, and it’s called African Risk Capacity. How does that work?  And what are some of the advantages of it?

Georgia: So again, nothing new about insurance. Insurance as a product has existed for hundreds of years, in some cases thousands of years, and we saw that with  Greek shipping fleets had insurance. So not new. I think where the ARC, the African Risk Capacity example becomes very interesting is that for years, the disaster response system—and on the radio, it’s hard to see what air quotes around a word like “system”—essentially meant  if you experience a drought, and let’s say you’re in the sub-Saharan Africa, you’re in the Sahel. And Sahel in the last decade has experienced at least three major and really devastating droughts. And again, it’s like the discussion we had about the investments and prevention, so drought does not inevitably lead to famine and widespread catastrophe, but unless we respond soon enough, it will.

And so again, the “system” for international humanitarian relief when it came to drought—but this is true for all kinds of things including pandemics like Ebola, which we saw a few years ago—was that countries had experienced drought, insufficient rainfall, go to the UN, go the donor community, issue an appeal, and then months later at best, if at all, the donor community would respond. And at that point, often, drought had metastasized into famine and into really widespread hardship.

Two years ago—a few years actually, we’re coming up on the third year—a number of countries in the African Union came together and they said, “There has to be a different way that we can respond to this. And what about insurance? Is it possible, for example, to use a satellite technology in the sky that can help us… and proxies on the ground, help us very early detect insufficient rainfall? And can we put together a pool of countries…” And by the way, it turns out, which wouldn’t have occurred to me necessarily, that countries in the Sahel, their rates of drought are uncorrelated, so you actually can ensure a pool of countries and have it be more diversified than I would’ve thought. And these countries now pay in a relatively small premium in drought insurance.  As soon as the satellite technology indicates insufficient rainfall – and this is an African Union-owned insurance company, so this isn’t a foreign entity – the payouts are triggered, and those payouts shave months off of the response time.

Denver: Makes all the difference in the world.

Georgia: Right. And that’s not like you and me waiting for our auto claims to come back. I mean, that’s really the difference in these situations between life and death.

Denver: And you can’t really depend on these appeals anymore. A lot of the countries never fulfill their pledges. And there are so many things going on in the world, they’re not even getting close to what they’re hoping to achieve.

Georgia: Right. Even if you could, even the best intentions. As you say, there are multiple appeals; there are multiple issues as we saw very tragically in the case of Ebola, for example. MSF in March 2014 sends the alarm about Ebola. The World Health Organization does not declare a medical emergency until August, and funds don’t start to flow until November. Well, just to put it out there, it’s too late or it becomes—it’s like we talked about– hockey sticks in a good way in the investment community.

But the World Health Organization by its own estimate said, “It would’ve cost, had we intervened to try to contain the outbreak, in April, it would’ve cost $5 million, by July, $100 million, and by October, $1 billion.” And again, Ebola is about tens of thousands of lives…it is a human tragedy. I don’t mean to just quantify it in monetary terms, but the value of prevention is clear. And by the way, the World Bank, under the leadership of Dr. Jim Kim who is a physician, has created a pandemic financing facility, sort of based in some ways on ARC.

Denver: Let me ask you about one more of these, and those would be social impact bonds, and we’ve discussed that a lot on the show.  Perhaps you can tell us how they work through the example of the Nurse Family Partnership and the partnership that they have with the state of South Carolina.

Georgia: Social impact bonds, which are, as you know, not really bonds. They’re Pay for Success instruments. They’re basically contracts. The idea, again, comes back to this idea of prevention. So we know prevention pays, whether it’s reducing recidivism, which is what the first social impact bonds were modeled – Peterborough and then Rikers in New York City, and then there’s the New York City State Bonds – so whether it’s sort of investing to keep people—investing in prisoners once they leave jail so that they don’t re-commit crimes and aren’t reincarcerated.  Or whether it’s in early childhood education. Peterborough is in 2010, we now have about 60 social impact bonds globally, and they have moved, in some cases, much further down the prevention continuum. And I’ll get to the Nurse Family Partnership example that you mentioned, but in some ways, that’s the earliest because that’s maternal health or early childhood where the ROI is huge.

But the basic idea is that we don’t necessarily have the incentives or the motivation or the capacity or the dollars to make those early investments in prevention. So here, the idea is that, in the case of recidivism for example, you bring in private investors, and for the most part, those private investors have been philanthropists.  So Pershing Square Foundation is an investor in the New York State Social Impact Bond. But you essentially bring in those investors to frontload– to loan money to the social service providers, who then provide whatever intervention it is. And then if the intervention works, the investors are repaid out of the social savings of the costs averted, whether it’s the cost of putting people back in prison or in the case of maternal and child health, the cost of not needing additional special services– whether it’s Medicaid or specialized instruction and schools.

It’s a very elegant structure. In practice, some of them, they involve very rigorous measurement and evaluation. They are sort of complex and involve a lot of people and entities at the table, but that’s the basic design. And what it means ultimately, two things: I would say one is the taxpayers are only on the hook for interventions that work, so the government and therefore taxpayer money only repays the investors if they’ve actually seen an improvement; and two, it’s really about evidence-based policy making. So what that means is that there are pretty rigorous measures, whether it’s using a randomized control trial for the control population… or just really evaluating in a very serious and earnest way to say, “We really are only going to fund interventions that have demonstrable…”

Denver: A lot of money on the line, right?

Georgia: A lot of money on the line. And the case that you mentioned with Nurse Family Partnership is probably one of the most rigorously evaluated social and anti-poverty interventions in the US. And the idea is you have  home visits to mothers– typically low-income mothers, but it really could be anyone who are first-time mothers– through their pregnancy… and then with the children to make sure that everyone is getting the health interventions that they need, the social and emotional development that they need, and again, the ROI, the return on investment, from those visits are huge.

So currently, in aggregate, we spend about 40 times the amount responding to disaster that we do in investing in prevention in the first place.

Denver: Let us look to the United Nations 17 Global Sustainable Development Goals because that is really where this thing comes into play, I think in a very central way. I think the aspiration calls for about $3.9 trillion a year to be able to meet those goals by 2030, and perhaps the projected amount of revenues coming in are only going to be about $1.4 trillion. That’s a huge gap. How significant a role do you believe that innovative finance can play in closing that gap?

Georgia: I think that was , again, the initial impetus for this book. And I have colleagues at the Rockefeller Foundation who lead something called the Zero Gap Initiative, and it’s very much focused on closing that and other gaps where the amounts of public capital and philanthropy fall short. So the SDGs, the Sustainable Development Goals, serves as the most pronounced example. They don’t even include some other areas. So the sort of urgency is that we do need these types of new innovative finance approaches to begin to close that gap. I think some of it is creating proof points. So once we have an example of Africa Risk Capacity, for example, or successful social impact bonds or other types of insurance mechanisms that demonstrate that these investments in prevention pay and in some cases– not all– that you can actually earn market or close to market rate returns would demonstrate the value in investments and prevention.

So currently, in aggregate, we spend about 40 times the amount responding to disaster that we do in investing in prevention in the first place. So I think that you will see– or we hope to see– and unlock a little bit of shift in the mindset about when we make investments, which is just a little bit more to my “smarter capital, not just more capital” perspective. The other thing is I think really the large sources of capital, the trillions of dollars are in things like sovereign wealth funds and pension funds and big institutional investments. And if we can start to move that needle a little bit and say, “Can we unlock some of those resources to bear on some of these needs?” We do begin to close in on some of those gaps.

In some ways, I just think it’s a willingness on the part of government actors to be involved in progressive and forward-thinking public-private partnerships. So all of the examples we gave, whether it’s the social impact bonds or IFFIm… they were really government coming together with the nonprofit sector and the private sector in partnership. And I think that that, more than any one policy, is the way to unlock some of these tools.

Denver: Is there a role, Georgia, that government or policymakers can play to help innovative finance optimize its potential?

Georgia: I think we have seen in the US, for example, in recent years, we’ve made some significant advances on how we think about fiduciary responsibility and how we make it clear what’s legal and what’s fine versus what’s been a commonplace practice. So that people and investors and investment managers start to feel a little bit more comfortable in realizing in some cases, they’re not in violation of their fiduciary responsibility to make investments for social good. And by the way, parenthetically, in some cases, they begin to understand that if they are over-exposed to things like carbon-intensive industries, they may actually be in abrogation or violation of their fiduciary responsibility.  So it sort of flips it on its head, I think, ERISA and the other reforms we’ve seen– different regulatory reforms– vis-à-vis pension funds and how they can be invested.

In some ways, I just think it’s a willingness on the part of government actors to be involved in progressive and forward-thinking public-private partnerships. So all of the examples we gave, whether it’s the social impact bonds or IFFIm at the top of the hour, they were really government coming together with the nonprofit sector and the private sector in partnership. And I think that that, more than any one policy, is the way to unlock some of these tools.

Finance is a tool, and it’s not something that we should fetishize, and it’s not an end in itself.

…we have to realize that over time, financial literacy and financial education is critical because debt can be crushing.

Denver: Let’s talk about vaccine bonds one more time that you just referenced. Is borrowing on future aid payments to get cash now for this “ounce of prevention strategy”– which sure seems to make a lot of social and economic sense.  But are there concerns that borrowing on the future like this could cause some strains on the system down the road?

Georgia: So debt is an extremely powerful instrument. And it can be an extreme instrument for good. It can allow someone to become a homeowner for the first time. It can allow people to send their children to school and allow for higher education. We also have seen that debt obviously can be crippling. And sometimes that’s because of nefarious activities, so you have people really making bad loans, and you have people sort of in almost a predatory way—finance is complicated, and the compounding nature of finance makes it not only complicated but potentially crushing if you take on too much debt.

And so I think two thoughts: One is that, again, finance is a tool, and it’s not something that we should fetishize, and it’s not an end in itself. So this is not a book celebrating these instruments; this is a book saying, “This is what these instruments can help us achieve and they are means to an end in terms of financial inclusion and shared prosperity.” But that also means that we have to realize that over time, financial literacy and financial education is critical because debt can be crushing. And that is true of a household, and that is true of a sovereign nation that takes on too much debt. And so I’m mindful that these need to be put in place very sensibly.

Denver: Let me close with this, Georgia. Many of the tools that you’ve discussed in innovative finance are time-tested as you’ve said – lending and insurance and credit enhancement. But they’ve only recently made their way to the social sector. Why do you think it took so long?  And why is it happening now?

Georgia: It’s a good question. I think I probably have two or three answers. I think the first is innovation is born out of necessity, and I think that there is a little bit of doing more with less. So I think as we’ve seen in the US in the wake of the financial crisis, we saw governments, particularly at the state and local level– really with their budgets and their sort of coffers diminished, and so you have to, by necessity, start to look to some of these other partners and these other mechanisms. So one of them is a tool of necessity. I think that that’s for sure.

I do think secondly that there have been in the last generation—my first book touched on this—a real shift  in mindset across the sector– so certainly nonprofit sector; I think in the public sector, but also in the private sector. So in the financial services community, at large corporates where people I think are really understanding that business is a very powerful tool and engine for social change. People who work for large banks or people who work for large companies really now have the expectation that those entities they work for have a responsibility and a mandate to also do good in the world. So many of the people I profile in the book went into finance for sort of conventional reasons, but really, I think pretty early in their careers,  recognized the power of their skills and their tools and the organizations behind them. And I do think that we have seen across industries and across the world a very different convergence in the way of thinking about  who is on the hook and who has the ability to solve problems.

Denver: Great point. Well, Georgia Levenson Keohane, the Executive Director of the Pershing Square Foundation, I want to thank you for appearing on the program this evening. The book again is Capital and the Common Good: How Innovative Finance is Tackling the World’s Most Urgent Problems. And for people who are interested in understanding what better and smarter solutions are out there to address the challenges that the global community faces, you will not find a better source than Capital and the Common Good. It was a real pleasure to have you on the show, Georgia!

Georgia: Thank you so much!


The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at

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