Despite ten years of building out the impact investing ecosystem-which included supporting and investing in for-profit, positive impact businesses in private markets; developing an extensive network of impact entrepreneurs, investors, and experts; contributing to the exchange of knowledge and best practices in the industry; and providing increasing opportunities for impact-focused investors-the team at Chicago-based Impact Engine was just getting started. Constantly raising the bar for themselves and the industry as a whole was ingrained in the firm's ethos. Indeed, the women-founded, women-led, and women-governed impact investment firm, which was founded as one of the first impact-oriented accelerators in the U.S., had grown to include early stage and private equity investments-all optimizing financial and social returns. The range of investment stages, however, presented new challenges to impact measurement, which the team viewed as an opportunity to reexamine its existing approach and incorporate best practices across the industry.

Building on Nobel Prize-winning research, nearly a decade of experience investing in impact funds, and a lifetime of social and economic justice advocacy, Daryn Dodson's Illumen Capital, an impact investment fund-of-funds, was at a critical juncture. Prior to founding Illumen in 2017, Dodson struggled with finding a way to transfer the success he had experienced in building awareness across teams at institutional asset allocators on topics of diversity, equity, and inclusion to long-term organizational change. Instead, he observed that the investment teams-those with the most power and leverage-rarely engaged in the work, and many investments were underperforming from both a return and impact perspective because of racial and gender biases. Indeed, research consistently showed that diverse managers offered alpha enhancements for investors-not just because diversity at the general partner level led to better investment decision-making and differentiated deal flow, but because diverse managers drove diversity at the portfolio company level as well. This meant a staggering missed opportunity considering that just 1.4 percent of the $82 trillion of the asset management industry was overseen by firms owned by women and people of color. Through Illumen's proprietary bias reduction programming, and because of its powerful fund-of-funds structure, Dodson was well positioned to reduce bias and unlock impact and returns. Specifically, the 10-year curriculum was a means of spurring long-term institutional change beyond one-off trainings; however, Dodson knew that changing one firm in an entire ecosystem was not enough. To elicit lasting change, he would have to enlist many firms working together to create field transformation and capitalize those firms with specific plans to reduce bias. Further, the fund-of-funds structure was a leverage point in the system; its top-down effect allowed 10 times more impact than investing at the company level.

In 2016, Stephen M. Liberatore, CFA, lead portfolio manager for and head of Nuveen's impact fixed income strategies, received a phone call from the World Bank. The call was not unusual; in fact, Nuveen had collaborated with the World Bank in the past as lead investor on a new type of Green Bond for the World Bank's private sector arm, the International Finance Corporation (IFC). While Green Bonds had been in existence for nearly a decade, the IFC Forest Bond was the first government-related credit focused on channeling private funds toward forest protections. The call that day, however, centered around an entirely new concept-a Blue Bond. Like most fixed income products, Blue Bonds were a debt instrument providing capital to issuers who repaid the debt with interest over time; however, the use of proceeds was earmarked for marine projects and ocean conservation. While the Nuveen team was familiar with and open to the more esoteric transactions presented by the World Bank, they had a series of challenging tasks ahead of them. First and somewhat simultaneously, they had to assess the security on a total return basis incorporating, among other assessments, fundamental credit analysis, an evaluation of terms, liquidity analysis, and relative value analysis, while ensuring that the investment adhered to their impact framework. This included not only direct support of measurable social and environmental impact but an emphasis on competitive, risk-adjusted return potential. This was particularly challenging given that the issuance was the first of its kind and comparable securities did not exist. Additionally, measures of impact remained immature as this was an inaugural transaction, so determining impact targets was not feasible. The team also had to determine the size of their commitment. While they could have funded the entire deal, they wondered if it made more sense to incorporate other impact investors. Finally, the team had to ensure that that the investment and

In February 2022, nearly three years after the launch of the REDF Impact Investing Fund (RIIF), a 501(c)(3) debt fund providing financing and capacity building to grow social enterprises employing individuals overcoming barriers to work, CEO Carrie McKellogg was both humbled and hopeful. Much had been learned in her time at the helm of RIIF, both within the portfolio and in relation to the employment social enterprise (ESE) sector as a whole. Specifically, she recognized that the ESEs with whom REDF had worked for over two decades had difficulty gaining access to and were not comfortable with credit; in fact, she had identified that the traditional underwriting process and credit risk methodologies that they were using perpetuated barriers to accessing credit. Indeed, the inequitable effects of the pandemic paired with ongoing racial injustices and structural challenges highlighted the role of RIIF as an important tool to accelerate the growth of the ESE field, and their crucial work to provide a more inclusive economy for all.

In April 2019, just two months shy of his graduation from Stanford Graduate School of Business ("Stanford"), Cody Evans was looking forward to converting his professional and academic experiences to real-world impact. Having worked at both the largest private equity firm in the world and an energy infrastructure developer in Africa, Evans brought a unique blend of investment rigor and entrepreneurial spirit to Stanford. More importantly, he was driven and inspired by energy as a fundamental building block for economies. During his time at Stanford, he was drawn to new legislation meant to spur economic growth and job creation in low-income communities through tax-advantaged investment. These emerging Qualified Opportunity Zones (QOZs) were the topic of multiple articles published by Evans alongside distinguished professors, specialists, and leaders in the economic and community development fields. With expertise in the area and a passion for energy infrastructure projects, Evans wondered if he could combine the social benefits of QOZs with the environmental impact of existing solar incentives. The U.S. Internal Revenue Services (IRS) had not yet written the rules on the innovative concept, so the risk levels were high while the return was uncertain. With graduation approaching, Evans would have to make some key decisions. In addition to settling on a viable investment thesis, he would have to assemble a team and think about how best to raise capital.

For five years, the private equity impact team at Nuveen led by Rekha Unnithan, CFA, had been watching Samunnati, a specialized agriculture value chain solutions provider located in Chennai, near the southeastern coast of India. Its mission was to support smallholder farmers, who comprised roughly 87 percent of Indian farm workers, by providing financing and capacity building for farmer collectives and larger, more diverse agri-enterprises. Through market linkages and working capital, Samunnati sought to raise the access, purchasing power, and connectivity for agricultural value chains in India. Launched and led by a career banker with deep expertise in rural and agricultural finance, Samunnati was poised to transform the agriculture ecosystem in India while improving the income and livelihoods of hundreds of millions of smallholder farmers. First introduced to Samunnati in 2014, the Nuveen team had followed the company's journey from a pilot project in the unbanked tiers of a single state in India to an agritech enterprise operating in 14 states and over 30 value chains across India. In early 2019, Samunnati began raising its Series D round of financing to further its growth, and the team at Nuveen was ready to take a closer look. Despite Samunnati's success to date, agriculture had historically been a risky sector with significant volatility, particularly at the value chain level. In addition, the company was in its growth stage, so its systems and processes needed to further mature-specifically its information technology strategy, impact framework and reporting, and preparations as a Systemically Important Non-Bank Finance Company, a designation assigned to Samunnati given its size and significance in the economy. Finally, given the marginalization of smallholder farmers throughout history, the Nuveen team was sensitive about safeguarding this vulnerable member of the agricultural ecosystem; specifically, they wanted to ensure that the investment would not

After completing a successful two-year pilot, the Los Angeles Cleantech Incubator (LACI) was ready to launch its inaugural Debt Fund. The goal was to capitalize companies solving the greatest challenges related to climate change across three priority spaces in cleantech: transportation, clean energy, and sustainable cities. Spearheading the effort was Alex Mitchell, senior Vice President of Unlocking Innovation through the empowerment of start-ups-one of the three pillars of the organization's theory of change-in addition to Market Transformation through partnerships and pilots, and Enhancing Community through workforce development and programs. For over a decade, LACI had worked with nearly 300 start-ups through its incubator program to help sustainable start-ups, particularly those founded by and serving underrepresented individuals and communities, gain access to capital and scale their businesses. The Debt Fund would draw heavily on LACI's expertise and existing portfolio to provide loans with interest rates at or below market rates to companies that had achieved market traction but did not have the cash flow required to qualify for traditional loans. Specifically, the Debt Fund would focus on capitalizing minorities who were disproportionately affected by the cost and lack of access to equity funding. As its incubator program portfolio was nearly 33 percent women and 33 percent underrepresented founders of color, Mitchell needed a plan for preventing biases from imbuing the lending process at LACI while staying true to the organization's social mission of building a more sustainable and equitable ecosystem. In addition, while LACI had developed an impact framework for the incubator program that not only aligned with portfolio companies but underscored the importance of start-up engagement in the process, he struggled with how best to do the same with the Debt Fund. Finally, LACI would be partnering with other cleantech start-ups ("incubator partners") in the

Much like the famous philosophical thought experiment, impact investing raises questions about perception, observation, and reality. What is our sense that an investment results in social, environmental, and financial return? What changes can we observe taking place? What is the state of the situation as it exists (perhaps by measurement)? This case study applies this framework to our analysis of the social, environmental, and financial impact of forestry and timberland investment.

In January 2021, Chesca Colloredo-Mansfeld (MBA '92), cofounder and executive director of MiracleFeet, a nonprofit dedicated to eradicating untreated clubfoot for good, found herself at yet another crossroad. In just over a decade, the organization, which partnered with local clinics to provide low-cost, nonsurgical solutions to one of the world's leading causes of disability, had treated just over 50,000 children in 29 countries, nailing nearly every ambitious goal to date. Notably, it had accomplished this with just over $31 million in funds raised. And with programming costs of just under $500 per child, treatment with MiracleFeet had proven to be one of the most cost-effective, high impact health initiatives in the world. But a hole remained. Over the prior decade, Colloredo-Mansfeld had faced a number of challenges. These included how best to harness the power of data to operate more efficiently and effectively, deliver the highest-quality programming, and provide meaningful data for donors that, in turn, informed the programming process in a continuous feedback loop. Indeed, Colloredo-Mansfeld had figured out how to use data to drive performance, retain and inform major donors, and manage impact but she struggled with how to scale the organization beyond the low-income model. Since inception, MiracleFeet had focused primarily on countries with poor access to health care. However, in order to solve the issue of untreated clubfoot globally, Colloredo-Mansfeld would have to figure out how to leverage data to forge a new pathway beyond low-income countries.

Thorough analysis of various nonprofit business models requires an understanding of each firm's economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. Providing further practice beyond Nonprofit Business Models and Financial Statement Relationships (A), this case presents the "common-size" condensed annual balance sheet, income, and cash flow statements for eight nonprofit firms in the U.S. for the 2018 or 2019 fiscal year (compiled from either audited financial statements or Form 990s).

Thorough analysis of various nonprofit business models requires an understanding of each firm's economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. This case presents the "common-size" condensed annual balance sheet, income, and cash flow statements for eight nonprofit firms in the U.S. for the 2018 or 2019 fiscal year (compiled from either audited financial statements or Form 990s).

In late March 2017, Clara Miller, director and president of the F.B. Heron Foundation ("Heron"), a philanthropic institution focused on helping people help themselves out of poverty, sat down to put the finishing touches on her President's Letter. In previous years, the letter included Miller's lucid thoughts regarding major changes within the organization and advocated for movement toward a "philanthropic world"-a world in which "all sectors-public and private companies, partnerships, nonprofits, government-[were] actively and broadly philanthropic in their regular operations." In her 2017 letter, however, Miller had more to talk about than ever. Over the prior five years, Miller, who joined Heron in 2011 with over three decades of nonprofit management experience, had led the organization through a strategic and operational transformation. In 2012, she launched a five-year plan to invest 100 percent of the endowment toward better fulfilling the organization's mission. By December 2016, Heron had done just that. In the process, Heron's board and staff reset the organization's investment policy statement and unified the investment program functions to create a new operating model. Miller realized that there was still more work to do. The board and staff saw 100 percent as a "false summit" and looked ahead to optimizing an endowment that was 100 percent aligned for mission. And while Heron had been influential over the years in encouraging others to adopt the organization's original vision of being more than a private investment company, the practice was still rare in philanthropy. It seemed that the goal of a "philanthropic world"-one going beyond the walls of the foundation or philanthropy alone-was more urgent than ever. This case describes how the Heron board went about visualizing the future in terms of leadership, strategic direction, and Heron's own leadership within the philanthropic world.

Supplement to case SM266A

Supplement to case A234

In July 2017, software and device giant Microsoft [NasdaqGS: MSFT] adopted a new accounting standard that market observers described as one of "the most historic accounting changes to hit the U.S. capital markets in decades." Twelve years in the making, the Financial Accounting Standards Board's (FASB) 2014-09 Revenue from Contracts with Customers (Topic 606) laid out new rules for making revenue recognition consistent across industries, both in the U.S. and internationally through its International Financial Reporting Standards (IFRS) equivalent, IFRS 15. While implementation of the standard; beginning in fiscal year 2018, would have an impact on many industries, perhaps the greatest effect would be felt by software companies, where "multiple-element arrangements" that bundled software licenses, upgrades, and post-contract customer support or services were ubiquitous. This case focuses on helping students understand the updated standards for revenue recognition, both in the U.S. through Financial Accounting Standards Board's (FASB) 2014-09 Revenue from Contracts with Customers (Topic 606); and internationally through the International Financial Reporting Standards (IFRS) equivalent, IFRS 15.

Beginning in fiscal year 2018, a new and relatively unnoticed accounting rule took effect that had the potential for a major impact on the reported earnings of companies holding financial assets or owing financial liabilities. Dubbed the Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, or Accounting Standards Update 2016-01 (ASU 2016-01), the updated rule sought to increase financial reporting transparency and relevancy by changing how companies accounted for equity. Specifically, the update required recognition of changes in fair value in net income and affected the presentation and disclosure requirements for financial instruments. Entities across a broad range of industries were significantly impacted-specifically; companies holding minority passive stakes in other entities that had to be valued quarterly, whether that value had increased or decreased. This inherent volatility then flowed through a company's income statement, causing fluctuations in earnings per share, and calling into question the relevance of reported net income. This case describes the updated standards for equity investments under FASB's ASU 2016-01 and IASB's IFRS 9 and their impact on Alphabet Inc. By providing viewpoints from preparers, investors, and standard setters, the case allows students to appreciate the trade-offs of the different accounting methods for asset valuation.

In the fall of 2017, Beneficial State Bank, a triple bottom line community development bank serving areas of California, Oregon, and Washington, had completed its fourth successive year of normalized profitability while continuing to fulfill its mission of promoting social justice and environmental sustainability. Having grown roughly 20 percent organically by loan and deposit growth annually, as well as through three aligned acquisitions, Beneficial State Bank was well on its way to proving its beneficial banking model as well as the impact of its operations on individuals, communities, and the banking system at large. At the same time, husband and wife creators of the bank, Tom Steyer (MBA '83) and Kat Taylor (JD/MBA '86), found themselves at a crossroads. As the sole providers of capital to the bank during the formation and, as a result of the bank's unique organizational structure, the couple remained the only investors in the bank almost a decade after its founding. With the bank's assets approaching $1 billion, the team envisioned scaling the business for both economic viability and impact to nearly five times the current size in the coming years. In order to achieve this goal, however, the founders would have to consider the introduction of additional investors. This case describes the motivating factors for changing the bank's existing capital structure and includes a discussion of a potential investment option to fulfill these goals. Additional topics include prospective investors, existing capitalization and growth prospects, and the role of mergers and acquisitions.

In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a converged standard on revenue recognition (ASC Topic 606 and IFRS 15, respectively) aimed at ameliorating difficulties associated with determining when to recognize revenue and at what amount. Prior revenue recognition standards applied broad concepts together with a variety of requirements for specific industries or types of transactions, sometimes resulting in divergent accounting for economically similar transactions. In contrast, the new standard outlined a single comprehensive model to use in accounting for revenue from contracts with customers. Although the new standard simplified the guidelines down to one framework, it also generally required firms to use more judgment and estimation than prior guidance. In its second quarter of 2014 financial statement filed with the Securities and Exchange Commission (SEC) in August 2014, New York-based airliner JetBlue Airways Corporation (JetBlue) [NASDAQ: JBLU] acknowledged the new revenue recognition standard. While it had yet to determine the full impact of adoption, changes were imminent. This case examines how companies' accounting practices are affected by broad-based new accounting standards. It is designed to introduce the new revenue recognition standard, and help students walk through an assessment of how the standard might impact a company like JetBlue Airways.

In November 2015, U.S.-based biopharmaceuticals company Pfizer [NYSE: PFE] and Ireland-based pharmaceutical company Allergan [NYSE: AGN] announced a $160 billion merger to move Pfizer's domicile out of the United States to Ireland in the largest inversion deal ever. The announcement came just days after the U.S. Treasury Department laid out a set of restrictions on tax inversions; however, the deal was structured to avoid those restrictions. According to the U.S. Department of the Treasury, "By undertaking an inversion transaction, companies move their tax residence overseas to avoid U.S. taxes without making significant changes in their business operations." Two primary benefits provided by inversions were: (1) the removal of a company's foreign operations and income from the U.S. taxing jurisdiction to achieve pure "territorial" tax treatment (in which income was taxed only in the country where it was earned); and (2) the reduction of U.S. taxes on income from U.S. operations through the use of various "earnings stripping strategies" (e.g., making payments of deductible interest or royalties from the U.S. entity to a new foreign parent). According to Reed College economist Kim Clausing, inversions and other income-shifting techniques reduced Treasury revenues by as much as $111 billion in 2012.

By 2017, pervasive mobile connectivity and the rise of the on-demand economy resulted in an explosion of businesses attempting to fulfill immediate consumer demand in the food delivery market. A broad, secular shift was occurring: Online or mobile orders were rapidly replacing the traditional method of picking up the phone to call in takeout and delivery orders. Still, concerns began to arise as market participants struggled to raise funding amid an uncertain investing climate in 2016. Meanwhile, despite rapid consolidation amongst industry players, the market remained highly competitive with up to a half-dozen players vying for customer attention in some locations. In addition, the arrival of logistics platforms, Uber and Amazon, into the food delivery space posed a serious competitive threat, while companies in segments not in direct competition, such as local delivery platform Postmates, continued to chip away at market share. As a result, questions arose regarding the long-term profitability of food delivery businesses. Specifically, observers wondered whether the businesses could make money, who was best positioned in the marketplace, and what aspects of each business model would prove to be an essential competitive edge. This case examines the challenges facing the on-demand food delivery market. It provides a brief history of food delivery, an industry overview, a summary of predominant food delivery models and predominant U.S. food delivery companies, an in-depth look at industry trends, and a brief view toward the future of online food delivery.