Lady Sharon Harel-Cohen ?

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Sir Ronald Cohen: "The dip will come to have the same amplitude as the peak as the economy has climbed past 15 years"

Sir Ronald Cohen is a visionary. This man of 63, who fled Egypt to England with his family, at age 11, has spent most of his career in capital development. It is one of the most respected financial side of the Channel and near the British Prime Minister Gordon Brown.

Keep this article in your workbook. Subscribe to Monde.fr: 6 € per month + 30 days for free ON THIS TOPIC Jean-Claude Trichet, ECB president. Lighting Decline ECB rate: effects and when? Thursday night, the European stock markets had fallen sharply in closing a few hours later imitated by Wall Street. Facts European shares rebound, collapse of General Motors as the facts Despite falling interest rates, credit remains scarce and expensive real estate Interview Jacques Mistral, "The bankers have a role in the public interest" Lighting British banks struggling to play the Thurs Summary For the first time since 1945, developed countries are in recession in 2009

Founder of the investment fund Apax Partners has funded and thus contributed to the emergence of AOL, Apple, Virgin Radio, among others. Since he retired from Apax in 2005, he campaigned for the development of social entrepreneurship. To reduce poverty in the world and contribute to the peace process between Israelis and Palestinians. He was passing through Paris Thursday, November 6, to mark the publication of the French edition of his book The second bounce of the ball (ed. Saint-Simon, p. 262)

You are a friend of Gordon Brown. Are you responsible for his bank rescue plan? No. But I am a big supporter of that plan. And very pleased to see that President Sarkozy and Gordon Brown have teamed up to use a pattern that begins to show that it is correct. Nobody knows the economy as Gordon Brown. That man just as fair, and we English, we are lucky to have him. Because he learned to penetrate the international financial system for over ten years.

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Do you think stock markets will continue to drop?

Yes, because they do not reflect economic reality. We need another six to nine months for all the financial problems are revealed.

All sectors will be affected?

The hollow coming will have the same amplitude as the peak as the economy has climbed for fifteen years. Few sectors will be spared. But we will bounce back. It will take a year or two before consumers will start consuming and investors to invest.

In your book you say that you must anticipate the next rebound. Or will he?

This is a good time to invest in companies or funds that buy credits to banks, with significant discounts. Because markets overreact. Or development capital.

But is it reasonable to create or invest in a company when markets are depressed?

Development capital funds that have hundreds of billions to invest, will play a very constructive role in this crisis, financing of large corporations, allowing them to be aggressive when stock markets are frozen.

You also say that "for successful entrepreneurs should seek out situations of uncertainty and benefit." The situation is ripe!

It is commonly said that a contractor must have a taste for risk. This idea is false. It must take this uncertainty. Ie identify, get into position to benefit. This is not a matter of luck, because you can learn to analyze uncertainty. This is not to go blindly, to venture.

The election of Barack Obama Will it change the economic policy of the United States?

It shall appoint a secretary of the treasury experienced and cautious. It will deal with social consequences of this crisis. Otherwise, the whole system is in danger. Unemployment, foreclosures will affect millions of people will cause social upheaval throughout the world.

How can governments be able to address these social problems?

By investing in and encouraging firms to do so with grants and tax benefits. Stimulating social entrepreneurship that creates independence, not dependence. I think that's critical. We must come to have a strong impact on growth and jobs through this area as we did with development capital in thirty years. The idea that charities should be carried out by poorly paid people who sacrifice themselves must change. I asked the British government to allocate 300 million pounds (368 million euros) to create a social investment bank. The capital that I created, Bridges Ventures has 115 million pounds. Sixteen professionals manage it. The yields are excellent. We raise 100 million pounds currently to invest in real estate neighborhoods.

You also created Portland Trust in favor of peace in the Middle East. What it is he?

This is a foundation with offices in London, Tel Aviv and Ramallah. We work for a year and a half to an investment program that would help the Palestinians to build homes at an affordable price. We also have microfinance programs. I also participate in the creation of a fund for social entrepreneurs Palestinian and Israeli Keren Orr. For prosperity and peace is correlated.

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THE SECOND BOUNCE OF THE BALL

Ronald Cohen

Here's a success story and key lessons learned was that its author. Undertake or invest in opportunities for most of today does a fairly low cost.

Predict the second bounce of the ball is more difficult, but that, in situations of uncertainty, which can make substantial profits. The challenge for entrepreneurs is to take advantage of this difficulty.

Ronald Cohen of Apax Partners knew how the first private equity investment in Europe. When he retired in 2005 after 33 years of career management to Apax funds managed by the group representing more than $ 20 billion, with offices in eight countries.

Apax has supported companies worldwide such as AOL, Apple, Computacenter, Kabel Deutschland, Calvin Klein, Panrico, Q-Cell, Travelex, Virgin Radio ...

Reading this book is required reading for anyone interested in entrepreneurship. It is a real guide risk and opportunity.

"A masterful lesson in entrepreneurship" (Observer)

"A very valuable and instructive bible to develop its case" (Forbes)

"The winning formula" (New Statesman)

"This compendium of wisdom from the capital investor Sir Ronald Cohen is accurate, intelligent and fair" (Financial Times)

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Private philanthropy: giving less, invest more in the field

Finite philanthropy "to daddy." The new philanthropists expect a return on investment. Result, funds innovative multiply.

There are about ten years, a band of European professionals steeped in the world of private equity (investment in unlisted companies), led by the legendary Sir Ronald Cohen, founder of Egyptian origin and the largest fund British investment Apax Partners, launched its manifesto.

Having earned huge fortunes, but refusing to do philanthropy "to Dad," they launched the idea of ??applying for donations they made to projects led by NGOs or social enterprises, know-how their job: careful selection, coaching managers and measuring the social impact. The philanthropy is endowed with a stream called "venture philanthropy".

Their energy was contagious, if one believes the number of participants at the last conference of the EVPA * Nov. 17 in Luxembourg and has had the effect to tease the world of institutional donors - large foundations or Large NGOs dispensers - and also the states. But they do not stop there: they now advocate more just grants or loans associated with measurable goals, but they encourage the major philanthropists, foundations and institutional investors (pension funds, insurance companies) to leverage direct investment in social enterprises through the creation of funds "ad hoc" to address social or environmental problems.

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Innovative funds have emerged, such as Bridges Ventures, Blue Orchard Igni or with an investment capacity ranging from 15 to 75 million euros.

The most recent example is the fund led by Sir Ronald Cohen "himself", Social Finance, to fund the integration of 3,000 prisoners in Britain. The fund proposes to foundations, institutions or individuals who want to invest their money responsibly, to underwrite government bonds ** original, which the State undertakes to pay - another original - a rate of return that is determined by the lower rate of recurrence of such offenders. In summary: if the percentage of recurrence of these prisoners down (currently it is 60%), you earn more, and this up to 13% yield potentially ...

The managers of these funds will pose two questions ... existential! Will they focus on return on investment or interest? And how to measure the social impact of the project? In other words, when selecting projects, is that their investment will hold a project that will generate a return - about a little taboo in these circles, but at first located in a range of 1 to 10% , against a minimum of 15% in conventional funds - or a project that will allow them to recover - just - the capital invested, but who has made real social benefits.

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All this speaks directly to financial innovation large foundations, used to invest money entrusted to them in conventional products, or at best funds managers said. How will they integrate these new practices and how high? A study commissioned by the group Alphamundi actors Luxembourg "Impact financing" conducted by the Bank of Luxembourg considers that this could eventually represent 1% of the amounts allocated by donors and by very large institutional investors.

But, as pointed out Serge Raicher, president of the EVPA, "it is important that there is too much money too quickly available. The worst scenario would see the emergence of a mini-bubble, knowing that there will not be sufficient to finance sustainable projects effectively. This would mean creating a deceptive effect among investors and social entrepreneurs ...".

This hypothesis should not occur because the foundations have remembered, primary mission to provide solutions, through their donations, social emergencies or severe outbreak of projects - especially in research or new Green Technology - whose maturity is too uncertain for investors.

Meanwhile, funding for social innovation remains a challenge and it is desirable that private foundations and businesses boldest experiment in other ways, such as those developed by the Shell Foundation and evaluated in its report Enterprise Solutions to Scale .

* European Venture Philanthropy Association

** Yield Bond Office: "Social Impact bonds"

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Social innovation seen by The Economist (2)
Following my translation of the article in The Economist, 12 August. Where it appears that England is ahead of the U.S. in terms of social policy innovation.

In his book, Goldsmith argues that American society began a new period, "the fourth stage" in the way of solving the most difficult societal problems. In the first stage in the early 20th century, these problems were still largely the purview of the family circle, and charities. The second stage, marked by the welfare state ("wellfare state") has seen governments take the fight against poverty instead of private actors. In the third stage, governments have sought to respond to societal problems through partnerships with the private sector, consisting to outsource public services in a competitive perspective: despite some successes, partnerships developed have often been too prescriptive and too focused on reducing costs. The fourth stage which begins governments will rely on the ability of the private sector (businesses and nonprofit organizations) to deliver breakthrough innovations or "transformative."

Mr. Goldsmith was handed the job Michael Bloomberg "made him an offer he could not refuse" to be the deputy mayor of New York in charge of Operations. Its mission is to consolidate the work of the municipality on social innovation, work that has clearly influenced the choice of the Obama administration.

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When he became mayor of New York in 2002, Bloomberg thought he could manage the city as he had managed the communications company that bears his name. He organized his office into a vast open space comprising all the senior of the council, with him at the center. But he was quickly frustrated by a system hostile to innovation. It bypassed the system by creating the Center for Economic Opportunity (CEO), which invests a mix of public money and private (philanthropic) in the ideas of social entrepreneurs for the fight against poverty, through the emphasis on the notion of personal responsibility.

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Projects are selected on tenders. Winners receive public funding after passing the gauntlet of the town hall bureaucrats. The CEO has supported controversial experiments, one to encourage the poor to get vaccinated and the other being to reward success in school examinations with money. The CEO and the "municipal fund for the advancement of NYC" were among the first funding awarded by the FIS of the Obama administration: $ 5.7 million to replicate five anti-poverty programs in seven other cities, including Memphis , Newark and Tulsa.

In fact, says Goldsmith, CEO inspired the FIS. But there is a difference. New York has chosen to encourage risk taking by assuming the model of venture capital, a high failure rate. BIS instead focuses on replication and imitation of ideas that have already proven themselves. Its objective is to identify ideas that have succeeded on a small scale and help them grow or have a greater impact. The philosophy is "invest in what works."

Identify what works

But how to know whether an innovation actually works? Entrepreneurs have the conventional profitability to measure their performance. The social economy sector still lacks an evaluation tool. Sometimes things may seem simple. For example the number of people who cross the threshold of a social center is a useful data to evaluate its operation ... but this data tells us nothing about the actual effects of the activity center. Find better ways to assess the social impact of public expenditure is an objective of the OSICP: he works with the Federal Budget. The OSICP says that progress has been made and Sonal Shah, director of the Office, also stipulates that one of the enduring challenges of his job will be well to "identify what types of evaluation work and are adapted to each stages of swarming and duplication. "

Appeal to private capital is another way to bring rigor: the private financiers have experience of measuring return on investment. The fact that more than half the money awarded in July [2010] by SIF comes from philanthropic foundations is a strong signal of confidence of these operators. For similar reasons, the BIS is based on non-profit intermediaries to duplicate the promising ideas. These intermediary organizations will be less likely to succumb to political pressure or rejection risk in choosing to support social entrepreneurs.

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The Social Innovation Fund has selected two other middle-sized, Venture Philanthropy Partners, New Profit, two funds created by a new generation of philanthropists who adopt a managerial approach "businesslike" for their donations, an approach known as The Economist had "philanthrocapitalism" in an article published in 2006. Both organizations are investing money from their sponsors, donors in a portfolio of associations and NGOs. They monitor their development and measure performance carefully.

To build his Great Society, David Cameron has also on such intermediaries, the Big Bank Society is the first of them. In fact, it may well be that the UK is ahead of the United States in the use of public funds to stimulate social entrepreneurship and innovation. Unlike the U.S., Goldsmith notes, "England has a decade of reflection on art and the way for a government to work with the third sector." The creation of a new form of enterprise, community interest company (community interest company) offers English social entrepreneurs greater flexibility in time use the profit to spread social innovations. America is trying to follow B-corp status, a hybrid form of business partnership between profit and nonprofit organization.

In England the establishment of a special government office responsible for work with nonprofit organizations dated Tony Blair government. But the Office of the Third Sector (Office of the Third Sector), established in 2006, proved especially prone to the voices of the establishment of charity, rather than supporting the ideas of social entrepreneurs. The fact that it was renamed the Bureau of Civil Society (Office of Civil Society) by Cameron announced he change course? It is too early to tell.

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The United Kingdom also has several years experience in funds for social innovation. By 2000, Tony Blair had set up a working group on social investment "Social Investment Taskforce, whose recommendations have been largely adopted. But, as is now noted by Sir Ronald Cohen, the private equity millionaire and philanthropist - who led the working group - "it was disappointing to see the Labour Government to accept the policies that we recommended, but never put in place as they should be. " For example, money that "dormant" bank accounts stable has not been used to finance a Social Investment Bank. David Cameron has promised that 250 million pounds from these accounts would be used to mount the Big Bank Society.

Details on what will be the Bank of the Great Society remains unclear. Sir Ronald plans were to use public funds to attract and channel private capital, both "for-profits and philanthropy, to duplicate and develop the ideas of social entrepreneurs who have proven themselves. As the taskforce (the panel) had advocated tax exemptions were enacted to funds that invest in disadvantaged areas, and a specific Investment Fund was created in the same direction (Bridges ).

Recently there appeared a British innovation that could prove even more important: a requirement of social impact (social impact bond), that is to say, a new financial instrument that is indexed to the performance of social sector organizations, in specific sectors and measurable: for example reducing the recidivism rate for juvenile offenders. Private investors bring money to the organization chosen (in this specific example, the charity St Giles), allowing it to have a long-term capital to develop its model, which saves time constantly seeking funding. The government pays the buyer of the obligation in terms of levels of relapse at a rate between 7.5 and 13% - or nothing if the expected improvement is not reached. In many respects, the financial obligation, the social-impact jump, embodies the new approach. It provides long-term financing for promising ideas solidarity sector. It transfers the risk to the private capital markets, and it costs the government only if the scheme provides the specific social benefits.

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Sir Ronald is one of the founders of "Social Finance", with David Blood, who is a financial partner of Al Gore and Stanley Fink, a major donor campaign D. Cameron. Social Finance is aimed to become the Bank of the Great Society and the one who designed the bounds of social impact. Ronald Cohen believes that this type of financial innovation is a bright future in the North and South. "And why not an obligation to fund social impact of literacy programs in Africa? "He suggests.

Remains to be seen whether these new financial instruments can attract enough money in search of profitability to make a difference. As noted by Geoff Mulgan, a former adviser to Tony Blair, now the head of the Young Foundation thinktank, the money placed on the first hop with a social impact came mostly from philanthropists, who will be delighted if they make money with and not too concerned if they do not. But philanthropists' money will not suffice to create a real market for social impact, and the critical test will be to attract capital conventional one that is in search of profitability. For his part, Sir Ronald said that a change would be useful to inform managers largely private foundations and pension funds as investments in social impact is a legitimate asset class.

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