pg. 1
Jul 24, 2016
pg. 1
African-American and Latino workers also now represent 29 percent
of the general workforce population, but just 16 percent of the
advanced manufacturing workforce, 15 percent of the computing
workforce and 12 percent of the engineering workforce – all rates that
have remained essentially flat. – USNews
Feasibility Study – Major Areas
I. Bayes’ Theorem………………………………………………………………………………………………………………..1
II. Market Analysis………………………………………………………………………………………………………………..1
III. Organizational/Technical Issues………………………………………………………………………………………..30
IV. Financial Issues………………………………………………………………………………………………………………...31
V. Conclusion………………………………………………………………………………………………………………………..37
pg. 1
I. Bayes’ Theorem (Conditional Probability)
Bayes’ Theorem – PG County Micro-Social Impact Bond for STEAM
Prior Probability
Initial estimate of how likely it is the project will be successful
X 75%
New event occurs: Raise $2.5 million in capital to sustain 3-year pilot programming
Probability of raising capital y 60%
Probability of not raising capital z 40%
Posterior Probability
Revised estimate of how likely it is that the project will be successful, given that $2.5 million is raised in capital
Xy Xy + z(1-x)
82%
*Bayes’ theorem is concerned with conditioned probability. That is, it tells us the probability that a theory of
hypothesis is true if some event has happened.
II. Market Analysis
a. What is the current or projected demand for your proposed products or services? In other words,
how many units can you reasonably expect to sell each month? What is the social impact demand
forecast?
STEM Demand (Local, Nationally, Internationally)
o Local Level
In April of 2014, the Maryland legislature last week approved a 2015 budget, and it includes $12 million to help create jobs in Maryland's innovative biotech and science sector. That's a smart use of resources. For lawmakers looking to put residents back to work, our state's high-tech sectors have been bright spots — especially our vanguard biotech industry, which accounts for more than 11 percent of the Maryland economy.
Source: www.Baltimoresun.com.
According to a report by Gov. Martin O’Malley’s STEM Task Force, Maryland schools produce just 4,000 STEM graduates for 6,000 annual STEM job openings. The newly agreed upon budget includes Governor O'Malley's record funding for education, with a strong emphasis on building STEM skills.
Also, in the fiscal 2016 allowance is $4.9 million for the Maryland Innovation Initiative, advancing Technology in Maryland.
The FY 2016 allowance includes $12 million in biotechnology tax credits to leverage investment for life science companies, $9.4 million to further develop stem cell technology, and $2.5 million, after contingent reductions, in investments and tax credits to promote cybersecurity research.
The allowance also includes $9.0 million in research and
development tax credits, $8.5 million to create endowed research
Maryland schools produce
just 4,000 STEM graduates
for 6,000 annual STEM job
openings.
pg. 2
chairs at universities, and $4.9 million to commercialize research
conducted at participating universities through the Maryland
Innovation Initiative. The allowance maintains $4.5 million in
funding for the Employment Advance Right Now (EARN) program,
an industry-led workforce development initiative to help develop
the skilled workforce businesses need to remain competitive.
The budget also includes $2.8 million for adult instructional services and General Educational Development (GED) testing programs as well as $1.2 million for the Conservation Jobs Corps to teach green jobs skills to at-risk youth.
The FY 2016 allowance provides $15.9 million, after contingent reductions, for the Maryland State Arts Council as well as $2.0 million to fund distinctive cultural arts organizations. The budget includes $9.0 million for the Sustainable Communities Tax Credit to leverage private investment and revitalize our State’s cities and towns as well as $1.1 million to provide financing to new and expanding small businesses in those communities.
The FY 2016 allowance for the Maryland Energy Administration (MEA) includes $19.9 million for Renewable and Clean Energy Programs and Initiatives; $19.6 million for Energy Efficiency and Conservation Programs; and $4.1 million for the Jane E. Lawton Conservation Loan Program and State Agency Loan. The Department of Housing and Community Development receives $41.2 million for weatherization and energy efficiency programs.
Source: www.Maryland.gov.
In their analysis of HB 517, the Maryland Department of Legislative Services analyzed numerous factors. They researched a program for prisoner recidivism in Great Britain and they worked with the Maryland Department of Public Safety and Correctional Services.
In January of 2013, the Department of Legislative Services advised against SIBs for the following reasons:
SIBs cause an increase in budgetary pressure compared to direct program financing due to the necessity of funding contingent liabilities and the added expense of features unique to SIBs;
SIBs do not produce cost savings when outcomes are achieved, even under highly optimistic assumptions;
SIBs could effectively exclude new providers and program types that do not have a well-established record of success with investors seeking to minimize risk; and
SIBs potentially distort evidence used in policy decisions
For example, 250 Baltimore youth are held in detention each day at a cost of $464 per youth per day. This amounts to an annual bill to the state of about $42 million. If a SIB provided enough funding to offer alternative programs for just 50 percent of this daily population in accordance with proven programs already demonstrated through the MOC, the state could use the $21 million
250 Baltimore youth are
held in detention each day
at a cost of $464 per youth
per day.
pg. 3
in savings to fund 21,000 summer jobs or 4,200 Little League teams. The uses are endless, and so too would be the accomplishments of our youth and the potential for an improved quality of life in Baltimore—if we invest in opportunity.
Source: www.spotlightonpoverty.org, Maryland.gov o National Level
STEM Nationwide – STEM fields directly employed more than 7
million Americans in 2012. And job openings in science and tech-
related fields are projected to grow by nearly 20 percent by 2018 —
nearly double the growth in non-STEM occupations.
According to a report by the Information Technology & Innovation
Foundation in 2010, the number of STEM graduates will have to
increase by 20-30% by 2016 to meet the projected growth of the US
economy.
Overall, STEM employment grew three times more than non-STEM
employment over the last twelve years, and is expected to grow
twice as fast by 2018.
Source: www.itif.org.
Drone Technology
Analysts predict the Unmanned Aerial Vehicle (UAV)
spending will reach $89 billion worldwide by the year 2023
– The TEAL Group
Forecasters estimate the domestic market for UAV’s will
reach $82.1 billion by 2025 – Association for Unmanned
Vehicle Systems Int’l.
UAV’s are forecasted to created hundreds of thousands of
high paying jobs in the US market – Fortune Magazine
70,000 of the estimated 100,000 jobs will be created within
the first ten years of wide-spread commercialization –
AUVSI
American regulators plan to phase in commercial use of
drones weighing 55 pounds or less – Business Insider
3D Printing Technology
Global 3D printing market to grow from $2.5B in 2013 to
$16.2B by 2018 – Canalys
U.S. Market for 3D printer manufacturing to reach $1.4B in
2014, a 28% increase from 2009 – IBIS World
67% of manufacturers surveyed are currently implementing
3D printing either in full production or pilot and 25% intend
to adopt 3D printing in the future – PriceWaterhouseCooper
Over the next decade manufacturing is expected to
quadruple its share of the total 3D printing market,
accounting for a projected 46% of the market in 2025 – Lux
Research
Forecasters estimate the
domestic market for UAV’s
will reach $82.1 Billion by
2025.
pg. 4
Digital Currency Technology
Bitcoin has a 90% share of the digital currency market –
CoinDesk
Roughly 60,000 companies now accept the currency –
Futuremoneytrends.com
The term “Bitcoin” was mentioned online over 3.4 million
times in 2013 – PwC
96% of online discussion of Bitcoin occur among US/Chinese
males, ages 26-50 – PwC
On average there were 55,000 daily Bitcoin transactions in
2013. Daily average was less than 100 in 2009. –
Congressional Research Service
Green Technologies
Global low-carbon investment totaled roughly $500B in
2013, and is expected to double by 2020 to $1.6T – IEA
There are currently 1.4B people without access to electricity
– World Wildlife Fund
Nuclear waste will remain dangerous for another 10,000
years – WWF
The global population is set to reach roughly 10 billion by
2050 – UN
10-foot Sea Level Rise Now Unstoppable Due to Glacier
Collapse – Popular Science Magazine
Art & Design
This year’s findings suggest that art buyers and collectors are increasingly acquiring art and collectibles from an investment viewpoint (76% said so this year, compared with 53% in 2012).
It is particularly interesting to see that the wealth management community is already responding to this new demand, with 88% of the family offices and 64% of the private banks surveyed said that estate planning around art and collectibles is a strategic focus in the coming 12 months.
Focus II reports that the nationwide demand for graphic designers/web art directors is expected to grow as fast as average through 2018, with people established in their career generally earning between $33,130 and $58,140 per year. Employment prospects for Exhibit Designers are expected to improve in the near future, with O*Net projecting above average growth in the field through 2016 (www.onetcenter.org). According to the Occupational Outlook Handbook, average wages for Exhibit Designers as of 2010 were $23.31 hourly and $48,480 annually.
Source: www.bemidjistate.edu
Global low-carbon
investment totaled roughly
$500B in 2013, and is
expected to double by 2020
to 1.6 Trillion.
pg. 5
Art & Finance Report 2014-15 United States and Europe: there is a positive outlook for art wealth management services in the United States and Europe, as art market values are moving towards an all-time high. Wealth managers expect their clients to increase their total wealth allocated to art, providing a fertile ground for Art & Finance-related services aimed at protecting, leveraging and enhancing art and collectibles wealth.
Another blow to the arts has been the decline in government funding. During the Great Recession alone local government support for the arts fell 18 percent, while state funding dropped 27 percent. Between 1992 and 2012, adjusted for inflation, total government support declined 31 percent.
Source: www.americantheatre.org. o International Level
Europe
Europe is in a similar position to the US, but with less
flexible immigration policies. Unemployment is on the rise
across Europe but in STEM fields the real problem is a
shortage of skilled talent Cedefop, the Thessaloniki-based
European Centre for the Development of Vocational
Training, predicts that by 2015 there will be a shortage of
between 380,000-700,000 ICT workers in Europe. Germany
alone was short 114,000 STEM-skilled workers in
2011.Principles for Responsible Investment represent a $30
trillion dollar or 20% share of global capital markets,
showing a clear international demand to invest in socially
responsible companies and/or projects.
China
The results are already visible. A staggering 41% of all
degrees awarded by Chinese institutions in 2011 were in a
STEM subject, almost twice the proportion of STEM degrees
awarded in the UK and three times the rate in the US.
China now stands behind only the United States in the
number of science and technology journals published
annually, and is expected to overtake the US in scientific
output within few years, according to a recent study by the
Royal Society, the UK's science academy. The study notes
however that China still lags behind most developed
countries in terms of job-creating quality research.
Brazil
Accenture predicts that Brazil will increase its engineering
graduates by 68% by 2015 and will produce more PhD
engineers than the US by 2016.
China now stands behind
only the United States in the
number of science and
technology journals
published annually, and is
expected to overtake the US
in scientific output within a
few years…
pg. 6
Source: obhe.ac.uk.
Singapore
The Singapore educational system is currently 2nd Overall in
Math and Science on global international educational
assessments.
Source: Pharma.org.
Fiscal Opportunities for Social Impact Initiatives
o Local Level
Prince George’s County, MD
2012 GIVING PROFILE
Giving ratio 5.24%
Total contributions $984,015,000
Total adjusted gross income (AGI) $18,771,912,000
Median contribution $4,808
Median AGI $70,136
Giving ratio 10.15%
Total contributions $31,817,000
Total AGI $313,582,000
Average contribution $2,436
Average AGI $16,367
DEMOGRAPHICS
Population 865,443
Political leaning Democratic
Race
Black 64.2%
Hispanic or Latino 15.0%
White 15.0%
Other 6.9%
Asian 4.1%
Multiracial 2.6%
American Indian and Alaska Native 0.3%
Native Hawaiian and Pacific Islander 0.1%
Age ranges
Under 18 23.8%
18 to 24 11.6%
25 to 44 29.0%
45 to 64 26.0%
65 and older 9.6%
Religion
Baptist 11.3%
Christian Non-denominational 10.9%
Catholicism 9.7%
Methodist/Pietist 5.5%
Other Groups 2.4%
Pentecostal 1.6%
pg. 7
Adventist 1.0%
Latter-day Saints 0.8%
Episcopalians/Anglicans 0.6%
Lutheran 0.6%
Presbyterian-Reformed 0.5%
Holiness 0.2%
Judaism 0.2%
Eastern Liturgical (Orthodox) 0.1%
European Free-Church 0.1%
Liberal 0.1%
NEIGHBORING COUNTIES GIVING RATIO
District of Columbia 4.00%
Charles County 3.54%
Howard County 2.71%
Montgomery County 2.69%
Anne Arundel County 2.56%
Calvert County 2.48%
Fairfax County 2.40%
Alexandria city 2.36% *AGI = Adjusted gross income: A person’s gross income minus some business expenses, unreimbursed medical expenses, retirement-plan contributions, and other deductions. *Giving ratio: The percentage of AGI given to charity as determined using the charitable deductions reported on the income-tax forms. Source: Philanthropy.com
Maryland has the highest median household income for 214 at $73,971, which is 38 percent above the national median.
Source: U.S. Department of Commerce, Bureau of the
Census, 2014 American Community Survey.
Maryland maintained its first place ranking in millionaires per capita for 2014 with 7.7% of households having $1 million or more in investable or liquid assets.
Source: Phoenix Marketing International, Ranking of U.S.
States by Millionaires per Capita 2010-2014.
Maryland has the second lowest poverty rate for 2014, with 10.1% of the population living in poverty, compared with 15.5% for the U.S. as a whole.
Source: U.S. Department of Commerce, Bureau of the Census, 2014 American Community Survey.
Maryland is home to three of the top 20 large counties in the nation for median household income. Howard County ranks fourth ($107, 490), Montgomery 11th ($97,765) and Calvert 16th ($95,110) among 800+ counties with a population of 65,000 or greater.
Source: U.S. Department of Commerce, Bureau of the Census, 2014 American Community Survey
Maryland ranks seventh among states in per capita personal income ($54,176).
Maryland maintained its
first place ranking in
millionaires per capita for
2014 with 7.7% of
households having $1
million or more in
investable or liquid assets.
pg. 8
Source: U.S. Department of Commerce, Bureau of Economic Analysis, 2014; ranking excludes Washington, DC.
In May of 2015, Maryland approved the development of a $30 Million dollar prison facility with 60-beds for juvenile offenders.
Source: baltimoresun.com.
PG County Economic Development Incentive Fund
Most of the awards will be made as loans to small and medium sized businesses located in the County. On occasion, in particular and extraordinary circumstances involving large numbers of jobs, grants may be considered.
The loan process is approximately 90 days. The priorities for funding are projects that grow the
County’s commercial tax base, add County jobs, and meet other specified goals. Any business or development project that meets those priorities can apply for funds from the program. Non-profits are eligible for funding of projects that result in growth in the County’s commercial tax base and in new jobs, but not for funding operations.
The County Executive and County Council have set aside $50 million as a multi-year commitment for the EDI Fund.
Approximately $7 million to $11 million will be available each fiscal year. This will ensure that the Council has an opportunity to review the status of the program before additional funds can be spent.
Sources: Maryland.gov, Hyattsville.org
Maryland has maintained its second place ranking in the Milken Institute’s biennial State Technology and Science Index for 2014. According to study results, Maryland received top five rankings in all of the index components, including human capital investment, research and development inputs, risk capital and entrepreneurial infrastructure, technology and science workforce, and technology concentration and dynamism. The Index measures the technology and science assets for states, ranking them on their ability to foster and sustain a technology sector, which is crucial in determining a region's future economic success.
Source: The Milken Institute, State Technology and Science Index: Enduring Lessons for the Intangible Economy, November 2014.
Maryland/Suburban Washington DC places fifth in a ranking of the top ten U.S. biopharma clusters based on criteria including patents, NIH grant funding, venture capital, lab space and number of jobs.
Source: Genetic Engineering and Biotechnology News, March 9, 2015.
Maryland ranks fifth in the 2014 State New Economy Index a measure of a state’s economy as knowledge-based, globalized, entrepreneurial, information technology-driven and innovation-based.
Maryland has maintained its
second place ranking in the
Milken Institute’s biennial
State Technology and
Science Index for 2014.
pg. 9
Source: Information Technology and Innovation Foundation, the 2014 State New Economy Index.
Maryland ranks third among the states in the square footage of LEED-certified commercial and institutional green buildings per capita for 2014. By using less energy, LEED buildings save money for businesses and taxpayers; reduce greenhouse gas emissions; and contribute to a healthier environment for workers and the larger community.
Source: U.S. Green Building Council press release, February 9, 2015.
Suburban Maryland/Metro DC, spanning the Rockville and Gaithersburg areas in Montgomery County northwest to Frederick County, ranks eighth among U.S. life sciences clusters with top five rankings in the component factors of life sciences establishment concentration, life sciences venture capital funding and NIH funding.
Source: Jones Lang LaSalle, Global Life Sciences Cluster Report 2014.
Maryland ranks highly in the technology intensity of its business base. The state ranks fourth in high-tech businesses as a share of all business establishments (11.6%), and third in employment in high-technology businesses as a share of all employment (16.0%).
Source: National Science Foundation, Science and Engineering Indicators 2014, using data from 2010; ranking excludes Washington, DC.
According to a Brookings Institution study, Baltimore ranks in the top ten among large metropolitan areas for the concentration of STEM (Science, Technology, Engineering and Math) jobs, with 23% of jobs requiring high-level STEM knowledge. The report cites Baltimore for being home to Johns Hopkins University and other hospital systems, and having a strong defense industry cluster in the suburbs.
Sources: Brookings Institution, The Hidden STEM Economy, June 2013.
Maryland has the highest concentration of employed doctoral scientists and engineers. The state ranks first in employed PhD scientists and engineers per 100,000 employed workers (1,288), with a first place ranking for PhD scientists (1,031) and third for PhD engineers (178). Maryland also holds rankings in the following fields for employed doctoral scientists per 100,000 employed workers:
first in biological sciences (466) first in mathematical sciences (75) first in health (83) fourth in physical sciences (221) fifth in computer and information sciences (28)
Sources: National Science Foundation, data for 2013, and U.S. Department of Labor, Bureau of Labor Statistics; ranking excludes Washington, DC.
pg. 10
Maryland ranks first among the states in the percentage of professional and technical workers (28.3%) in the workforce.
Sources: U.S. Department of Labor, Bureau of Labor Statistics, 2014 Geographic Profile of Employment and Unemployment; ranking excludes Washington, DC.
Maryland ranks third among the states in the percentage of the population age 25 and above with a bachelor’s degree or higher (38.2%) and second in the percentage with a graduate or professional degree (17.5%).
Sources: U.S. Department of Commerce, Bureau of the Census, 2014 American Community Survey; ranking excludes Washington, DC.
According to the Cyberstates 2015 report, Maryland ranks first in the concentration of technology establishments, comprising 8.45% of private-sector establishments, and fourth in the concentration of technology jobs, which employ 8.6% of the private sector workforce. The state ranks eighth in average wages for high-tech workers at $101,849, and seventh for tech GSP as a percentage of total GSP (9.0%). Maryland's top rankings for employment in specific industries are:
Communications equipment manufacturing (8th - 3,160) Measuring and control instruments manufacturing (9th -
12,230) Reproducing magnetic and optical media manufacturing
(7th - 955) Computer systems design and related services (9th - 68,842) IT services (10th - 75,838) Engineering services (9th - 32,700) R&D and testing services (9th - 26,829)
Source: CompTIA, Cyberstates 2015.
Maryland ranks fourth among the states in federal government employment, with 142,745 non-military federal jobs in 2014. On a per capita basis, the state ranks first with 239 federal jobs per 10,000 residents. Non-military federal jobs generate $13.4 billion in total wages in Maryland, ranking fourth among the states. Further, these jobs pay better in Maryland than in any other state, with an average annual wage of $94,156, which is 24% higher than the national average.
Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and Wages, Annual Averages 2014; U.S. Department of Commerce, Bureau of the Census; ranking excludes Washington, DC.
According to the CBRE Research report "Scoring Tech Talent," Baltimore ranks eighth as a top tech talent market based on the ability to attract and grow its tech talent pool. Components of the scorecard in which Baltimore ranks the highest include second in tech degrees (in the Washington-Baltimore metro area), fourth in
Maryland ranks first among
the states in the percentage
of professional and
technical workers (28.3%) in
the workforce.
Maryland ranks first in the
concentration of technology
establishments, comprising
8.45% of private-sector
establishments, and fourth
in the concentration of
technology jobs, which
employ 8.6% of the private
sector workforce.
pg. 11
gender diversity in tech occupations, and tenth in tech labor concentration.
Source: CBRE Research, 2015 Scoring Tech Talent.
In a ranking of "Best Cities for Women in the Workforce," Baltimore ranks sixth among large cities and Greenbelt, Maryland is seventh among small cities. Cities were evaluated on several factors including women's earnings as a percentage of men's, labor force participation, and unemployment.
Source: NerdWallet.com, Best Cities for Women in the Workforce, March 16, 2015.
o National Level
One out of every nine dollars under professional management in
the U.S. is invested according to strategies of sustainable and
responsible investing (SRI) (Social Impact) – US Forum for
Sustainable and Responsible Investment.
$3.31 trillion in US-domiciled assets at year-end 2011 held by 443
institutional investors, 272 money managers and 1,043 community
investment institutions that apply various environmental, social and
governance (ESG) criteria in their investment analysis and portfolio
selection; and
$1.54 trillion in US-domiciled assets at year-end 2011, held by more
than 200 institutional investors or many managers that filed or co-
filed shareholder resolutions on ESG issues at publically trades
companies from 2010-2012 (Thompson Reuters).
The assets engaged in sustainable and responsible investing practice
currently represent 11.3 percent of the $33.3 trillion in total assets
under management tracked by (Thompson Reuters).
From 1995, when US SIF Foundation first measured the size of the
US sustainable and responsible investing market, to 2012, the SRI
universe has increased 486 percent, while the broader universe of
assets under professional management in the United States has
grown 376 percent (Thomson Reuters).
From 2010 to 2012, there has been a pronounced upward trend in
vote support on environmental and social issues, with 24 percent or
more of such resolutions each year receiving the support of more
than 30 percent of the shares voted, up significantly from the levels
of 2007 to 2009, when only 15 to 18 percent of environmental and
social issues resolutions won such support levels (Thompson
Reuters).
80% of investors considered sustainability as a factor in one or more
contexts within the past year (PriceWaterHouseCooper –
Sustainability Goes Mainstream: Insight into Investor Views).
Consistent with prior studies, investors have expressed a high level
of dissatisfaction with the sustainability-related information being
provided by companies (PriceWaterHouseCooper).
The assets engaged in
sustainable and responsible
investing practice currently
represent 11.3 percent of
the $33.3 trillion in total
assets under management.
pg. 12
95% of investors surveyed believed that regulatory risks due to
climate change should be periodically assessed
(PriceWaterHouseCooper).
89% of investors surveyed believed that market risks due to climate
change should periodically be assessed (PriceWaterHouseCooper).
84% of investors surveyed believed that physical risks due to climate
change should periodically be assessed (PriceWaterHouseCooper).
92% of investors surveyed believed that human health impacts
should be periodically be assessed (PriceWaterHouseCooper).
89% of investors surveyed believed that impacts on water quality
should be periodically assessed (PriceWaterHouseCooper).
74% of investors surveyed believed that impact on other social
issues such as income inequality and human rights inequality should
be assessed (PriceWaterHouseCooper).
o International Level
While global challenges related to sustainability are manifest,
defining how businesses can meet the challenges can be daunting.
Sustainability can encompass a broad range of issues that affect
business—from pollution and climate change to education, poverty,
health and human rights. (PriceWaterHouseCooper – The
Sustainability Agenda: Industry Insights).
The International Energy Agency (IEA), estimated sustainability-
related investment in the area of energy to grow to $45 trillion from
2010-2050 (PriceWaterHouseCooper – Vision 2020).
In the case of agriculture and food, a recent FAO report, suggested
that feeding the growing world population up to the middle of this
century would require an average net investment of about $83
billion per annum, over the period to 2050, which would equate to
around 0.6% of average projected world GDP of around $130 trillion
over the period from 2008 to 2050 (PriceWaterHouseCooper).
PWC estimates that the share of the world DGP accounted for by
emerging economies might rise from around 45% in 2008 (23% from
the BRICs) to around 60% in 2050. Total emerging market GDP in
2050 might on this basis rise to around $125 trillion by 2050. A rise
in the share of this on health and education of around 5.4
percentage points, would therefore translate to around $6.7 trillion
in 2050 (PriceWaterHouseCooper).
‘The most frequently cited benefits that firms expect from
sustainability policies relate to improve business outcomes: the
ability to attract and retain customers (37%), improved shareholder
value (34%) and increased profits (31%),’ (Economist Intelligence
Unit Survey, Doing Good: Businesses and the Sustainability
Challenge, 2008).
The International Energy
Agency (IEA), estimated
sustainability-related
investment in the area of
energy to grow to $45
trillion from 2010-2050.
pg. 13
‘Two-thirds (66%) of transportation and logistics CEOs are worried
about the potential threat to business growth as a result of
increased carbon emissions regulation,’ (PriceWaterHouseCoopers
11th Annual Global CEO Survey).
Banks and capital markets have also seized on new products linked
to sustainability. These products respond to the new priorities of
many investors, including a second generation of wealthy families
who are intent on deploying their inheritance in socially responsible
ways, institutional investors (pension funds) looking for long-term
above-average returns, and sustainable companies looking to
deliver on those priorities. Products already with track-records
including sustainability indices such as the Dow Jones Sustainability
World Index, renewable energy funds, water business funds and
socially responsible investing (SRI) funds. Further opportunities lie in
venture financing of alternative energy and other businesses aimed
at protecting the environment as well as in carbon emissions trading
(PriceWaterHouseCooper).
The Economist Intelligence Unit (EIU) found in a survey that 57% of
top executives believe that the benefits of efforts to achieve
sustainability outweigh the costs (PriceWaterHouseCooper).
Only 6% of companies surveyed by the EIU rate themselves as
outstanding in reducing emissions, waste and pollution. And only a
third of executives worldwide say their sustainability policies
extended to their supply chain (PriceWaterHouseCooper).
Quotes by Prominent CEO’s on Social Impact o “This agenda of sustainability and corporate responsibility is not only central to
business strategy but will increasingly become a critical driver of business growth… I believe that how well and how quickly businesses respond to this agenda will determine which companies succeed and which will fail.” – Patric Cescau, CEO of Unilever
o “Sustainability is the single biggest opportunity of the 21st century, and will be the next source of competitive advantage.” – H. Lee Scott, President and CEO of Wal-Mart.
o “If you want to continue to succeed as an energy company in the coming decades, you need to understand and meet people’s expectations for environmental and social performance, as well as delivering solid technological and financial performance. That means putting solid business principles, including sustainable development, at the heart of how you do your business.” – Jeroen Van der Veer, CEO of Shell
o “I am convinced that helping address societal problems is a responsibility of every business, big and small…Financial achievement can and must go hand-in-hand with social and environmental performance.’ – Indra K. Nooyi, President and CEO of PepsiCo.
o “Business has the prime responsibility to come up with the technologies, the know-how, the products and services, the business models and management
pg. 14
solutions that will help meet the sustainability challenges.’ – Gerard Kleisterlee, President and CEO of Royal Philips Electronics
o “The positive correlation between sustainability and financial performance will provide an enormous boost to the sustainability investment sector.’ – Markus Knisel, Director of Morgan Stanley Private Wealth Management
Human Demand in Target Area
o Total Public School Enrollment
Prince George’s County – 125,136 students
Grades 7-12 – 52,667
o Students by Race
African-American – 80,821 (64.6%)
Asian – 3,509 (2.8%)
Hispanic – 32,330 (25.8%)
Native/Hawaiian/Other Pacific Islander – 282 (0.2%)
Two or more races – 2,084 (1.7%)
Total Non-white – 119,026 (95.1%)
o Maryland School Assessment Results: 2011, 2012, 2013
Students Proficient in Mathematics
2011 – 33.7%
2012 – 46.0%
2013 – 36.4%
2014 – 32.8%
o Maryland Public School Graduate
2013 Total – 8,081
2013 w/ diploma – 7,952
o PG County Drop-out
5.54%
o Maryland Public School 2013
$1,481,789,761
o PG County Cost Per Pupil
$13,784
o Local Wealth
$45,490,140,424
Note: Local wealth is the amount used in the cement expense formula
(Section 5-202 of the Education Article) and includes county assessable
base for fiscal year 2013 (September 13, 2013) and met taxable income
for tax year 2012 (September 11, 2012).
o Career and Technology Education in Public Schools: 2012-2013
PG County
Information Technology Program – 110 participants
Environmental and Natural Resources – 26 participants
Average Attendance: 2010-2011
Maryland 2012-2013 – 93.9%
pg. 15
U.S. Average – 96.7%
National Rank – 25
Source: marylandpublicschools.org.
b. What are the target markets for this product or service? What demographic characteristics do these
potential customers have in common? How many of them are there?
Target Market
o Local Venture Capital
Venture capitalists provide capital to startup ventures or support small companies that wish to expand but do not have access to public funding.
Allegis Capital Arborview Capital LLC Bessemer Venture Partners Boulder Ventures Camden Partners CNF Investments, LLC Core Capital Edison Ventures Epidarex Capital Fortify Ventures Foundation Medical Partners Grotech Ventures Harbert Ventures Anthem Capital Conscious Venture Lab Dominion Group Grande Ventures Meridian Venture Partners
HIG Capital In-Q-Tel JMI Equity Kinetic Ventures NaviMed Capital New Atlantic Ventures New Enterprise Associates New Markets Novak Biddle Paladin Capital Revolution Ventures TEDCO SWaN & Legend Ventures Montagu Newhall Panacea Capital Advisors Portview Communications Partners Questmark Partners
Source: http://www.angelresourceinstitute.org
Total annual venture capital funding in Maryland increased by about 63 percent, from $407,752,600 in 2012 to $663,413,200 in 2013. The number of total deals rose by roughly 25 percent, from 57 deals in 2012 to 71 deals in 2013.
Maryland far outpaced the national average increase year over year, the MoneyTree Report shows.
Nationally, venture capitalists invested $29.4 billion in 3,995 deals in 2013, an increase of 7 percent in dollars and a 4 percent increase in deals over the prior year, according to a statement on the report.
As in 2012, the software industry remained the single largest investment sector in 2013, followed by biotechnology. Internet-specific companies also reached their highest investment levels since 2001. Networking and equipment, financial services, and business products and services also saw significant year-over-year gains, the statement showed.
Total annual venture capital
funding in Maryland
increased by about 63
percent, from $407,752,600
to $663,413,200 in 2013.
pg. 16
Information on the industry sectors receiving venture capital funding in Maryland was not released in the report.
Find quarterly data for Maryland below:
Venture Capital Funding in Maryland 2012-2013
Year Quarter Funding Deals Annual Total Funding
2012 Q1 $119,745,400 16 $407,752,600
Q2 $50,448,400 9
Q3 $161,558,900 22
Q4 $75,999,900 10
2013 Q1 $148,278,200 13 $663,413,200
Q2 $320,180,000 13
Q3 $140,490,000 26
Q4 $54,465,000 19 Source: MoneyTree Report Regional Aggregate Data
o Local Angel Investors
These angel investor groups may be able to locally provide the capital that is necessary to fund the 3-year pilot initiative.
Active Angel Investors Angel Venture Forum Baltimore Angels Blu Venture Investors (VA) Chesapeake Emerging Opportunities Club Dingman Center Angels
Georgetown Angels Mid Atlantic Bio Angels Mountain Maryland Angels NextGen Angels New Dominion Angels New Vantage Group
Source: http://www.angelresourceinstitute.org
o Local Philanthropy
This report provides data that is important to our field to assist us in understanding the growth in grant making as well as community investment both in Maryland and across the country. Having several of the 14 community foundations that serve Maryland highlighted in the report shows the generosity of communities in our state, and the important leadership role that Maryland’s Community Foundations play.
This past year, the 14 community foundations that serve Maryland and comprise the Maryland Community Foundation Association, held over $795 million in charitable assets and donated $138 million to local communities
Source: nccsweb.urban.org.
This past year (2013),
the 14 community
foundations that
serve Maryland and
comprise the
Maryland Community
Foundation
Association, held over
$795 million in
charitable assets and
donated $138 million
to local communities.
pg. 17
Number of Nonprofit Organizations in Maryland, 2003 - 2013 2003 2013
Number of Orgs.
Percent of All Orgs.
Number of Orgs.
Percent of All Orgs.
Pct. Change
All Nonprofit Organizations 27,638 100.0% 32,387 100.0% 17.2%
501(c)(3) Public Charities 17,274 62.5% 24,058 74.3% 39.3%
501(c)(3) Private Foundations 2,307 8.3% 1,872 5.8% -18.9%
Other 501(c) Nonprofit Organizations 8,057 29.2% 6,457 19.9% -19.9%
Small community groups and partnerships, etc.
Unknown NA Unknown NA NA
501(c)(3) Public Charities 17,274 62.5% 24,058 74.3% 39.3%
501(c)(3) Public Charities Registered with the IRS (including registered congregations)
17,274 62.5% 24,058 74.3% 39.3%
Reporting Public Charities 6,758 24.5% 16,404 50.6% 142.7%
Operating Public Charities 5,902 21.4% 14,787 45.7% 150.5%
Supporting Public Charities 856 3.1% 1,617 5.0% 88.9%
Non-Reporting, or with less than $25,000 in Gross Receipts
10,516 38.0% 7,654 23.6% -27.2%
Congregations (about half are registered with IRS)*
- 0.0% 0 0.0% NA
501(c)(3) Private Foundations 2,307 8.3% 1,872 5.8% -18.9%
Private Grantmaking (Non-Operating) Foundations
2,220 8.0% 1,727 5.3% -22.2%
Private Operating Foundations 87 0.3% 145 0.4% 66.7%
Other 501(c) Nonprofit Organizations 8,057 29.2% 6,457 19.9% -19.9%
Civic leagues, social welfare orgs, etc. 2,103 7.6% 1,548 4.8% -26.4%
Fraternal beneficiary societies 1,300 4.7% 812 2.5% -37.5%
Business leagues, chambers of commerce, etc.
1,317 4.8% 1,151 3.6% -12.6%
Labor, agricultural, horticultural orgs 1,076 3.9% 672 2.1% -37.5%
Social and recreational clubs 1,234 4.5% 1,427 4.4% 15.6%
Post or organization of war veterans 452 1.6% 390 1.2% -13.7%
All Other Nonprofit Organizations 575 2.1% 457 1.4% -20.5%
Note: Excludes out-of-scope organizations. The number of congregations is from the website of American Church Lists (http://list.infousa.com/acl.htm), 2004. These numbers are excluded from the totals for the state since approximately half of the congregations are included under registered public charities.
Source: http://www.fundingpost.com/;
http://mdbiznews.commerce.maryland.gov/.
Source: IRS Business Master File 10/2013 (with modifications by the National
Center for Charitable Statistics at the Urban Institute to exclude foreign and
governmental organizations).
pg. 18
Target Market Demographics
People QuickFacts Prince George's County Maryland
Population, 2014 estimate 904,430 5,976,407
Population, 2010 (April 1) estimates base 863,519 5,773,785
Population, percent change - April 1, 2010 to July 1, 2014
4.7% 3.5%
Population, 2010 863,420 5,773,552
Persons under 5 years, percent, 2014 6.7% 6.2%
Persons under 18 years, percent, 2014 22.7% 22.6%
Persons 65 years and over, percent, 2014 11.2% 13.8%
Female persons, percent, 2014 51.8% 51.5%
White alone, percent, 2014 (a) 26.9% 60.1%
Black or African American alone, percent, 2014 (a)
64.7% 30.3%
American Indian and Alaska Native alone, percent, 2014 (a)
1.0% 0.6%
Asian alone, percent, 2014 (a) 4.6% 6.4%
Native Hawaiian and Other Pacific Islander alone, percent, 2014 (a)
0.2% 0.1%
Two or More Races, percent, 2014 2.6% 2.6%
Hispanic or Latino, percent, 2014 (b) 16.9% 9.3%
White alone, not Hispanic or Latino, percent, 2014
14.2% 52.6%
Living in same house 1 year & over, percent, 2009-2013
84.9% 86.7%
Foreign born persons, percent, 2009-2013 20.2% 14.0%
Language other than English spoken at home, pct age 5+, 2009-2013
20.8% 16.7%
High school graduate or higher, percent of persons age 25+, 2009-2013
85.5% 88.7%
Bachelor's degree or higher, percent of persons age 25+, 2009-2013
29.8% 36.8%
Veterans, 2009-2013 61,842 427,068
Mean travel time to work (minutes), workers age 16+, 2009-2013
35.8 32
Housing units, 2014 330,516 2,422,194
Homeownership rate, 2009-2013 62.5% 67.6%
Housing units in multi-unit structures, percent, 2009-2013
32.5% 25.5%
Median value of owner-occupied housing units, 2009-2013
$269,800 $292,700
Households, 2009-2013 303,441 2,146,240
Persons per household, 2009-2013 2.81 2.65
Per capita money income in past 12 months (2013 dollars), 2009-2013
$32,344 $36,354
pg. 19
Median household income, 2009-2013 $73,623 $73,538
Persons below poverty level, percent, 2009-2013
9.4% 9.8%
Business QuickFacts Prince George's County Maryland
Private nonfarm establishments, 2013 14,281 135,421
Private nonfarm employment, 2013 243,260 2,182,260
Private nonfarm employment, percent change, 2012-2013
1.1% 1.4%
Nonemployer establishments, 2013 71,062 456,511
Total number of firms, 2007 72,759 528,112
Black-owned firms, percent, 2007 54.5% 19.3%
American Indian- and Alaska Native-owned firms, percent, 2007
0.9% 0.6%
Asian-owned firms, percent, 2007 6.2% 6.8%
Native Hawaiian and Other Pacific Islander-owned firms, percent, 2007
0.1% 0.1%
Hispanic-owned firms, percent, 2007 8.8% 4.9%
Women-owned firms, percent, 2007 37.8% 32.6%
Manufacturers shipments, 2007 ($1000) 2,504,675 41,456,097
Merchant wholesaler sales, 2007 ($1000) 10,449,816 51,276,797
Retail sales, 2007 ($1000) 9,209,683 75,664,186
Retail sales per capita, 2007 $11,060 $13,429
Accommodation and food services sales, 2007 ($1000)
1,205,022 10,758,428
Building permits, 2014 1,292 16,331
Geography QuickFacts Prince George's County Maryland
Land area in square miles, 2010 482.69 9,707.24
Persons per square mile, 2010 1,788.8 594.8
FIPS Code 33 24
Metropolitan or Micropolitan Statistical Area Washington-Arlington-Alexandria, DC-VA-MD-WV Metro Area
(a) Includes persons reporting only one race.
(b) Hispanics may be of any race, so also are included in applicable race categories.
FN: Footnote on this item for this area in place of data
NA: Not available
D: Suppressed to avoid disclosure of confidential information
X: Not applicable
S: Suppressed; does not meet publication standards
Z: Value greater than zero but less than half unit of measure shown
pg. 20
F: Fewer than 100 firms
Source: US Census Bureau State & County QuickFacts
o Source: http://quickfacts.census.gov/.
In Prince George’s County, the rates of detention and longer-term incarceration have remained high and have risen in the more than five years Judge Dawson has presided as the primary juvenile court judge, according to an analysis by the Maryland Department of Juvenile Services.
Commitments to institutional settings increased 55 percent from 2009 to 2014, while, statewide, commitments dropped an average of 5 percent over the same period and complaints filed with the Juvenile Services Department — an indicator of juvenile crime — decreased 63 percent.
Detentions of juveniles from Prince George’s County in secure facilities have risen 115 percent since 2005 — despite a slight decline since 2012 — though they have dropped 29 percent statewide. Only 12 percent of the juveniles were detained for committing new crimes. The rest were locked up for violations stemming from old offenses.
Average Daily Prince George’s County Juvenile Detention is up 115% since 2005.
Overall daily population of County youth committed by the juvenile court to out of home placement rose 70%, from 107 FY2009 to 182 in FY2014.
PG County Committed Youth Population
pg. 21
The rate of Prince George’s County youth in a juvenile committed placement increased 55% since FY2009.
Youth detained in Prince George’s County during the study period were disproportionately African American and male (91%).
Average length of stay: 29.9 days.
Types of Writs and Warrants: AWOL/Runaway: 42% Failure to Appear: 39% Failure to Comply with Court Order: 14% State Attorney Office Requested: 4%
Sources: http://www.djs.maryland.gov/.
c. What is the projected supply in your area of the products or services needed for your project?
Social Impact Organizations
o Benefit Corporations and Benefit LLCs formed as of August 20, 2014
Afghanistan First, Benefit LLC
Allies for African Diaspora
Development Group Benefit LLC
Allison Sosna Group, Benefit LLC
Americans All Benefit Corporation
Awesome Wonder Eco Enterprise,
Benefit, Inc.
Bagopolis Benefit LLC
BBWoof Rock Creek, Benefit
Corporation
Big City Farms Inc.
Blessed Coffee, Inc.
Brick House Title, LLC. A Benefit Limited
Liability Company
Cambio Co. Benefit Corporation
Change University Benefit Inc.
Changematters, Benefit LLC
Chesapeake Compost Works, Benefit
LLC
Clean Currents, Benefit LLC
Coconut Orchard Benefit Co.
ColbyCorp, A Benefit Corporation
Commons Foundation, Benefit LLC
Conscious Ventrue Lab, A Benefit
Corporation
Curious Iguana, Benefit Corporation
Curriculum Compass, Benefit LLC
Cyitek, Benefit LLC
DAANA Benefit Corporation
Deeper Green, Benefit LLC
Do Good, Benefit LLC
Dragonfly Solutions, Inc.
Elizabethtowne Benefit Corporation
Emory Knoll Farms, Inc.
Ethical Electric, Inc.
Fenton Street Market, Inc.
Forbidden Root, A Benefit LLC
Frank Hayward III Benefit Inc.
General Bueno, Benefit LLC
God’s Word Shall Always Rule, Benefit
LLC
Good-Thrift Benefit Corporation
HCB Secured Payment Systems, Benefit
LLC
Healthy Markets, Benefit LLC
Humane Strategies, Benefit LLC
Impact Trader, Benefit LLC
Income for Outcomes, A Benefit LLC
Innov8Energy, Benefit LLC
Jacob’s Ride, Benefit LLC
Jerome Canady Research Institute for
Advanced Sciences, Benefit LLC
Khan Mentors Benefits Inc.
Launchpad: Maryland, Benefit LLC
Mama Organic Market Benefit
Corporation
pg. 22
Maryland Integrity Benefit Inc.
Mason Consulting, Benefit LLC
Metty’s Limos, Benefit LLC
MF Fire, Benefit LLC
Mob Rules Games Benefit Corporation
MPower Sports and Recreation Benefit
LLC
My Great Green School, Benefit LLC
Neelamga & Community Benefit
Corporation
New Spin Robotics
Oliver-Grayson Holding Company,
Benefit LLC
Peacemakers Benefit Corporation
Perpetual Life Benefit LLC
Pivot Point Financial Group, Benefit LLC
Roundpeg Benefit LLC
Semana Tica Benefit Corporation
Small Small Benefit Co
SocioEconomic Benefit Corporation
Solarfire Engineering, Benefit LLC
Spirits in the Sky, Benefit LLC
Substance151, Benefit LLC
Sustainable Systems International
Benefit LLC
Sustainable Transportation Research
and Planning Organization Benefit LLC
Tag I’m It, Benefit LLC
Taharka Brothers Ice Cream
The Capital Consortium Benefit LLC
The Farmer’s Table, Benefit LLC
The Good Gifts Education Project,
Benefit LLC
Tigra Promotions, A Benefit Corporation
Triple Impact, Benefit LLC
UBenefit LLC
Venture Funding Network, A Benefit LLC
Vera Solutions, Benefit LLC
Verdant Benefit Corporation
Whole Social Benefit LLC
World Footprints Media, A Benefit LLC
Zarif Design, Benefit Corporation
Project Team o Intermediary: Infinite 8 Institute, L3C o Service Provider: College and Career Pathways, a 501(c)(3) o Upfront Investors: Angels, VCs, Banks, Insurance, Impact Funds o Outcome Payors: Local/National Philanthropic Partners o Secondary School Partner: Northwestern High School, Hyattsville, MD
o Financial Administrator: CFO Systems, LLC
o Contract Construction: Georgetown University Law
d. What competition exists in this market? Can you establish a market niche which will enable you to
compete effectively with others providing this product or service on the local, national, and
international level?
Competition o Local Competition
Maryland: In 2013, Social Impact Bond legislation was introduced to the Committee on Appropriations in the Maryland House of Delegates.
Mark Fisher, from the Maryland House of Delegates, summarized the critical findings of a Maryland state analysis of the potential of SIBs:
“In January of 2013, the Department of Legislative Services advised against SIBs for the following reasons: SIBs cause an increase in budgetary pressure, compared to direct program financing, due to the necessity of funding, contingent liabilities, and the added expense
pg. 23
features unique to SIBs. SIBs do not produce cost savings when outcomes are achieved, even under highly optimistic assumptions. SIBs could effectively exclude new providers and program types that do not have a well-established record of success with investors seeking to minimize risk. And SIBs potentially distort evidence used in policy decisions…. In conclusion, SIBs are well intended, but they unnecessarily blow bureaucracies. Moreover, they have the potential of leading to crony capitalism. And as the Maryland Department of Legislative Services concluded, they do not save money.”
Although now an analyst with the Texas Legislative Budget Board, Kyle McKay was one of the Maryland researchers who did that state’s analysis:
“For governments facing revenue constraints, social impact bonds may appear to be the silver bullet for social services. However, the benefits may be based largely on wishful thinking. Yet, the risks and costs to governments who are engaging in this type of model are real…Forgive me for stating the obvious here, but if a program funded by a social impact bond works, the government will have to pay for the program. Thus, governments should budget for this potential payment by appropriating funds in advance…Because the government may have to pay back investors with interest and a bonus, or a return on investment, and the mechanics of this model require a large number of consultants and intermediaries, the government must budget for the potential payment using an amount that is greater than the investors provide to the program. In Massachusetts, for example, the state is liable for up to $27 million in payments for their social impact bond pilot program. Yet, the investors are providing only $12 million in funding. A social impact bond will therefore add pressure to a cash-strapped budget….”
McKay’s trenchant analysis pointed out the limitations of single-project SIBs:
“Proponents argue that social impact bonds will result in decreased expenditures, and thus, cost savings to the state. There’s a basic mathematical problem with this claim, though. Pilot programs do not operate at a scale large enough to produce significant cost savings to the government. In Maryland, we used well-established, cost-estimation techniques with our state agencies to model a high-impact pilot program. The program came nowhere close to paying for itself, which is consistent with Rand’s finding that Peterborough [the first SIB from the UK] is too small to produce savings.”
Source: http://nonprofitquarterly.org/.
According to McKay’s research, a reentry program financed using a SIB would not produce sufficient benefits to justify the operational costs or risks of engaging in this form of high-stakes contracting. A social impact bond financed program would:
pg. 24
Increase budgetary pressure compared to direct financing, due to the necessity of funding contingent liabilities and the added expenses of features unique to SIBs;
Not produce cost savings when outcomes are achieved, even under highly optimistic assumptions;
Be unlikely to shift outcome risk; Possibly exclude new providers and program types that do
not have a well-established record of success through investors seeking to minimize risk; and
Potentially distort evidence used in policy decisions. The primary weakness of a SIB is in the complexity of its moving parts and the high-stakes nature of the financing mechanism. A SIB contract would only be advantageous to Maryland, if, at minimum, all of the following conditions were met:
Maryland could create a contract that guarantees investors and providers will continue program operations for the entire life of the contract, even when it is apparent after the program starts that the outcomes are unlikely to be achieved. 18 Department of Legislative Services
Nonprofits would continue service delivery when reimbursements are below costs or all parties could effectively and efficiently renegotiate the contract without jeopardizing the evaluation and value of the risk shifting to the government.
An independent program evaluation could definitively show that the program either did or did not cause the target outcomes to be achieved.
The additional costs inherent to the SIB financing mechanism would be sufficiently lower than the cost of providing the service, so as to justify the value of these services to shift the outcome risk.
A private market can be created for investing in unproven forms of reentry programs.
The department has the operational capacity to engage in a SIB pilot program while undertaking other organizational and policy changes.
There is sufficient State funding in the operating budget available to fund the contingent liabilities of a SIB program.
The value of shifting the risk for a negative outcome is monetarily large enough to the government to risk the added costs of the SIB and the potential for an investor ROI given a positive outcome. If any one of these conditions cannot be met, then a SIB model is not an ideal financing or contracting mechanism for reentry programs in Maryland. Given the difficulty of shifting the outcome risk and the countervailing incentives for many of these conditions, it is unlikely that these conditions will be met.
pg. 25
Source: Department of Legislative Services Office of Policy Analysis Annapolis, Maryland January 2013: http://works.bepress.com/kylemckay/2/.
o Office of STEM Initiatives, Division of Instruction, Maryland Department of Education
The Maryland State STEM Standards of Practice are process standards that define the combination of behaviors integrated with content that is expected of a STEM proficient student. The Maryland State STEM Standards of Practice Frameworks and Instructional Guides explain in detail the essential skills and knowledge of a STEM proficient student for grades K, 1-2, 3-5, 6-8, and 9-12.
Source: http://mdk12.msde.maryland.gov/.
Maryland State STEM Standards of Practice
1) Learn and Apply Rigorous Science, Technology, and Mathematics Context.
2) Integrate Science, Technology, Engineering, and Mathematics Context.
3) Integrate Science, Technology, Engineering, and Mathematics Context.
4) Engage in Inquiry. 5) Engage in Logical Reasoning 6) Collaborate as a STEM team. 7) Apply Technology Strategically.
Source: http://mdk12.msde.maryland.gov/.
National Competition o Social Impact Finance
Founded in January 2011, Social Finance US is a 501(c)(3)
nonprofit organization that is dedicated to mobilizing capital to
drive social progress. We believe that everyone deserves the
opportunity to thrive, and that social impact financing can play
a catalytic role in creating these opportunities.
The organization is dedicated to designing public-private-
nonprofit partnerships that tackle complex social challenges
such as poverty, crime, education, health, and workforce
success. As market intermediaries, we structure these
partnerships by aligning the unique interest of all stakeholders –
service recipients and providers, government and investors – to
create innovative social financing solutions. This work reflects
our commitment to driving social progress through a market-
based approach, as well as our deep experience in the
governmental, capital markets, social services, and philanthropy
sectors.
New York State reentry employment services
Massachusetts adult basic education
pg. 26
New York State maternal and child health
South Carolina maternal and child health
Connecticut child welfare
Fresno – demonstration project for asthma management
Feasibility study with BOA concerning veterans
Memphis – Feasibility of Early Childhood Initiatives
Mexico – Identifying opportunities with Inter-American
Development Bank
WK Kellog Foundation grantees – Providing for four grantees
Oklahoma – Substance Abuse
o Third Sector Capital
Third Sector is a 501(c)(3) nonprofit whose mission is to
accelerate America’s transition to a performance-driven social
sector. In order to realize this vision, Third Sector is making Pay
for Success a reality in the United States. Third Sector serves as
a trusted advisor that leads governments, high-performing
nonprofits, and funders in building collaborative initiatives that
re-write the book on how governments contract social services,
by funding programs that work, saving taxpayer dollars, and
measurably improving the lives of people most in need.
Alameda County Asthma PFS Initiative
Austin/Travis County Health and Human Services
County of Los Angeles Blueprint
County of Los Angeles Pay for Success Feasibility
Cuyahoga County Partnering for Family Success Program
First Five Los Angeles and Families Commission of Orange
County
Massachusetts Juvenile Justice PFS Initiative
National Council on Crime and Delinquency
New Haven Mental Health Outreach for Mothers Partnership
(“MOMS”)
New York State
Orange County Early Childhood
Oregon Early Childhood
Salt Lake City Early Childhood
Salt Lake County PFS Initiative
San Francisco City and County
Santa Clara County Acute Mental Health PFS
Santa Clara County Homelessness PFS
State of Illinois Dually Involved Youth PFS Project
State of Nevada, Clark County and Las Vegas Early Childhood
United Way of Bay Area
Virginia Pay for Success Council
pg. 27
Washington State Department of Early Learning and Thrive
Washington
Year Up
International Competition
o Social Impact Finance
Social Finance UK
Essex Social Impact Bond for children at the edge of
care
Supporting Torbay’s vulnerable children
Manchester Social Impact Bond for looked after
adolescents in residential care
Greater Mancester early years interventions
CVAA/Baker Tilly “It’s all about me” Adoption Social
Impact Bond
The Shared Lives Incubator
Salford Health Matters
Reconnections Social Impact Bond
End of Life Social Impact Bond
Peterborough Social Impact Bond
Mayor’s Office of Police and Crime to reduce drug-
related crime
Blackpool Housing Regeneration Company
Local Solutions Social Impact Bond
St. Basil’s Social Impact Bond
Depaul UK Social Impact Bond
Building Homes for Generation Rent
SCLG Private Rental Sector Investment Project
Greater London Rough Sleeping Social Impact Bond
Youth Engagement Fund
Teens and Toddlers Social Impact Bond
Energise Social Impact Bond
Gen Community
4 Children
Empower Community
East Lancs Moneyline/Moneyline Cymru
Jam Jar Accounts
Rhino Impact Bond Project
Sleeping Sickness in Uganda
Social Finance Isreal
Employment opportunities for the Ultra-orthodox
community
Employment opportunities for Arab citizens of Israel
Prisoner rehabilitation
pg. 28
Reducing development of type 2 diabetes in high-risk
pre-diabetics
Higher Education
Instiglio
Girls in India – Gender Equality
Youth in Mexico- Reduction in High School Dropout’s
Employment in Colombia – Workforce Development
Poverty in Burkina Faso – Poverty Reduction
Diabetes in Mexico – Improve Type 2 Diabetes
Poverty in Sub-Saharan Africa – Poverty Reduction
STEM in Colombia – Educational Development
Foster Care in Chile – Child Development
o Other International Activity
Australia - In March 2013 the New South Wales government
signed an A$7 million contract for the country’s first Social
Benefit Bond. The SIB will fund a parent and infant program
called Newpin, which is delivered by UnitingCare Burnside and
works intensively with struggling families to keep them safely
together. The capital was raised by June 2013. Also in June, The
Benevolent Society and Westpac Institutional Bank announced a
second New South Wales SBB meant to reduce the need for
out-of-home care for 400 families over a five-year period. The
AUS$10 million offering closed in October with just under 60
investors. Another SBB to reduce adult re-offending is still under
development.
Belgium - A SIB has been launched in Brussels, Belgium that
aims to tackle the dual problems of integration and
employment among recent migrants aged 18-29. The SIB will
employ "Duo for Job," a one-on-one coaching/mentoring
program designed to improve employment outcomes. Using a
matched control group experiment, the SIB will measure
whether the intervention increases employment when
compared to the public agencies which normally have
responsibilities for the target population. The 3-year, EUR
400,000 SIB aims to match 320 mentor-young person pairings.
Canada - In November 2012 the Government of Canada signaled
its interest in financial innovations, including SIBs, to drive
progress in facing social and economic challenges that defy easy
resolution. The government invited proposals from the business
and nonprofit communities to meet these objectives, and will
reveal the results of this research in mid-2013. In April 2013
Nova Scotia announced its plans to issue the first Canadian SIB.
India - In June 2014 the UBS Optimus Foundation, the Children’s
Investment Fund Foundation (CIFF), Educate Girls, and Instiglio
pg. 29
launched the world's first Development Impact Bond (DIB) in
education. The DIB—managed by nonprofit intermediary
Instiglio—is a three-year project aimed at addressing the
challenges of high dropout rates and poor education quality in
Rajasthan, India. UBS Optimus raised an upfront investment of
$238,000 to fund Educate Girls, a Rajasthan-based NGO.
Starting in June 2015, Educate Girls will work to retain 10,000
girls and improve results in basic English, Hindi, and math for
20,000 students in close to 150 of Rajasthan’s poorest
performing schools. CIFF will pay for the social outcomes
achieved by the program.
Mozambique - While the UK and Commonwealth countries are
in the forefront of overseas SIB development, other nations are
not long behind in pursuing the use of innovative social finance.
One project of special interest is in Mozambique, where a global
consulting firm is exploring the possibility of launching Africa’s
first SIB. The target is malaria, which causes nearly one-third of
hospital deaths in Mozambique and takes a punishing toll on
worker productivity, industry profitability, and quality of life.
Early discussions envision the government of Mozambique
investing $20 million and impact investors another $10 million
for preventative malaria-fighting work, based on the knowledge
that it costs much less to equip a household with bed nets and
to spray at-risk communities, than to treat sick people. The idea
is that mining companies will repay investors out of the cost and
efficiency savings they reap from a healthier and more
productive workforce.
Global Momentum is Growing - Numerous federal, state, and
local governments around the world, including India, Ireland,
Colombia, Scotland, and South Korea, are exploring the benefits
of Social Impact Bonds. Additionally, in Spring 2012 Social
Finance UK and the Center for Global Development launched
the Development Impact Bond Working Group, which aimed at
exploring the possibility of deploying SIBs toward development
goals.
Corporate Responsibility & Sustainability Programming (Fortune 2000)
o Example: IBM’s Corporate Service Corps, a corporate version of the
Peace Corps, to train and deploy thousands of IBM’s future leaders; the
IBM Smarter Cities Challenge, which is helping more than 100 cities
worldwide become more effective; and the Pathways in Technology
Early College High School (P-TECH).
Market Niche
Numerous federal, state,
and local governments
around the world, including
India, Ireland, Colombia,
Scotland, and South Korea,
are exploring the benefits of
Social Impact Bonds.
pg. 30
o Only Social Impact Bond in U.S. for STEM/STEAM;
o Only Social Impact Bond in Maryland
o Only Social Impact Bond concerning Drones Technology
o Target area provides maximum opportunity to create social impact;
o Summer onsite residency, creates a greater immersive experience;
e. Is the location of your proposed business or project likely to affect its success? If so, is the identified
site the most appropriate one available?
Location:
o The programming will be held at the University of Maryland, a previous
partner of the project service provider, College and Career Pathways.
o The University of Maryland is directly located within walking distance of
Northwestern High School, the partnering school for the pilot initiative,
and a pre-existing partner of College and Career Pathways.
Conclusion:
o As a result of the previous relationship with the Secondary and Post-
secondary host and partnering institutions, geographic proximity, and
programmatic design, are all factors leading to a high probability of
success.
III. Organizational Structure/Technical Issues
a. What organizational structure is right for you?
Maryland Limited Liability Company (LLC)
o The LLC will serve as the trust for project funds.
o Community Development Financial Institution (CDFI)
Will apply for CDFI certification in order to participate in CDFI
Fund programs that inject new sources of capital into
neighborhoods that lack access to financing.
b. Who will serve on the board of directors?
Board of Directors o Positions: 8 Seats
1 Youth
2 Parents
3 Organizational/Partner Representatives
1 Public School Board Member
1 Social Impact Investors Representative (Impact Investing
Representative)(Non-voting Member)
pg. 31
IV. Financial Issues
a. Start-up/Operational Costs Operational Budget
o Infinite 8 Institute, L3C is requesting $850,245 a year for the total of 3
years, serving a total of 50 participants per year, which will go toward
STEAM programming to be implemented by College and Career
Pathways. The proposed project budget is adequate to support the
planned scope of service. Additionally, the expenses are cost-effective
and reasonable in relation to the objectives and proposed outcomes of
the project. Below is the budget narrative:
PERSONNEL $322,839
Executive Director (Summer) 80%, 2 months FTE @ $5000
per month $10,667
Executive Director (School Year) 50%, 10 months FTE @$3333
per month $33,333
Project Director 100%, 12 months FTE @
$4,500 per month $54,144
Assistant Director 100%, 12 months FTE @
$3,500 per month $42,000
Program Assistant (Summer) 100%, 2 months PTE @ $2,000
per month $4,000
Program Assistant (School Year) 100% 10 month PTE @ $1,500
per month $15,000
Psychologist/Social Worker (Summer)
100% for 1 PTE @ $25 per
hour, 15 hours per week, 6
weeks
$2,250
Psychologist/Social Worker (Saturdays)
100% for 1 PTE @$25 per
hour, 5 hours per week, 40
weeks
$5,000
STEM Instructors (Summer)
100% for 5 PTEs @ $25 per
hour, 4 hours per week, 6
weeks
$3,000
STEM Instructors (Saturdays)
100% for 5 PTEs @$25 per
hour, 1 hour per week, 40
weeks
$3,125
pg. 32
Fine and Performing Arts Instructors
(Summer)
100% for 3 PTEs @$20 per
hour, 4 hours per week, 6
weeks
$1,440
Fine and Performing Arts Instructors
(Saturdays)
100% for 3 PTEs @$20 per
hour, 1 hour per week, 40
weeks
$2,400
YEP Instructor (Summer)
100% for 1 PTE @ $40 per
hour, 8 hours per week, 6
weeks
$1,920
YEP Instructor (Saturdays)
100% for 1 PTE @$40 per
hour, 1 hour per week, 40
weeks
$1,600
Academic Instructors (Summer)
100% for 7 PTEs @$20 per
hour, 4 hours per week, 6
weeks
$3,360
Academic Instructors (Saturdays)
100% for 7 PTEs @$20 per
hour, 1 hour per week, 40
weeks
$5,600
Summer Tutors/Counselors 100% for 6 weeks for 8 PTEs
@ $3500 $28,000
Tutors (Saturdays) 100% for 10 months at $15
per hour, 1 hour, 40 weeks $6,000
Infinite 8 Consultants $45,000
Evaluation Consultant $5,000
CFO Systems Financial Management $50,000
BENEFITS/Fringe $54,846
FICA Tax (7.65%) $272,839 x 7.65% $20,872
Unemployment Insurance (.94%) $272,839 x .94% $2,565
Workers Compensation Insurance
(.90%) $272,839 x .90% $2,456
Medical Insurance (10.66%) $140,144 x 10.66% $14,939
Pension/Retirement (10%) $140,144 x 10.00% $14,014
pg. 33
EQUIPMENT AND SUPPLIES $84,100
38 Laptops $41,800
50 Tablets $15,000
Software Microsoft Office ($38 x
50)/Apps $2,000
Apple Insurance $100 per device $8,800
Printer $300
Projector $200
Office Supplies Paper, ink, files, pens and
pencils, etc. $4,000
Stamps and Postage $500
Software STEM, Student Tracking,
SAT/ACT Prep $8,000
Mobile Phones and plans For Project Director and
Assistant Director $3,500
3D Printers (5 printers) $1000 each $5,000
OTHER EXPENSES $20,700
Office Space On-Campus office space for
the summer program $8,200
Staff Parking on Campus $5,000
Communication Systems Phone and Internet $3,000
Liability Insurance $3,500
Miscellaneous $1,000
PROGRAM EXPENSES $367,560
Room and Board for Summer Program $250,000
pg. 34
c. Revenue Projections Arrangement: The Micro-SIB will be a private contractual agreement between
multiple parties.
o Upfront Capital Requirements: I8I seeks to create a $2.5M model.
Academic Year Student Stipend 50 students @ $25 per month
x 8 months $10,000
Summer Institute Student Stipend 50 students @ $20 per week
for 6 weeks $6,000
Scholarship(s) $10,000
Student Internship Stipends 10 students at $2000 $20,000
Seed Money for One Participant $5,000
Classrooms/Studio Space on-campus
for summer courses $33,600
Instructional Materials $2,000
Student Tshirts $2,000
Snacks $750
Transportation for Field Trips/College
Tours $4,500
Lodging for out-of-state campus tour $5,000
Meals for college tours/field trips $3,000
Planners for Students $1,000
SAT/ACT Prep Software $4,000
Student Database $3,000
Staff Training Guidebooks $30 each at 31 $930
Minecraft $26 each $780
Drones $5,000
Miscellaneous $1,000
$850,045
pg. 35
o Investor Shares: $50k-$100k in capital per year, for three years, from
sophisticated investors at an interest rate of 5% plus a return of their
initial investment upon the achievement of verifiable outcomes.
o Total Outcome Payments: $2,677, 657 @ 100% Success
o Interest Rate Paid per Verified Outcome: 5%
o Profit per Successful Outcome: $2550.14
o Total Payment per Verifiable Outcome: $53,553.14
o Investment per beneficiary: $51,003
o Number of Beneficiaries: 50
o Capital Accrued: The project is actively engaging with interested and
sophisticated investors.
o Internal Accountability: CPP will have a full-time accountant on staff,
who will conduct an internal audit bi-annually provided by CFO Systems.
o External Accountability: As well as subjecting itself to a third party audit
annually. A non-voting board position will also be reserved for a liaison
representing the interest of the investors.
o Outcome Assessment: The outcomes will be also be assessed by an
independent third party intermediary.
o Outcome Payments Protocol: Outcome payments will be given to the
upfront investors upon verification of achieved outcomes by an
independent third party intermediary.
o Government Payments (optional): Non-applicable
d. Sourcing of Financing Prospective Investment Groups
o Social Impact Investing o Angel Investing
o Venture Capitalism
o Banking Institutions
o Community Investment: Community Reinvestment Act
o Philanthropy
o Secured Online Markets
o Sponsorships o Insurance Providers
e. Profitability Analysis
Costs/Cost-savings/Profits
o Maryland Juvenile Lock-up Costs Per Day.
$229 per day, per capita.
o Maryland Juvenile Lock-up Costs Annually.
$83,585 annually.
o PG Micro-SIB for STEM Total Cost-savings Annually.
(50) participants = $4,179,250 total.
o PG Micro-SIB for STEM 3-year Cost-savings.
Investment per
beneficiary: $51,003
pg. 36
(50) participants = $12,537,750 total.
Source: Justicepolicy.org.
o PG County Public Schools Average Spending Per Pupil = $14,813
annually.
At-Risk Programs: Maryland State Education Association – Thorton Plan
o Compensatory Program: The Compensatory program is designed to
provide extra support to students coming from backgrounds of poverty.
For every student who qualifies for FREE and Reduced Price Meals,
school systems receive an amount equal to 97% of their per pupil
foundation.
o Limited English Proficiency: For every student who is learning English as
a second language, school systems receive an amount equal to 99% of
their per pupil foundation.
o Special Education: For every student receiving special education
services, school systems receive an amount equal to 74% of their per
pupil foundation.
Source: Marylandeducators.org.
Maryland Students with Disabilities
o In 2016, it’s projected that Students with disabilities cost Maryland
$425,548,409.
o In 2016, it’s projected that the Federal Government will only pay back
$202,365,484.
o Maryland will take an estimated loss of $223,182, 925 in special education
costs.
o Maryland has a total of 866,169 total students state-wide.
o Maryland has a total of 102,882 special education students state-wide.
o Maryland is averaging payments of $4,136 per special education student.
o Maryland is being subsidized $1,966 per special education student.
Source: Maryland.gov.
PG County Special Education Student Enrollment/Expenditures
o 125,136 total enrollment.
o 14,440 total enrollment.
o Special Education represents 11.5% of the total student enrollment.
o Under Maryland’s Formula, it costs PG County $59,723,840 annually.
o Over 3 years, PG County would save $620,400 in special education
expenditures.
Source: princegeorgescountymd.gov.
Total Estimated Cost Savings
o Prevention of Juvenile Detention
Juvenile Detention Costs over 3 years per pupil = $250,775.
Juvenile Detention
Cost-savings over 3
years (50 students) =
$12,537,750.
Special Education
costs PG County
$59,723,840
annually.
pg. 37
Juvenile Detention Cost-savings over 3 years (50 students) =
$12,537,750.
o Special Education Matriculation
Special Education Cost-savings over 3 years per pupil = $12,408.
Special Education Cost-savings over 3 years (50 students) =
$620,400.
o Total Cost Savings from Juvenile Detention/Special Education
Total Cost Savings per pupil = $263,183.
Total Tax-payer Cost-savings = $13,158,150.
V. Conclusion
In the STEM fields there is not only a lack of minority presence, but there is also dwindling
interest among young Americans of any racial make-up. As a result, there is a dire need for
innovative initiatives that fill this gap. Additionally, as a growing divide of income inequality
become more prevalent, new ways to develop the skill sets of low-income students is more
important than ever. Our goal is simple: to produce students who are highly competitive in the
new global knowledge-based economy. Today, to be competitive on a global scale means a
minimal level of competency concerning the areas of Science, Technology, Engineering and
Math. Corporations have an interest in being able to engage with talented minority human
capital pools early in their development, and provide them with the skill sets in order to hire
them straight out of high school or college. Such an investment in capital as well as in future
workforces will always provide a strong return. As governments around the world become more
strapped for funding in much needed areas, it is up to the private and philanthropic sector to
engage in a way that they have never done so before, in order to achieve results that have never
been achieved. America was created to be a platform from which to excel, and this particular
project perfectly modernizes and incubates the great American experiment. It is our hope that
through this endeavor, that much is learned and realized, and that lives are changed and true
impact accomplished.
Prepared By: Ean Garrett, J.D. President/Founder Infinite 8 Institute, L3C [email protected] www.infinite8institute.com