[syndicated from my blog at blogs.ft.com/mba-blog]
One of the first tasks I was asked to tackle for the California Fisheries Fund was the challenge of measuring the performance of the fund and its mission impact. Not in strictly financial terms, either. The goals of the CFF are three-fold:
Increase conservation measures supporting commercial fish stocks and their natural habitats.
Help revitalise California’s coastal fishing communities after decades of economic decline.
Assist fishery related businesses to make the transition from open-access to a catch-share based management regime.
Capitalised currently at $5M, you’ll notice something missing from those goals: nothing about earning the investors a financial return. While the goal of the fund is to remain solvent and self-supporting, this is a mission-driven, financial instrument, providing low-cost capital to higher risk businesses in need.
And nothing quite like it exists anywhere else in the world. So where was I going to begin? Not knowing what I didn’t know, my first step was to examine the existing state of the fund and I dived into the loan files of our current portfolio of borrowers. I wanted to know what the businesses we were helping were all about. This meant looking through financial statements, re-examining the business plans presented with each application and building a simple model to understand the various dynamic interactions at play within the fishery: economic, environmental, and social.
Not a simple task, but a mental exercise I found very helpful as I then took a step back and began the thought experiment of examining the fund fully deployed:
What are the impact goals we want to see? What actions are we as a fund taking? What are the intermediate outcomes that might be measurable? At what cost? Where will the data come from? Who is going to be doing all of this measuring in the future? As a start-up, the CFF still has only two full-time employees plus two interns for the summer. That is not a lot of staff to go around.
So what can we hope to do? Analyse the system and then simplify and standardise a proposed group of metrics. I don’t have the answer yet, but am making steady progress. Working with a group of PhDs and other fishery experts, we are taking an innovative approach to this unique challenge and focusing on what should be measured and can be measured. Business as usual for the EDF.