1. Integrating Measurement into Wealth Creation Work Presented by Melissa Levy, Senior Associate, Yellow Wood Associates www.yellowwood.org

2. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 1.Measurement Vocabulary 2.What is Wealth? 3.The Wealth Creation Approach 4.Measuring Impacts on Wealth Outline of Presentation

3. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Measurement Vocabulary Part 1

4. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Measurement defines success. What is success? How would you know it if you saw it? Measurement creates a common language and helps keep resources focused on outcomes Measurement provides a feedback loop for continuous learning and improvement A measurement framework is a powerful planning tool Measurement provides real data and improves the quality of discourse and analysis Why Measure?

5. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Goal A goal is a condition that you wish to achieve. A goal is not an action. It is not about doing or making; it is about being. Achieving a goal requires a change in the way your organization, community, or value chain looks, feels, and acts. For example: Creating jobs is an activity; being a community in which everyone who wants a job has one is a goal. Goals are usually broadly stated. A well chosen goal should reflect what you really want, not what you think someone else, like a funder, wants to hear. Measurement Vocabulary

6. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Indicator An indicator is something that must be changed, or a condition that must be achieved, in order to claim that progress is being made toward a goal. Since goals are generally quite broad, there are many possible indicators that could suggest progress toward the goal. A discussion of indicators is a discussion of values — it reveals how different people interpret the goal. Indicators are most powerful when created and agreed upon within the context of the community or organization where they have real meaning to participants. Measurement Vocabulary

7. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Measure A measure provides a way to actually count or value the status of an indicator. For example, things may be measured in terms of “number of,” “percent of,” “quality of,” “frequency of,” or “rating of.” To track a measure over time, you must have a unit which defines what you are counting - inches, people, quarts, hours, etc., and a baseline which defines the value of the measure at some predetermined starting point in time. Measurement Vocabulary

8. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Assumption An assumption is a hypothesis about some aspect of the way the world works that we believe to be true. Assumptions can be difficult to recognize because they are often deeply imbedded in the way we think about the world. The tendency to treat our assumptions as unquestionably true allows them to shape our world and become barriers to innovation and creativity. For example, it was once assumed that an electrical signal could not travel more than 100 meters. If Marconi and others had not challenged that assumption, we wouldn’t have wireless communications, among many other things Measurement Vocabulary

9. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Intervention An intervention is something you DO in order to achieve your goal. The intervention should be defined broadly enough to involve people in a variety of different tasks and provide opportunities for participants who don’t normally work together to do so. Successful interventions build energy and produce spin-offs. They broaden our perspective and suggest new relationships and possibilities. Measurement Vocabulary

10. You Get What You Measure® Process

11. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 What is Wealth? Part 2

12. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Governments usually consider wealth as net worth, i.e., the value of physical and financial assets minus liabilities. How is wealth typically defined? Businesses may also consider the value of intellectual property, such as patents and copyrights, as part of their wealth. These definitions all focus on marketable wealth, that can be measured with a monetary value.

13. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Wealth connotes power for those that have it. How is wealth typically understood? Wealth is commonly understood as an attribute of individuals and families or communities comprised of “wealthy” individuals and families. We often overlook the individual and shared wealth the rest of us have.

14. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 The World Bank has estimated that “intangible capital” constitutes most of the capital of nations – esp. developed countries – accounting for most of the differences in economic performance. Are these definitions sufficient? WORLD BANK

15. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 We define wealth broadly as the stock of all assets, net of liabilities, that can contribute to the well-being of an individual or group. What is wealth? As a stock of assets, wealth is durable and can be accumulated or depleted through investment and consumption decisions. Wealth stocks generate flows of goods and services (“income” or “earnings”) that contribute to well-being, though not all of these flows can be monetized.

16. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Seven Forms of Wealth Individual capital Social capital Financial capital Natural capital Built capital Intellectual capital Using the wealth creation approach means being intentional about creating wealth that sticks. Political capital What do we mean by “Wealth?”

17. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 INCOME EXPENSE WEALTH Understand the difference between wealth and income Most economic development activity focuses on income (a flow) instead of on building wealth (a stock).

18. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 The Wealth Creation Approach Part 3

19. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 What is the Wealth Creation Approach? The Wealth Creation approach provides a framework for creating wealth that is rooted in rural parts of larger regions, including those of persistent poverty, by using a systems approach to: intentionally connect people, resources, and markets; make investments that create multiple forms of wealth; and develop new models of local ownership and control of investments and returns.

20. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 A value chain is a business model based on shared economic, social, and environmental values, in which buyers, processors, producers and others work together for mutual benefit to create value in response to market demand. Value chains

21. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Traditional Supply Chain Chain starts with producer supply Measured by net income produced Everyone is in it for him/herself Power determines who gets paid how much for their role Participants try to pass on costs to others within or outside of chain Tries to influence policy to create advantage and maximize short-term income Wealth Creation Value Chain Chain starts with consumer demand Measured by wealth created/retained Everyone is in it together Intentionally balances mutual benefit of all in chain All known costs are considered and addressed Tries to influence policy to level the playing field and maximize long-term and widely shared wealth Value Chains vs. Supply Chains

22. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Results Supply Chain Value Chain Individual CapitalSocial CapitalIntellectual CapitalNatural CapitalBuilt CapitalPolitical CapitalFinancial Capital The Wealth Creation Approach

23. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Value chain construction with partners in Central Appalachia Energy efficient housing, energy efficiency, food, forestry Value chain exploration and selected construction grants with partners in the Alabama Black Belt and Mid-South Renewable energy, investment, forestry, food, community-based tourism Value chain exploration grants in the Lower Rio Grande Valley region in Texas Green housing/neighborhoods, literacy Where are we working on the ground?

24. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Measuring Impacts on Wealth Part 4

25. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 1.Framing measures create context establish meaningful targets 2.Measures of progress relate to strategic interventions capture behavioral changes Two types of measures

26. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 We measure the baseline conditions related to how the suite of interventions impact the forms of wealth. This works best if the interventions represent leverage points in the system. You Get What You Measure® can be used to identify goals and leverage points in the system. Baseline measures

27. Type of Wealth Strategy Individual How will your strategy impact the stock of skills and physical and mental healthiness of people in a region? Social How will your strategy impact the stock of trust, relationships, and networks that support civil society? Intellectual How will your strategy impact the stock of knowledge, innovation and creativity? Natural How will your strategy impact the stock of unimpaired environmental assets in a region? Built How will your strategy impact the stock of fully functioning constructed infrastructure? Political How will your strategy impact the stock of power and goodwill held by individuals, groups, and/or organizations? Financial How will your strategy impact the stock of unencumbered monetary assets at the individual and community level? Wealth matrix

28. TypeInterventionIndicatorMeasureBaselineMethod Individual Social Intellectual Natural Built Financial Political

29. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Explore how each intervention impacts each of the 7 forms of wealth. For each form of wealth, discuss which intervention has the strongest impact. Determine the strongest 1-2 measures for each form of wealth. Measurement with Grantees

30. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Determining Strongest Measures Results Supply Chain Value Chain Individual CapitalSocial CapitalIntellectual CapitalNatural CapitalBuilt CapitalPolitical CapitalFinancial Capital

31. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 In the previous example: All interventions touch multiple forms of capital. The blue intervention impacts Individual and Social Capital most strongly. The orange intervention only impacts Financial Capital. Determining Strongest Measures

32. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Grantees measure baselines within six months of starting their grants. Grantees re-measure and reflect at the end of year 2. Measurement with Grantees

33. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Rural Action: 2010 Data on Certified Lands Framing Measures Intervention: Create a certification center for the region Progress Measure: Number of certified parcel owners engaged in value chain over time

34. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 CAN Framing Measures Tier 1 – new farm business or new to wholesale, supplemental income, wholesale revenue of less than $10,000 annually Tier 2 – expanding or small but established farm business, a few employees, balance of direct and local wholesale, wholesale revenue of $10,000 - $100,000 annually Tier 3 – medium to large farm business, significant number of employees, regional wholesale, revenue over $100,000 annually

35. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Central Appalachian Network Indicator: more and improved best practices skills by farm and food producers Measures: number of producers selling into wholesale value chains, amount of sales, relationships between producers and buyers Framing measure: number of producers selling into wholesale value chains and amount of sales at a greater scale Measuring Individual Capital

36. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Measuring Individual Capital Central Appalachian Network

37. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Central Appalachian Network Indicator: increased acreage of sustainable production going into value chains Measures: acreage of sustainable production contributing to value chains, degree of sustainability Framing measures: acreage of sustainable production in the region, acreage of prime agricultural soils. Measuring Natural Capital

38. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Central Appalachian Network Measuring Natural Capital

39. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Rural Action Intervention: Growth of certified acres as a result of the Appalachian Carbon Partnership. Indicator: Improved forest ecosystem health. Measure: Number of landowners actively managing and acreage being actively managed. Baseline Measure: Number of certified acres in region. Measuring Natural Capital

40. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 Rural Action Framing Measure

41. Yellow Wood Associates, Inc. www.yellowwood.org © 2012 This process is not designed to be extractive. This way of measuring should help groups do their work more effectively. Measurement does not just happen; it needs to be intentional and well considered. Lessons

42. Acknowledgements Thank you to CAN and Rural Action for their contributions to this presentation. Learn more about their work on their websites: CAN: http://www.cannetwork.org/http://www.cannetwork.org/ Rural Action: http://ruralaction.org/http://ruralaction.org/ 228 North Main Street, St. Albans, VT 05478 ph: 802-524-6141 fx: 802-524-6643

43. For more information On wealth creation: Visit www.yellowwood.org/wealthcreation.aspxwww.yellowwood.org/wealthcreation.aspx for archival reports on the Wealth Creation Approach Visit www.CreatingRuralWealth.orgwww.CreatingRuralWealth.org for up-to-date descriptions of the wealth creation work Contact Melissa Levy at melissa@yellowwood.org, 802- 524-6141 for more information about the wealth creation approachmelissa@yellowwood.org On measurement: Visit www.yellowwood.org/you_get_what_you_measure.aspxwww.yellowwood.org/you_get_what_you_measure.aspx Contact Melissa Levy, melissa@yellowwood.org.melissa@yellowwood.org 228 North Main Street, St. Albans, VT 05478 ph: 802-524-6141 fx: 802-524-6643