Chris CardonaLearning: The “Third Heat” of Impact Investing—and All Grantmaking?

By: Chris Cardona In: 2013 Annual Conference| Impact Investing| Philanthropy

9 Apr 2013

On the TV show 30 Rock, Alec Baldwin’s character is a GE/NBC executive in charge of “TV and microwave programming.” He has to turn around the show-within-a-show led by Tina Fey’s character and invent a new kind of oven. He comes up with a “trivection” oven that combines radiant, microwave, and convection heat, and hires for the show Tracy Morgan’s off-the-wall character, who declares on the air, “I am the third heat!!”

Impact investing may have discovered its third heat. At Monday’s lunch plenary, Sterling Speirn shared the Kellogg Foundation’s framework of assessing impact investment opportunities. In addition to a social return and a financial return, Kellogg expects a learning return. When it invested in Revolution Foods, a social enterprise that provides schools with healthy meals to serve to kids, it helped increase the number of meals provided, got a financial return of 28 percent in eight months, and learned what kinds of conditions need to be in place for an effective school partnership to flourish. The learning returns then get “reinvested” to inform Kellogg’s grant work on sustainable food systems.

What’s intriguing about this framework is that it applies not just to impact investing, but to all foundation investments: grants, loans, PRIs, etc. For all of them, you can ask three questions: What is our expected social return? What is our expected financial return? What is our expected learning return?

It just so happens that the expectation of a direct financial return on grants is negative. You don’t expect to get any of the money back as a funder. You expect it to be spent on what’s been agreed to and to achieve the results you want, but not to get the money back. It’s a fixed negative financial return, one you accept in exchange for the social returns.

But you can also get the third heat from grants: learning returns. What do effective practices look like in the field? What components of the programs you support generate the direct outcomes that most interest the organization and you? What is the state of the field? How well is the community engaged in the programs and organizations you’re supporting? Ideally, these learning goals flow directly from the impact goals you’ve set as an organization. Learning returns inform social returns, and vice versa.

Do you think explicitly about what your expected learning returns are from your grants? Would you structure, monitor, or evaluate your grants differently if you asked of each one, “What is our learning return?”

Chris Cardona is associate director of philanthropy at TCC Group. He blogs about philanthropy and democracy at

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