Giving Compass' Take:

• Laura Tomasko et al. offer guidance for advocates of impact investing on engaging policymakers and strengthening government support.

• How does impact investing compare to philanthropy? How might engaging in both activities act as a way to increase your overall positive impact?

• Read about how to get started with impact investing. 

Periods of crisis remind us that our economic system often prioritizes short-term financial returns that concentrate wealth over sustainable and inclusive growth that addresses long-standing inequities. The COVID-19 pandemic and the movement for racial justice have shined a spotlight on stark inequities that are simultaneously acute and chronic. Impact investing, which can catalyze social and environmental impact for long-term structural change, is one way to address these inequities. By strengthening and strategically using policy advocacy and engagement skills, impact investing leaders can work with the federal government to advance the common good.

By working with elected officials, political appointees, and members of the civil service, advocates of impact investing play a key role in the development and implementation of policy and government programs across the legislative and executive branches. Though much federal advocacy focuses on getting Congress to pass legislation, engagement with federal agencies and White House offices can inform executive actions, regulations, and guidance, as well as government grant, loan, and technical assistance programs. Federal policy changes (both big and small) can significantly influence the impact investing field.

A recent study from the Global Impact Investing Network (GIIN) found that only 14 percent of impact investors believed there had been significant progress on government support for the market over the previous decade (Hand et al. 2020). Although this suggests an opportunity for the field to better engage legislative and executive policymakers to improve the social utility of markets, advocates of impact investing face several barriers in doing so. The field’s diversity—of actors, activities, sectors, and goals— makes it difficult to adopt clear, consistent, and compelling messaging that connects with policymakers. In addition, not all field leaders see the value of policy engagement. Some consider public policy a negatively disruptive force rather than a potentially positive one, whereas others view policy in narrow terms (e.g., specific tax subsidies), missing bigger opportunities to influence policy that supports impact investing.

With this context in mind, we wrote this brief to help leaders in the impact investing field and people supporting them better understand and engage in the policymaking process and champion impact investing to federal legislative and executive policymakers. Although we focus on engagement with federal policymakers, state and local policymakers often affect this field, and many of the lessons we share can be adapted to state and local contexts.

The insights in this brief come from a review of literature including news articles, policy briefs, and industry documents; a convening facilitated by the authors with field leaders; conversations with advocates and practitioners; and the authors’ experiences in public policy advising and advancing impact investing public policy in federal government. We do not prescribe exact language that advocates should use to communicate their policy objectives, which will be diverse and relevant to a specific time. Nor do we make the case to champion any one policy or policy action over another. Rather, we focus on making the overall case for policy engagement and recommend strategies and approaches that champions can use to advocate more effectively for a supportive public policy environment that prioritizes social and environmental outcomes.