Part one in a multi-part series.
With nearly a quarter of its population at or below the poverty line, Philadelphia is the poorest large city in the U.S. Almost one-third of Black families in Philadelphia live in poverty compared with less than half that rate among whites. And, the city is facing a gun violence crisis and high incarceration rate.
While government and philanthropy are necessary tools to help right the ship, one organization believes that investments in the local economy can help solve the intractable problems Philadelphia is facing.
ImpactPHL works with investors, foundations, and businesses to help them align their financial assets with their values – using a local lens. In a time when the number of community banks is decreasing and people are unknowingly investing in harmful practices like fossil fuel companies and private prisons, ImpactPHL is working to elevate impact investments that support Philadelphia’s economy instead.
“While you’re donating, volunteering, protesting, and voting your values, here’s a blind spot,” said Cory Donovan, executive director of ImpactPHL. “Is your money actually invested in things that are causing Philadelphia’s problems?”
The Summer of Funds: Investing at a Local Level
This past summer, ImpactPHL tracked at least eight new investment funds that focus on new ways to align capital for racial and social justice in Philadelphia. Because these types of opportunities aren’t available on traditional investing platforms, many people simply don’t know how to invest locally. Enter ImpactPHL.
By publishing an index of impact investments focused on the Greater Philadelphia area, ImpactPHL highlights opportunities for investors to put their capital to work in their own backyards, while elevating Black- or Brown-led enterprises at the same time. Some of the issues being tackled include:
Real Estate Barriers
Although redlining ended decades ago, the impacts are still felt in Philadelphia (and across the country) today. According to the city controller, redlined neighborhoods experience the highest levels of violence and are the most disadvantaged in Philadelphia.
In response, one of the core investment types curated by ImpactPHL is inclusive real estate. Funds focus on using real estate to tackle intergenerational poverty while others create neighborhood trusts to protect and preserve affordability and harness neighborhood power.
Philadelphia has the second highest rate of incarceration in the country (when including people on probation and parole), but ImpactPHL has identified a fund that moves money toward solutions that address mass incarceration and the historic racial inequities and extractive business practices within the prison system.
As a determinant of health, poverty dictates accessibility to healthy food and quality healthcare. ImpactPHL’s index features a number of social enterprises and start-up investment opportunities that focus on connecting people to food from local farms and at-home personalized medical services, among other things.
“Our north star is getting intentional dollars flowing into local impact investment opportunities,” Donovan said.
The Steroid, Not the Muscle
For the last five years, Donovan has been working to dismantle investor stumbling blocks and motivate curious investors to take the next steps toward an impact economy.
For example, Donovan works to debunk the common assumption that all impact investments will yield a lower return than traditional investments.
“If you are a foundation, you have a mission and if your money is doing something that doesn’t meet that mission, don’t you have a responsibility … to use all your assets and what’s within your power to actually meet that mission?” Donovan said. “If you could potentially earn as much money or potentially more with a mission-aligned or impact investment and you haven’t explored it, are you doing your fiduciary responsibility?”
Acting as the “steroid, not the muscle,” ImpactPHL focuses on helping investors identify opportunities, providing resources, and connecting them to peers already in this space. The result? Money is moving toward inclusive and sustainable solutions.
“Within a matter of weeks or months, several high net worth individuals [we worked with] went from not knowing much about this space to mobilizing millions of dollars,” Donovan said.
Although ImpactPHL’s focus is solely on the Philadelphia area, investors across the country who are interested in issues like environment, racial equity, and social justice can consider how to locally invest their dollars in solutions — instead of funneling capital through Wall Street, which could be creating harm at a local level.
“Many people I talk to aren’t aware that they can invest their money locally to create positive outcomes in their own backyard,” Donovan said “It’s not really how our financial system works. But that’s actually what people want. ImpactPHL is focused on connecting the dots to align local capital with local outcomes. If you’re a wealthy person with a family office who sits on the board of a foundation or endowment, you have multiple levers to pull.”
To learn more about impact investing, start here:
- Mission Investors Exchange
- Global Impact Investing Network
- Intentional Endowments Network
- SOCAP Global
Original contribution by Jen Jope, Editor-in-Chief, Giving Compass.
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