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Foundation leaders and philanthropists who have place-focused missions and who are making or exploring impact investments are increasingly asking the question, “What does it take to seed, nurture, and grow more investment in place?”
The answer lies in building a diverse set of community connections, sharing learning opportunities, understanding community needs, and identifying the resources to deploy for impact. That’s not easy, so people are increasingly working together.
Place-based impact investments are made to solve for social and environmental challenges unique to certain places, while also producing some financial return, even if that’s only a return of the initial capital. For example, an impact investment can be made with loans, guarantees, or equity investments to accelerate or draw technology businesses into a disinvested community or build artist live-work housing. Such projects can spur a positive ripple effect through a place and anchor broader initiatives.
Building deep and long-term relationships across sectors (public, private, nonprofit) creates environments where more impact capital flows to projects and enterprises, usually alongside grant dollars and public dollars. This kind of network is sometimes called an “impact investing ecosystem.”
These ecosystems frequently bridge diverse groups and foundations’ mission-first point of view and convening capacity makes them natural brokers for bringing a spectrum of talent and capital to the table to solve social and environmental challenges.
Take San Diego, for example, where a collective of people and organizations have set out on a 10-year plan to create and elevate new economic opportunities for those who live there. San Diego Grantmakers (SDG) took on the role of anchoring the work, inviting various contributors living and working in that city, and bringing together government leaders alongside foundations, corporations, nonprofits and other community members at a convening, Place-Based Impact Investing in Action. Together they were able to identify and articulate shared priorities: ending homelessness, providing access to healthy, fresh food to more people, developing cost effective renewable energy sources and driving more economic inclusion, particularly among women and people of color.
One investment opportunity resulting from that collaborative work is through Yes In God’s Back Yard (YIGBY), which seeks to develop 3,000 units of affordable housing on under-utilized property owned by some faith communities over the next five years. SDG member, entrepreneur and GoFundMe co-founder Andy Ballester is engaged alongside local housing and homelessness leaders and SDG. BQuestFoundation—Andy and Kara Ballester’s family foundation—has committed both grant support and a lead investment in a new loan fund to launch the effort. Various types of partners with different types of capital are providing their own unique contributions to the effort.
This type of place-based coordination is happening nation-wide. Each ecosystem is as varied as its geography. Community foundations, private foundations and service providers are for example providing more access to healthy food in Michigan, seeding diverse small businesses in Baltimore, and increasing affordable housing in Washington. The common thread for success in place-based collaboration is consistently involved philanthropy leaders stepping up with urgency and working side by side with unlikely partners.
If you or your foundation is interested in leading or joining a place-based impact investing ecosystem, consider these questions as you begin defining your next steps:
- Understand the unique role you or your organization can take in an impact investing ecosystem that aligns to your mission goals. Ask yourself, "What can I or my organization do that others cannot?" and find complementary partners.
- Recognize the imperatives that stem from the desires of the communities where the investment is intended. Ask yourself, “Who needs to be invited to lead these conversations about community and impact who isn’t yet?” and reach out.
- Consider the gap between the problems you are trying to solve and the capital available. Ask yourself, “What portion of my or my organization’s assets isn’t doing its mission work yet?” and explore how, beginning with the resources below.
Mission Investors Exchange invites you to visit our place-based impact investing resource center and begin writing your own future for impact investing in place. In addition, consider these options:
- Urban Institute research on place-based impact investing
- Consider learning more about impact investing through an Impact Investing Circle, either through your local community foundation or led by … you!
By Melanie Audette, Senior Vice President at Mission Investors Exchange.