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Can your philanthropic capital be aligned with your grantmaking? Can your philanthropy funds be recycled over and over? Can your investment portfolio do good while also providing a healthy financial return? Can your favorite “social benefit” organizations be financially sustainable after your support ends?
This is the promise made by the field of “impact investing.” But do you really have that choice? And if so, how do you put it into practice? Where do you begin? Who do you talk to? What resources should you use? What could you invest in? In short, what is the reality of actually doing impact investing on the ground today?
These are the fundamental questions that drove us to write this guide.
The target audiences for this guide are philanthropically minded individuals, families and foundations who are intrigued with the opportunities presented through impact investing, but who don’t quite know how to get started. It is for people who are passionate and pragmatic about tackling tough problems and who are vigilantly looking for ways to magnify their impact and invest more capital in the issues and communities they care about. These are the type of people that The Philanthropic Initiative (TPI) works with through our advisory services and peer networks. This is a basic guide for navigating the territory, developing your goals and finding the partners and resources that can help you take action. It is not a technical guide to help you develop an investment policy, construct a portfolio, vet deals and funds, negotiate terms or monitor a fund. However, through TPI’s network of expert impact investing resources, we would be happy to help you take those important next steps too.
The bottom line is that you can become an impact investor today. You can make a single investment, a portfolio of investments or you can develop an integrated strategy for all your financial resources. You can align your financial assets with your social goals, and in so doing, help for-profit and non-profit social benefit organizations become stronger and more sustainable. It will take thinking in new ways, building new capacities and forging new types of partnerships.
Yet, despite all the hype – and there is plenty – it is still tricky to navigate through the rhetoric and confidently make impact investments that meet your goals. The language is confusing; there is not a deep track record; there are not enough experienced advisors, intermediaries or “investment ready” opportunities; minimum investment requirements are often prohibitively high; and frameworks for analyzing these investment opportunities and measuring their social impact are imperfect. In many sectors and geographies, it is not possible to find impact investing deals and so you may need to help create them.
But if you want to join a group of pioneers who are tackling these challenges and strengthen the field of impact investing, your passions, ideas and actions can help part the way! The opportunity to both bring new tools and dramatically expand the pool of capital directed to positive social change is enormously exciting for all of us who care about making a difference.
Read the full article about impact investing at The Philanthropic Initiative.