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Giving Compass' Take:
• This post from Social Capital Markets gives an overview of the impact investing landscape, in particular how philanthropy can play critical roles as both investor and field builder.
• Which evidence-based practices should the sector be cultivating in this space? What would be the obstacles for more collaborations between philanthropists and investors?
Impact investing has the attention of institutional investors — driven largely by client demand. Over the last three years, BlackRock, Goldman Sachs, Bain Capital, and TPG are just a few who have made significant moves towards integrating impact investing into their asset management offerings.
Across the financial industry, the number of SRI (socially responsible investing) mutual funds and ETFs has grown rapidly. MSCI and Morningstar — leading providers of independent investment research — have also released ESG indices and ratings to inform investment decisions. On the whole, this is a good thing.
Four Ways Philanthropy Plays a Critical, Unique Role in Impact Investing
1. As investment dollars. While philanthropy may not be able to run a sophisticated discounted cash flow valuation or know how to pursue top quartile venture returns, it does have completely risk-free capital to deploy … every grant is a guaranteed 100% financial loss.
2. As infrastructure builders. Philanthropy continues building critical impact investing infrastructure: associations, benchmarks, market-mechanisms, regulation, and research.
3. As impact translators. For over a century, philanthropy has been in the business of impact evaluation.
4. As thoughtful educators. Philanthropy can serve as educator through thought leadership, convenings, and training. This can take the form of leading content creation, facilitating seminars with interested investors and advisors, planning thoughtful gatherings and conferences, and conducting interviews to give realistic voice to experienced practitioners.
Read the full article on philanthropy's role in impact investing by Patrick Briaud at Social Capital Markets.