Each week, the Erb Institute shares a collection of news and updates regarding business sustainability. This month, the Erb Institute blog and social media are focusing on an emerging industry, impact investing. Impact investments are investments made into companies, organizations and funds with the goal of generating financial returns as well as social and environmental impact.
Sustainable Business News – 3/10/2018 – 3/16/2018
“Donor-advised funds have long been seen as effective philanthropic vehicles administered by public charities. Here’s another way to look at these tax-preferred investment products that are designed to do good: an untapped pool of assets that is naturally aligned with the impact investing approach.”
“As an entrepreneur, I made my living generating, testing and collaborating on good ideas. As an investor and philanthropist, I now spend my days seeking, evaluating and collaborating with others on ventures, and I have been surprised at finding great ideas in unexpected places — outside Silicon Valley, outside Wall Street, and even outside the private sector.”
“The social enterprise sector is ripe for realizing the multiplier effects of women’s leadership: Women are more likely to hire other women, to focus on women beneficiaries, and to pass on their gains to female family members.
That’s especially true in India, where nearly 25 percent of social enterprises are led by women. By comparison, less than 9 percent of India’s commercial small and medium enterprises have a woman at the helm.”
“The fintech company Liquidnet hosted the panel,“Demystifying Impact Investing,” at its New York offices, in collaboration with the Tristate Area Africa Funders Network. Brian Trelstad of Bridges Fund Management set the stage, explaining impact investing has grown at the crossroads of two distinct traditions — philanthropy and responsible investing.
“It’s very different from grantmaking, because with grantmaking there’s no expectation of return of capital, at all,” Trelstad said. “The harder definition is, how is it different from a traditional private equity investment, where jobs are created? That’s where the ambiguity lives.”
“This week, it’s the Nathan Cummings Foundation making a move. And it’s going all in, pledging to “align 100 percent of our nearly half-billion dollar endowment with our mission.” NCF is the largest foundation to take this step, and it follows most directly in the footsteps of the F.B. Heron Foundation, which made the shift to 100 percent alignment under the leadership of Clara Miller. In contrast, the other major foundations engaged in impact investing—an increasingly long list—have mostly committed only small portions of their endowments to this approach.”
“For more than three decades, a small-but-growing sector of mission-driven organizations known as Community Development Financial Institutions (CDFIs) have been at the forefront of creating equity and opportunity in underinvested communities. Unfortunately, as inequality gaps continue to widen across the United States, CDFIs are struggling to scale their work. Limited funding requires that that they, and other nonprofit organizations, make tough choices about where to focus their efforts.”
“Wealth managers increasingly are responding to a younger generation committed to making social and environmental change through investing as well as philanthropy, guiding them on how to get more directly involved in philanthropic work as well as steering them to viable impact investing opportunities.
They have to do this, and more, given the strong desire of many ultra-high net worth millennials and Generation X-ers, to focus on investments that meet environmental, social and governance, or ESG, standards, according to a 2017 study from OppenheimerFunds and Campden Research. The study found, for instance, that 33% of wealthy millennials, ages 22-37, intend to incorporate ESG standards into their family’s investment portfolio once in charge.”