Social Impact Investing Unleashes Financial Wave
“What you do makes a difference, and you have to decide what kind of difference you want to make.” – Jane Goodall
Driving impact with our investments that measurably improves our world is a strong objective for many of us, but it can also feel like a daunting goal. There’s also the perception that a choice must be made between doing good and doing well — between philanthropy and investment. The growing revolution of social impact investing is countering that viewpoint rather dramatically, and it’s being driven in part by the increasing financial power of women and millennial investors.
Greater Cincinnati Foundation (GCF) is helping to grow awareness of this important trend by sharing cutting-edge information with our partners, professional advisors and donors to increase impact for the good of our communities, nation and world. GCF has prioritized impact investments by setting aside a $10 million from our endowment, with $17.1 million deployed in 23 projects in our region since 2009. This year we are investing $1 million in a new Affordable Housing Impact Investment Pool (AHIIP), which will support a wide range of investments to create a more stable housing ecosystem key to advancing equity and opportunity for low-income families. AHIIP’s targeted fund size goal is $5 million, and GCF is inviting donors to partner with us to invest in affordable rental housing opportunities for our most vulnerable neighbors.
At a recent GCF symposium, various speakers offered insights and cited advantages for such impact investments — defined by the Global Impact Investing Network as “investments made into companies, organizations and funds with the intention of generating social and environmental impact alongside a financial return.”
The symposium’s keynote speaker, Jean Case, reported a comment she heard recently from a college student: “Why would you just settle for a financial return?” Case, Chairman of National Geographic Society, founder/CEO of the Case Foundation and a former AOL executive, sees significant societal and cultural shifts around unleashing capitalism — and the power of entrepreneurial-based strategies — as a force for good. In her book, “Be Fearless: 5 Principles for a Life of Breakthroughs and Purpose”, those strategies include: make a big bet; be bold, take risks; make failure matter; reach beyond your bubble; and let urgency conquer fear.
“It’s often urgency that will push people out of their comfort zones,” Case emphasized. “To make the big change we need, we need to feel a little uncomfortable, and because of that we try new things.” Impact investing is an important way we can strive for “something big,” a bold change. While awareness of impact investing — or a “marriage of finance and purpose,” as Case calls it — is growing, a 2018 UBS survey found that just 21 percent of U.S. investors were familiar with the term.
Along with focusing attention in impact investing, there’s a push to increasing reliable means of measuring social and environmental impacts, a vital piece for investors. The good news is that, as conscientious corporate governance — along with profits — is cited more frequently as a paramount concern for investors, there is growing evidence that socially responsible companies can outperform traditional models. Diverse, well-treated employee teams and environmentally sound supply chain efficiencies are demonstrably leading to stronger results.
Another significant draw of impact investing is that, rather than harnessing just the percentage of resources which investors devote to charitable giving, it positions a higher proportion of their assets to work toward socially significant outcomes. Impact investing also provides a vehicle for “recycling” those assets repeatedly. How that looks is different for the priorities of each investor — and the process of adopting that investment strategy is often incremental — but it can transform the influence and imprint of your investments.
For further information about impact investing and GCF’s Affordable Housing Impact Investment Pool, please contact your GCF philanthropic advisor.