In our latest post on impact investing in Oregon, we discuss Ecotrust’s hybrid nonprofit/for-profit approach to impact investing with their Director of Investment Strategy, Nathan Kadish. Read our other posts in the series to learn about the definitions we use and how other local actors are shaping the space:
- Impact Investing defined; Meyer Memorial Trust’s Invest Oregon
- Willamette University’s proposed student-led impact investment fund
- The NW Social Venture Fund
Interview with Nathan Kadish, Director of Investment Strategy at Ecotrust
Impact Entrepreneurs: How would you describe Ecotrust in a single tweet?
Nathan Kadish: Ecotrust is building a #neweconomy that restores nature and invests in people. www.ecotrust.org
Would you explain the structure and approach of both the Natural Capital Fund and Ecotrust Forest Management?
At Ecotrust, we want to meaningfully contribute to the building of a resilient regional economy that creates wellbeing for people and place. A critical component of working toward this vision is our ability to creatively deploy capital. The Natural Capital Fund is Ecotrust’s working endowment. We use the term ‘working’ because it’s capital hard at work growing businesses in the bioregion. Our goal is to invest our fund in one of two ways: Either we incubate business ideas within Ecotrust’s nonprofit programs that we can transition into for-profit businesses and investment opportunities, such as Ecotrust Forest Management, or we seek deals outside Ecotrust that are aligned with our mission.
Fifteen years ago, in the process of renovating the Natural Capital Center, Ecotrust encountered an unexpected challenge: even in the heart of the most productive temperate forest ecosystem on Earth, there were few sources of sustainably harvested timber products. Instead, we found single-species tree farms subject to cycles of monoculture, growth, asset liquidation (clearcut), and sale — a pattern of churn whose deleterious impacts are found in impoverished landscapes and communities that depend on them, and in the intractable conflict between the timber industry and environmentalists over harvest plans on public land. Over the next six years, we applied $1.2M in philanthropic support to the articulation of the problem, analysis of its origins, exploration of its social and economic drivers, conceptualization of an alternative, and establishment of a mechanism for its actualization. That mechanism is Ecotrust Forest Management, Inc (EFM) — the world’s first Forest Investment Management Organization (FIMO). Catalyzed by a seed investment from the Natural Capital Fund, EFM manages over 13,000 acres of forestland under FSC certified management. It delivers both wood products and aims to monetize significant ecological outcomes in terms of carbon storage, salmon habitat restoration, benefits to tribes, and open access to our forestlands for recreation.
What are some past deals that exemplify Ecotrust’s investment strategy?
In addition to Ecotrust Forests, the Natural Capital Center (also known as the Ecotrust Building) is a strong example of Ecotrust’s investment strategy. We used the Natural Capital Fund to finance the building, which now houses other leading social enterprises demonstrating new ways of living and doing business. The Natural Capital Center is a for-profit enterprise, earning revenue from leasing office space as well as events. A pioneer in the green building space, the Natural Capital Center has seen over 5 million visitors walk through and hosts more than 500 events a year.
How do you measure the social and environmental impacts of your investments?
We have a team of economists on staff at Ecotrust who are able to help quantify impact, but as anyone working in this space knows, calculating social and environmental return on investment (SROI and EROI) is always challenging. On the environmental side, we often look at impacts on carbon, acres of habitat, and water/air quality as metrics. For social considerations, we think about jobs, general wellbeing indicators, and education.
What do you see as the role of nonprofit-led funds in moving impact investing forward as a field?
Nonprofit-led funds have tremendous opportunities in this space. Any nonprofit with deep sector expertise has a competitive advantage over a for-profit investment shop — the nonprofit fund can do ‘free’ R&D using grant funding to drive its program work. To make significant impact in any given sector, investors need opportunities that are well-informed and have a proven track record. Nonprofits like Ecotrust are best positioned to provide these opportunities as they hold deep sector expertise and experience in providing social and environmental value. A nonprofit endowment is the perfect funding vehicle to capitalize on the unique knowledge and networks the nonprofit holds, but also to drive the organization’s mission.
I also believe we should place foundations in the category of nonprofit-led funds. Foundations that just think about the 5% distribution they make each year are missing the work that 95% of their assets can be doing toward driving impact. By aligning a foundation’s corpus with its granting mission the foundation can magnify its impact tremendously. [Ed. note: read the first post in this series to learn how Meyer Memorial Trust is investing part of its endowment to create regional social impact.]
What are the biggest barriers to — and opportunities for — impact investment funds in Oregon?
I’m not sure that Oregon poses any unique issues. My perception is that one of the greatest challenges stems from placing the terms ‘impact’ and ‘investment’ in the same phrase. These terms are both so loaded that combining them creates chaos. As soon as you say ‘impact,’ investors assume they’re losing money and shift their thinking toward the philanthropy end of the returns spectrum. The term ‘investment’ immediately draws impact-minded people toward thinking that the social and environmental impact is compromised. This leads to a formidable barrier, which is actually getting the capital moving.
Oregon has a tremendous opportunity to be a state where we throw out the term impact investing and just focus on getting deals done — matching needs for capital with available capital. Reframing the ‘appropriate risk-adjusted rate of return’ conversation to one that focuses on how do we use capital to solve social and environmental challenges while still growing economic prosperity.
What else would you like our readers to know that we didn’t ask?
Making investments that are aligned with one’s values is challenging, especially for non-accredited investors, but having the conversation with your friends, family, and financial advisor is an important first step. Then find an investment and do it. The sooner we all take small actions to move this field forward, the faster it will evolve, generating financial, social, and environmental returns.
By Jacen Greene, Program Manager, Social Enterprise Intiatives at Portland State University’s Impact Entrepreneurs
For the second interview in our ongoing series on the state of impact investing in Oregon, we discuss Willamette University’s proposed student-led fund. For the definition of “impact investing” we use to guide this series, and to learn what Meyer Memorial Trust is doing to innovate around the way foundations make investments, please read our earlier post.
Interview with Professor Elliot Maltz, Ph.D., Atkinson Graduate School of Management at Willamette University
Impact Entrepreneurs: Willamette University is planning a student-led impact investing fund. How will that be structured? What will student involvement look like?
Professor Maltz: Let me preface this entire discussion by stating that the program is currently being piloted to help understand how to develop a structured assessment process. Having said that, the general structure of the program will be similar to other student investment funds which have become popular in MBA Finance Programs. It will include a dedicated instructor who will guide students through a structured assessment process to vet a variety of potential investments. From the potential investments, students will identify social entrepreneurs who appear to have the potential to sustain their operations through internal funding, generate social value that would not be created without the ongoing operations of the entrepreneur, and the ability to scale social value in a way that will generate substantial social returns. An independent board of directors will have to approve any student-suggested impact investments.
What types and sizes of investments will the fund make?
The types of investments are still being discussed. The maximize size of any investment in a single year will be $25,000.
Are there specific sectors or geographies you plan to target?
Given the high likelihood that we will need to have a number of personal interactions with any social enterprise prior to investing, it is likely that the initial headquarters of the enterprise will be in the Oregon-Washington area. However, as noted above, we will be looking for enterprises that have the potential to scale. Thus, in a longer-term basis enterprises could have plans to generate significant social value outside the region.
How will you measure the social and environmental impact of your investments?
That is still under discussion. It is likely that we will rely on the IRIS catalog for some of our metrics. However, we are also likely to develop some original metrics as we work through the pilot.
Do you know of any other universities currently pursuing a similar approach?
The inspiration for this fund came from the success of our Angel Fund program, which engendered an enormous amount of learning for students interested in entrepreneurship and/or early-stage investing. I am not aware of any other schools who are developing an impact investing fund.
What are your recommendations for faculty and staff at other universities who might be interested in creating a student-led impact investing fund?
I’m very excited about the potential for this fund to really give students a hands-on understanding of the impact investing field. But as I’ve said, this is early days. Talk to me after I’ve done this for a couple of years and I will probably have more advice to offer.
By Jacen Greene, Program Manager, Social Enterprise Intiatives at Portland State University’s Impact Entrepreneurs
It’s the start of the school year, and students mean business. Literally. We’ve put together a list of the best fall events for student entrepreneurs in Oregon. Not to stereotype college students or anything, but at least one of them even offers free pizza.
Pitchlandia Student Workshop
Friday, September 20
10am – 4pm, Nedspace
“This free workshop will give you a behind-the-scenes look at the private investment process and a chance to learn from local experts. Morning sessions will introduce you to the fundamentals of private investment, and during the afternoon you’ll have the opportunity to vet real companies applying for investment. The workshop is free, lunch is free—all you have to do is bring a laptop.”
PSU Kickstart Weekend
Friday, Oct. 4 – Saturday, Oct. 5
Maseeh College of Engineering
“Kick-off your year of entrepreneurship at PSU with a fun, intensive two-day session! Meet your peers, join a team, start a company, and enroll in the Launch in 9 entrepreneurship track.” Limited to PSU students and alumni. $10.
Eugene: Friday, Oct. 11 – Sunday, Oct. 13
Bend: Friday, Oct. 18 – Sunday, Oct. 20
550 NW Franklin Ave.
Portland: Friday, Nov. 22 – Sunday, Nov. 24
“All Startup Weekend events follow the same basic model: anyone is welcome to pitch their startup idea and receive feedback from their peers. Teams organically form around the top ideas (as determined by popular vote) and then it’s a 54 hour frenzy of business model creation, coding, designing, and market validation. The weekends culminate with presentations in front of local entrepreneurial leaders with another opportunity for critical feedback.” $99.
It’s that time of year again. The weather cools, the leaves begin to turn, and our thoughts turn to seed funding, business plans, and networking. At least in Portland, where the end of summer means the start of entrepreneurship event season! We’ve gathered a bushel of September events every entrepreneur should know about. Did we forget anything? Leave us a comment and let us know.
Don’t let the name fool you: TechFestNW, part of MusicFestNW, is a celebration of technology, startup and design culture for entrepreneurs from any sector. A startup crawl, hackathon, and sessions at OMSI: what else could you ask for? $325 for TechFest/$375 including music.
OEN PubTalk: Women Entrepreneurs
Did you know that Portland was just ranked the 5th best city in the US for women entrepreneurs? Join a discussion at Backspace with women business founders Ivo Lukas (24Notion), Jennifer Ferguson (Handful), Juanita Kurtin (Pacific Light Technologies), and Shelley Gunton (Castor & Pollux) to learn why. $30 for non-members.
Oregon BEST Fest
Join keynote speaker Van Jones, researchers, entrepreneurs, and industry leaders at the Leftbank Annex for a conference on cleantech innovation. Learn how to apply for government grants, find the best local resources for your cleantech startup, and cheer on the winners of the PSU Cleantech Challenge and the Red List Design Challenge. $125 general/$65 student.
Pitchlandia Application Due
“The world’s first completely crowdsourced, crowd-based and crowd-selected startup competition.” Apply to be be one of 20 startups selected to pitch to the crowd at the November 20 event, where 10 will be funded. That’s a 50% success rate! FREE to apply.
OEN Angel Oregon Fall Application Due
Apply to the new, fall program of one of the largest angel investment conferences in the region. Award to be made November 12. $75 to apply.
Oregon Small Business Fair
Seminars and workshops, networking opportunities, and a business resource fair at the Portland State Business Accelerator to get your venture off the ground or accelerate your growth. $35 for seminars/FREE for resource fair.