Meet the Impact Investors: in Pursuit of Profits, Purpose and Planet
Impact Entrepreneurs at Portland State University and Ater Wynne LLP presented an impact investing panel the morning of April 19, as part of the PSU School of Business Administration Business Briefing Breakfast series. The series is sponsored by A-dec, Black Helterline LLP, Moss Adams LLP, NW Natural and The Standard. For more information on impact investing, including definitions, resources, and a diagram of the impact investing spectrum, please see our earlier post on the topic. Read on for a recap of the panel discussion.
- Kipp Baratoff, Meyer Fellow, Meyer Memorial Trust
- Bill Campbell, Principal and CFO, Equilibrium Capital Group; Partner Emeritus, Ater Wynne LLP
- Patrick Maloney, Principal, Imprint Capital Advisors
- Moderated by Cindy Cooper, Managing Director, PSU Impact Entrepreneurs
Each of the three panelists approaches the nascent field of impact investing from a slightly different angle. Meyer Memorial Trust is working to identify ways in which foundations can expand how they apply capital to generate positive change, Imprint Capital builds and manages customized mission investment portfolios for institutional investors, and Equilibrium Capital is a platform of asset managers focused on environmental sustainability.
As an example of impact investing, Bill Campbell discussed the philosophy of Equilibrium Capital Group. Their approach is based on a concept Campbell calls “Diamond’s Law,” after the principles outlined in the book Collapse by Pulitzer Prize-winning author Jared Diamond: “When collapse is threatened, financial wealth and ecosystem and social health must create, sustain, and enable each other.” He focuses on investing as an “engineering process,” a method of participating in the creation of value rather than a simple hunt for returns.
Not all impact investors follow the same approach, though, and Patrick Maloney spoke to the importance of institutional investors understanding where they fit within the investing spectrum. Impact investors enter the space for a number of different reasons: because of their values, a wish to use more of their resources for impact, to identify the right resources to use for impact, or to find, support and learn about enterprise models for impact investing. They need to understand what types of impact investments are appropriate for their risk, return, and impact targets.
Kipp Baratoff expanded on Maloney’s definition of the various impact investment tools available to foundations: Mission-Related Investing (MRI) aligns endowment investing policies with a foundation’s mission; Mission-Driven Investing (MDI) typically focuses on direct debt or equity investments in mission-aligned businesses; and Program-Related Investing (PRI) takes the form of low-interest loans or other financial support to both nonprofit and for-profit organizations.
However, a fear of making “jeopardizing investments” constrains many foundation executives from deploying their capital resources in a way that would maximize positive social and environmental impacts. Baratoff argued that a target of 5-10% of foundation assets allocated through MRI is an easily achievable, high-impact step towards more effective use of foundation resources. Unfortunately, few foundations make use of these tools to increase their impact, and as a result, social entrepreneurs and nonprofits face higher financing challenges than necessary.
The panelists pointed to the JOBS Act, recently signed into law, as a major opportunity to expand the capital available to social entrepreneurs and sustainable businesses. Under the provisions of the act, businesses can engage crowdfunding intermediaries to sell shares directly to the public. In this way, anyone can become an impact investor—and, with the right protections, society as a whole benefits.
Entry filed under: Events, Funding, Impact Investing, Social Entrepreneurship. Tags: bill campbell, Equilibrium Capital, impact investing, Imprint Capital, JOBS Act, kipp baratoff, Meyer Memorial Trust, Mission-Driven Investing, Mission-Related Investing, patrick maloney, Program-Related Investing.