This Wednesday, Georgetown Law Continuing Legal Education hosted a Nonprofit Governance Conference on Impact Investing – Key Issues for Exempt Organizations, which was co-sponsored by Independent Sector and the Council on Foundations. The one-day conference featured a range of sessions by legal experts and seasoned impact investors, who offered practical tips and takeaways for those contemplating impact investing or who have already begun to experiment with new investment vehicles. Independent Sector’s Marie LeBlanc shares her top three insights from the event.
1. Definitions are still an issue…or are they?
Speakers throughout the conference agreed that the language we use to describe impact investing is still imperfect. I’ve attended this conference for four years now – three of which have focused on social enterprise and impact investing – and definitions are a challenge year after year.
While “impact investing” as a term includes a variety of investment vehicles, the conference focused on PRIs (program-related investments) and MRIs (mission-related investments), which helped to narrow the scope. Various speakers mentioned both the pros and cons of fuzzy definitions – on one hand, imprecise language creates confusion and misunderstanding, and imprecision is not ideal when working within the legal structures of new investment vehicles. On the other hand, the broad term “impact investing” can embrace a diverse set of activities and provide an opportunity to think in innovative ways about deploying capital for social good.
As these types of philanthropic investments continue to gain momentum, the field will have to wrestle with this tension and hopefully strike the right balance.
Thanks to @IndSector member @FordFoundation for sharing insights about their journey to launch an MRI program at #georgetownnpg pic.twitter.com/FvaGceGCo2
— Independent Sector (@IndSector) April 26, 2017
2. Is impact investing playing a role in democratizing access to philanthropy?
This question was raised several times throughout the conference, and I was excited to hear examples of speakers leveraging impact investing to increase access to philanthropic investing. The Calvert Foundation (represented by Investments Director Beth Bafford) has been leading the charge with its Community Investment Note, and recently we’ve seen our local philanthropic association, the Washington Regional Association of Grantmakers, offer an Enterprise Community Impact Note.
The minimum investment for the Calvert Note is only $20 – accessible for most average donors. I would argue, though, that impact investing is not that different from other philanthropic structures – we can either choose to hold power and access at the highest levels, or provide equitable opportunities for different types of individuals and institutions to get involved.
Hopefully, examples like these continue to push the field to embrace opportunities to diversify investor pools and bring new voices into philanthropy.
Great questions raised at #GeorgetownNPG about role of impact investing to democratize access to philanthropy @calvert_fdn @nhcfoundation
— Independent Sector (@IndSector) April 26, 2017
3. Where are the voices of investees (nonprofits)?
I was struck by the lack of nonprofit or investee perspectives at the conference – and in most conversations that I’ve witnessed about impact investing. Most of the sessions focused on foundations’ legal structures for PRI and MRI portfolios – an important topic, given the changing legal landscape and need for regulatory compliance. However, it is imperative that we create space for potential and current investees to be part of these conversations, and that we ensure that traditional nonprofits have an opportunity to compete for impact investments alongside for-profit and social enterprise organizations.
One speaker raised the point that impact investors come to the table with very different views on whether the impact or the investment (i.e. financial returns) are a priority, and whether just having the intent to do good is sufficient. Intent is necessary, but not sufficient, to address the critical challenges facing our world today. Allison Clark, Associate Director, Impact Investments at the John D. and Catherine T. MacArthur Foundation, noted that “all dollars have an impact”, whether we intend them to or not.
As the field continues to evolve, we must ensure that all approaches and strategies consider the perspectives of those most impacted – whether as investees or community members whose lives are changed, for better or worse, by our actions.
Thanks to @GeorgetownCLE & fellow #GeorgetownNPG co-sponsor @COF_ & welcome IS members speaking @macfound @FordFoundation @RockefellerFdn
— Independent Sector (@IndSector) April 26, 2017
Marie LeBlanc is the manager of critical issues and sector advancement and Independent Sector.
