“Impact Investing” Forum at the RCGA
September 14th at 3:00 PM
By: Chris Miller, The Mission Center L3C
Philanthropy is changing. The markets are changing. The lines that once clearly divided philanthropy from the markets are blurring and funders across the nation are looking for more sustainable and strategic solutions to their giving.
Philanthrocapitalism, venture philanthropy, impact investing…call it what you want: the fact is that it is becoming increasingly more common for philanthropists to explore new investment vehicles that, unlike the traditional grant, provide both a social and financial return on investment. As a result, these forward thinking leaders are able to successfully impact their charitable purpose and mission space while simultaneously growing the pool of funds available to re-grant or reinvest in new programs in the future.
In general, the St. Louis community of funders has been slower to take up the mantel of “Impact Investing” than some, but we do have a few leaders in this space that are national examples of the virtuous cycle created through impact investing.
The most noteworthy is the corpus investment that a local foundation has made to the micro-lending and credit building institution, justine PETERESEN. As a result of a member of the foundation’s staff having been a long time proponent of impact investing and, in turn, having spent years educating his colleagues and finance committee on the benefit of investing a small percentage of its corpus – in this case, 1% — into a community based institution that, rather than lining the pockets of Wall Street like traditional portfolios, can put the money to work right here in our own neighborhoods.
In less than a year, justine PETERESEN lent the investment capital to hundreds of low-income and minority home buyers and small business owners and within three years was able to pay the foundation back the entire amount of its investment, plus interest. As importantly, the foundation can now point to this corpus “Impact Investment” as the single highest performing investment in its portfolio. Whereas the market lost 24% of its corpus during the same period, the philanthropic investment it made in justine PETERSEN’s mission returned all of its principal plus 3% interest.
This “virtuous cycle” is precisely the promise that impact investing holds. By no means are we saying that impact investing will, or should, fully replace traditional grant making; for the vast majority of nonprofits and their programs, grant funding and contributed revenue are essential to their ability to fulfill their missions. That said, it is incumbent upon all funders to seek out or create those investment opportunities that allow for at least a small portion of our charitable dollars to be reinvested in the community through sustainable and replicable business models that can provide both a social and financial return on investment.
To learn more about the current state of impact investing both here in St. Louis and across the nation, please join The Mission Center, L3C and its advisor, John Tyler, Vice President and General Counsel of the Kauffman Foundation for Entrepreneurship at an “Impact Investing” Forum at the RCGA on September 14th at 3:00 PM.