Rockefeller Philanthropy Advisors

Clear picture of concrete solutions to move from theory to practice in achieving social change and investment returns

NEW YORK (November 23, 2009) –A challenging economic climate for investors, donors and nonprofits alike has prompted increased interest in “impact investing,” leveraging a broad range of investments to address major social and environmental problems while also earning a return. For investors exploring this nascent field, Rockefeller Philanthropy Advisors has published Solutions for Impact Investors: From Strategy to Implementation, practical guidance on tightening the link between making investment decisions and impact.

Written by a team of practitioners, advisors and academics, Solutions for Impact Investors is designed for investors who may have made social purpose investments but not yet connected them to an overall investment strategy, and traditional investors struggling with whether – and how – to integrate impact investing into existing asset allocation models. This includes philanthropic foundations and endowments seeking to enhance their knowledge of social, mission- and program-related investments, and individual and institutional investors and their advisors.

“As techniques and options in this kind of investing continue to evolve, there is great potential to deploy much more capital into the social sector, which is especially needed in this difficult economic climate,” said Melissa A. Berman, President and CEO of Rockefeller Philanthropy Advisors (RPA).
Solutions for Impact Investors builds on Rockefeller Philanthropy Advisors’ earlier publication, Philanthropy’s New Passing Gear: Mission-Related Investing, widely recognized as the first practical guide to translate the concepts, ideas and philosophy of mission-related investing into useable policies and practices for foundation trustees.

“The possibilities for social change through impact investing are limitless, but it is not charity; it can be used across all asset classes and requires the same discipline as traditional investing,” said Steven Godeke, a noted independent advisor and a lead author of both RPA publications.
“Our intent is threefold: to attract more capital to impact investing; to assist investors as they move to executing and refining their investment decision-making processes; and to narrow the gap between foundations’ program and investment professionals, which would contribute to a mutual understanding and implementation of a portfolio approach to impact investing,” said co-author Raúl Pomares, a vice president of Guggenheim Partners.

Embracing “The Genius of AND”
The sharp dichotomy between profit-maximizing financial investment and “give it away” charity is gradually eroding. Citing business author Jim Collins’ advice to avoid the “Tyranny of OR” and instead harness the “Genius of AND,” the authors of Solutions for Impact Investors emphasize that investors need not choose between social impact OR financial return. Instead, they can:
• Create new impact-related processes AND operate within strict investment policy discipline;
• Optimize for impact AND apply rigorous investment management tools;
• Invest in new markets and asset classes AND continue traditional investment strategies;
• Embrace new business models AND adhere to recognized financial theory;
• Evaluate impact performance AND subject investments to recognized financial benchmarks; and
• Expand the scope and scale of philanthropic capital AND adhere to fiduciary responsibilities.

The book covers the key role that behavioral finance plays in impact investing, and includes examples of investment processes, case studies and resources that focus on specific themes or investment vehicles. To illustrate many of the concepts throughout the book, the authors highlight RSF Social Finance, the KL Felicitas Foundation and the Calvert Social Investment Foundation. Finally, the authors prepared more than 40 profiles to demonstrate the range of impact investments available in the marketplace today. While not intended to serve as investment guidance or as a comprehensive list of the industry, additional profiles will be added on an ongoing basis and are available at www.rockpa.org/impactinvesting.

“Government and traditional philanthropy do not have sufficient funds to address the world’s most serious problems, so commercial capital and market forces must be part of the solution,” said Berman. “Impact investing will build the kind of partnerships that we need for the current crisis, and will lay the groundwork for real change in the coming years.”

Other contributors to Solutions for Impact Investors include technology entrepreneur and pioneering impact investor Charly Kleissner; Patrick Guerra, founder of Lions Peak LLC; and Albert V. Bruno and Hersh Shefrin, social investment experts and professors at Santa Clara University.

Major support for the publication was provided by the KL Felicitas Foundation and the Rockefeller Foundation. Additional underwriting was provided by the Betsy and Jesse Fink Foundation, Legacy Works, the Flora Family Foundation and the Woodcock Foundation. Solutions for Impact Investors: From Strategy to Implementation is available at no cost by contacting info@rockpa.org or calling 212-812-4369. A PDF can also be downloaded from www.rockpa.org/pdfs/impactinvesting.pdf.

This entry was posted on Monday, November 23rd, 2009 at 5:00 pm.