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Agents of Impact Call No. 20: Investors share experiences in getting their assets off the sidelines



ImpactAlpha, July 1 – It’s an all-hands-on-deck moment. 

Getting assets off the sidelines and into impact investment portfolios that work for all stakeholders was the agenda on ImpactAlpha’s Agents of Impact Call No. 20, which helped launch Rockefeller Philanthropy Advisors’ new Impact Investing Handbook: An Implementation Guides for Practitioners

“The mission of impact investing right now is very, very clear,” said co-author Steven Godeke. “We need to deploy capital to take on some of these systemic challenges such as racism, the climate emergency and COVID.”

The new handbook comes a decade after Rockefeller Philanthropy Advisors first released a pair of guides to the then-emerging field. ImpactAlpha is publishing a series of excerpts; the first two are here and here. More than 600 agents of impact signed up for The Call, which was sponsored by RPA. 

The sense of urgency was palpable. “It’s a great time for new entrants, but for those of us who’ve been doing this for a while it is equally urgent to raise our game right now and to not get complacent,” said Margot Brandenburg of the Ford Foundation. 

“This is not just something for billion-dollar foundations,” said Chris Earthman, operating partner of the Aragona Family Office in Austin, Texas. “You can also take small bites – $5,000, $10,000, $50,000 can do a ton, especially when you’re thinking about place-based investing.”

Co-author Patrick Briaud said the new handbook synthesizes frameworks, reports and best practices into actionable steps for investors. “How do you make sense of all those things and empower asset owners to take action?” he said. “That’s really been the impetus for this handbook.”

Stepping up

The Call featured a range of Agents of Impact, who have helped expand the use of impact investments both within their organizations and across the field. Relative newcomers included the Alabama Power Foundation, the philanthropic arm of the state’s largest utility. The Ford Foundation, in contrast, made the first “program-related investment” an early form of impact investing, back in 1968. 

“Our premise is, what’s good for Alabama is good for Alabama Power,” said the foundation’s Myla Calhoun. “Economic prosperity and growth and creating opportunities for business makes good sense.” 

The foundation made its first impact investment last year: a loan to a Birmingham-based health-tech company with a behavior-based tool for opioid addiction therapy. It has since completed five more impact investments. Calhoun has introduced the concept of impact investing not just to the foundation’s corporate parent, but to other Alabama philanthropic funders.

 “Impact investing is not new, but it was not done here,” she said. 

Like Calhoun, Aragona’s Earthman has been working to expand impact investments from the family’s foundation and donor-advised fund to its main investment portfolio in the family office and its adjacent family foundation. Five years ago, Earthman nudged Aragona to make its first mission-related investment, meaning the investment didn’t need to count towards the foundation’s required 5% distribution. 

“I just said, hey, let’s stick our necks out. There’s got to be something in this huge white space between negative 100% returns (for grants) and something greater than 100%.” He’s now working to weave impact throughout the organization’s various silos. 

The Ford Foundation has upped its game in response to the current crises. In March, as the coronavirus was ravaging New York, it rushed a $29 million program-related investment to the NonProfit Finance Fund in just eight days, enabling it to make zero-interest loans to nonprofits on the frontlines. 

In June, Ford floated $1 billion in long-term social bonds in order to double its grantmaking. The bonds, which were oversubscribed more than five times over, are “a way to increase payouts in a capital efficient manner,” Brandenburg said. 

Expanding impact

Participants shared advice for other investors looking to align their assets with their values. Do your homework, but don’t get mired in too much planning, suggests Rebekah Saul Butler of the Grove Foundation.

“Engage and actually start doing it, because doing it demystifies it and helps you to learn so much more about what you want and need to do,” she says. The Grove Foundation is in the process of spending down its endowment in the next decade or two to respond to urgent challenges such as climate change and inequality.

Another easy but overlooked step to shift capital: park your cash in a mission-aligned bank. 

Impact measurement can often feel daunting, noted Karim Harji from the Impact Measurement Program at Oxford University’s Saïd Business School, who contributed a section in the handbook. “One of the messages is that you can take a lot of small steps, there are a lot of starting points.”  

“The organizing principle is having a theory of change and to try to shift systems,” Godeke said. “That sounds a little wonky, but what we’re seeing – and it doesn’t matter if you’re a private equity fund, a corporate foundation or a family – is to have a clear sense of what you’re trying to do and that these are your assets and you want to be accountable for them and responsible for them.”

Alabama Power’s Calhoun closed out The Call with her own call to action for racial justice. Systemic racism has been there all the time, she said, “but we didn’t have proms and we didn’t have graduations and we didn’t have gala season and we didn’t have March Madness to distract us from the realities of what has been happening to black and brown people.” 

“We have to be courageous and ferocious and relentless as we do this work. I’m in Alabama. So it’s real for me, in a cellular way,” she said. “This is a moment not to be missed. It’s a moment not to gloss over. It’s fun to feel better, but I think it is critical to do better.”

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