Catalytic Capital | August 11, 2021

In search of existential answers and impact-first investors, Ceniarth finds religion

Diane Isenberg and Greg Neichin
Guest Author

Diane Isenberg

Guest Author

Greg Neichin

What good is it if someone says he has faith, but does not have works?James 2:14

“I do not want followers who are righteous, rather I want followers who are too busy doing good that they won’t have time to do bad.”  – Rabbi Menachem Mendel of Kotzk

We live at a moment when performative, digital displays of solidarity and outrage are ubiquitous. Professing one’s commitment – whether the topic is racial justice, climate change, or economic inequality – has never been easier. An impassioned tweet is all it takes to announce oneself a true believer. Press releases from corporations, public institutions, and charitable foundations herald the arrival of a new just era. 

If only we could solve problems by word alone.

Over the last year, we at Ceniarth have participated in a wide variety of virtual forums convening family offices, foundations, and impact investors to discuss issues of race, gender, climate, and other pressing social and environmental issues. The enthusiasm for solutions that require limited or no financial sacrifices, or perhaps, even better, deliver “impact alpha,” are at an all-time high. We have reached the Golden Age of responsible investing, a time when even the world’s largest private equity investors are “among ESG’s most enthusiastic boosters”.    

But ask these same institutions, even those professing profound dedication to social and environmental change, to dig deeper, to offer longer duration capital at lower rates, the kind of money that makes a real difference, particularly in these challenging times, in marginalized communities, and you will hear crickets.  

Why is there such a profound disconnect between the intensity of the rhetoric and the relative lack of interest we see in the corners of the impact-first universe that require one to accept more modest financial returns?

Why does the – entirely laudable – idea of investing in diverse, yet conventional managers, have so much traction, when deploying money directly into diverse, underserved communities of color get far less attention?

We have exhausted ourselves, unsuccessfully, in search of impact-first peers. Perhaps, like many in search of existential answers and nowhere else to turn, we have found religion at Ceniarth.

Faith-based roots

Religiously-oriented faith communities of all creeds have long known that faith without action is empty. Intention without willingness to sacrifice for the good of others does little good.  One could quote apostles or rabbis, imans or monks and arrive at the same call to action.  Perhaps this is why, as we ponder the future direction of the impact investment movement, we would be wise to revisit its faith-based roots.

As recounted in Nun Funds: The Original Impact Investors, it was as early as the 1970’s that religious women began scrutinizing how the financial system was operating and how shareholder activism could be used as a tool for change. Groups like the Adrian Dominican Sisters and the Sisters of Mercy were not only instrumental in early efforts to hold public companies more accountable, but were pioneers in impact-first investing.  They were amongst the very first to provide low interest loans to nascent community development finance institutions (CDFIs).

They have remained steadfast and true to this commitment over the ensuing decades and continue to be pioneers in our sector.  The Mercy Partnership Fund has been around for over 25 years delivering patient, impact-first money to communities in need. Mercy’s recent investments in the Kiva Refugee Fund, WaterEquity’s Global Access Fund, and the SOAR (Southern Opportunity and Resilience) Fund are a carbon copy of our own pipeline at Ceniarth.  We similarly find ourselves co-invested in organizations such as Root Capital, One Acre Fund, and various CDFIs with the impact investing program at Cabrini World MSC

While these organizations work with little fanfare and share few stages with us at industry conferences, we would be hard pressed to find many others with such an extensive history and overlap of dollars deployed for deep impact.  

We are optimistic that faith-based organizations, steeped in traditions of charity, will continue to push the field of impact-first investing forward.  Convening organizations such as the Catholic Impact Investing Collaborative (CIIC), the Global Islamic Finance and Impact Investing Platform (GIFIP), and The Jewish Funder’s Network (JFN), which recently published its first impact investing guide, are attempting to mobilize the field. Frequent Ceniarth collaborator Calvert Impact Capital has dedicated a full-time director of faith-based initiatives to serve as a resource for the sector.  

In addition, individual faith-based institutions such as the San Francisco-based Jewish Community Federation, which recently launched an impact loan program focused on CDFIs, are increasingly on our short list of engaged co-investors.  Notably, The Federation, as part of an institutional commitment to advancing racial justice, will be pooling donor-advised fund holders to join Ceniarth as an investor in the Black Vision Fund, a soon to be launched CDFI intermediary supporting black-owned small business owners. (Disclosure: Neichin is volunteer chair of the impact investing efforts of the Jewish Community Federation.)    

New allocations

While enthusiastic about these faith-based efforts, we are sober to the resource constraints and budget realities faced by many institutions in the sector.  As a 2020 GIIN Survey of Faith-Based Investors concluded, around 80% of respondents are purely seeking market-rate impact investments, as opposed to ~20% willing to entertain below-market transactions.  This is understandable in a sector that has traditionally relied on the growth of endowment assets to fund grantmaking critical to providing community services or pensions. 

Consequently, we anticipate that new, faith-based, impact-first allocations will come primarily from individual philanthropists motivated by their traditions or private foundations grounded in religious values.    

We hope that as the impact field finds “new religion” that it can also remember some of the merits of “old religion.”  That we can remember that what we do is as important as what we say.

And that extending a hand to those in need is critical to an ethical society, even when it requires sacrifice.  

Diane Isenberg is founder and co-director and Greg Neichin is co-director of the family office Ceniarth.