Beats | January 29, 2014

Mainstreaming Impact Investment Products and Services

The team at


Impact investing will struggle to gain scale and relevance without both the participation of mainstream capital markets and investment professionals and the expansion into more traditional and non-private financial products.

A key step is to increase awareness by educating financial advisors and capital markets intermediaries about the opportunities for their clients in the impact investing space.  These gatekeepers are beginning to recognize the trends to provide responsible investment services to wealthy clients and millennials.  But we need to meet them where they exist, in mainstream products and services.  Relationship-driven, value-added services for investors and companies are all key components in the evolution and growth of our markets and cannot be replaced by “Invest Now” technology-only solutions.

An informative 2012 industry survey of financial advisors titled Gateways to Impact by Hope Consulting  stated that 69% of financial advisors were interested in using impact and sustainable investments to grow their practices. It also made it clear that financial advisors and other capital markets professionals can help investors “dip their toes” into the impact investing waters via the use of defined research products and public investment vehicles versus self-directed private investments, which many financial advisors are reluctant and/or not permitted to utilize.


The creation of mainstream investment products and services has been pioneered by companies such as Calvert Social Investment Foundation with their Community Investment Notes and Microplace, an online broker dealer, which facilitated the sale of registered impact investments available in small investable increments ($20) to retail investors. However, the recent announcement by Microplace that, after 7 years, it no longer offer these services, underscores the challenge of mainstreaming impact investments.

Currently, the market for impact investment is very private placement centric and in the U.S. private placement investments are generally limited to accredited individuals and institutions.  However, public and registered securities offerings, which do not have the accreditation limitations, expand the universe of investors who are able to participate in the impact investing space.  Products like the TriLinc Global Impact Fund  are often open to non-accredited investors and at more affordable minimum investment levels.

(Full disclosure: The author is a registered representative of Bendigo Securities, LLC, Member FINRA/ SIPC.  Bendigo Securities is a Participating Dealer for TriLinc. The content of this article is intended for educational purposes only and should not be construed as an offer to buy or sell securities.)  

The report by Sonen Capital Evolution of an Impact Portfolio: From Implementation to Results was very effective in describing the asset classes that can define a diversified impact investing strategy.  The report also provided examples of a variety of acceptable investments, from CD’s to private equity and publicly traded equities.


Data and corporate profile platforms like the Social Stock Exchange (which, despite its name, is not an exchange or transactions platform) provide a valuable venue for impact reports and information about public companies which possess a high degree of social responsibility. Public companies benefit from the additional visibility and transparency which increases trading liquidity and demand for their securities.  For investors the Social Stock Exchange provides a data service where they can identify public companies that could make appropriate investments for their impact portfolios.

A U.S. effort called the Small Cap Public Company Project, which represents over $30 billion in investor assets from asset managers such as Portfolio 21, Trillium, Walden Asset Management, Boston Common, Calvert and others, is engaging small capitalization public companies to encourage them to report on their impact and become visible and investable to the impact investing space.   This is an important step in creating a new class of public impact reporting company, which is currently dominated by large Fortune 500 companies in the form of ESG reporting.


In my opinion, the impact investing space does not need a “separate” exchange in order to scale and the cost to start such an entire exchange infrastructure may be prohibitive. However, the need for the impact space to employ technology creating effective aggregation for issuers, investors and 3rd party service providers (from private capital to public markets) is clear.

In the long run, however, technology and data solutions alone will not move the space into the mainstream.  Although there are now many online technology platforms promising issuer to investor direct access, private placement investments are not “Self Service”.  These online venues coupled with the use of qualified capital markets and financial intermediaries are essential for this to be effective.


The creation of mainstream financial products combined with engaging capital markets professionals and qualified service providers with appropriate technology and data solutions will help remove significant barriers for scale thereby moving the dial in using capital as a vehicle for good.

Michael J. Van Patten is founder and president of Mission Markets Inc.