ImpactAlpha, April 14 – Don’t refer to conventional finance as ‘mainstream,’ ImpactAlpha’s David Bank said on The Call earlier this month. Call it ‘legacy finance’ in the same way the tech community refers to ‘legacy’ computer systems that are outdated but still in use.
That was one takeaway from The Call No. 10, which took ImpactAlpha subscribers inside our editorial decision-making and explored our hunches and hobby horses with a few special Agents of Impact.
“What we really try to do is break ideas,” said editorial director Dennis Price (see, ‘Reverse the polarity’ tops ImpactAlpha’s charts for the transformation of finance’).
“The name ‘ImpactAlpha’ itself was a stake in the ground for the provocative idea that there’s value to be had in the impact thesis,” said Bank.
So was ‘New Revivalists’ when we launched the series, in partnership with Village Capital, to profile local entrepreneurs and projects rebuilding and empowering their communities.
“When we began covering the U.N. Sustainable Development Goals, a lot of the execution was at the local level, so we deliberately turned our focus there,” said Price. Now, with the passage of the Opportunity Zones legislation, local community-building is in the spotlight.
“It turbocharged the whole idea and made all of those early examples even more salient,” Bank said. A few other themes that emerged:
Catalytic capital. “We want to usher in ideas that become obvious,” said Rockefeller Foundation’s Adam Connaker, who explained the foundation’s innovative finance strategy, including a new fund management capacity (see, “Indispensable element in many impact investments: ‘catalytic capital’”). “The biggest idea is that finance can do more than we’ve been asking of it.”
Returns on inclusion. “If we are not looking at racial equity in the impact investing space, what are we here for?” asked Kellogg Foundation’s Cynthia Muller. We’re really leaving a lot of opportunity on the table.” The foundation’s “lens is really about systems, and how we change the systems of power [that] have oppressed communities of color and poor individuals,” she said.
Reverse the polarity. The Earth’s north and south poles have reversed hundreds of times in the last 83 million years. “To me it represents those things where you say, ‘it could never happen,’” until it does, Bank said. “In our world, it stands for that whole set of ideas about reinventing capitalism.”
John Goldstein of Goldman Sachs said signs the poles are reversing are proliferating. “As the world continues to change, this is just showing up in a fundamentally different way,” he said. Financial institutions need to recognize secular, persistent, accelerating themes that are shaping risk, opportunity and efficiency for their clients and themselves, Goldstein said.
Otherwise, they risk becoming ‘legacy’ institutions – and not in a good way.
