Rockefeller new guide to impact investing

If you want to learn about the new field of impact investing the Rockefeller Foundation has issued a helpful field manual. “Impact investing” involves using a broad range of investments including capital and private sector expertise with a view to making a difference to development including social and environmental problems and not only to gaining profits for the investor and has the potential to channel large amounts of funds to Africa.

The new guide is Solutions for Impact Investors: From Strategy to Implementation, written by a team of practitioners, advisors and academics and published by Rockefeller Philanthropy Advisors.

It is aimed at investors developing this new field and gives practical guidance on tightening the link between investment decisions and impact. It also helps 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 trying to boost their knowledge of social, mission- and programme-related investments, and individual and institutional investors and their advisors.

Melissa A. Berman, President and CEO of Rockefeller Philanthropy Advisors (RPA), says: “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. 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. 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.”

Steven Godeke, a noted independent advisor and a lead author, adds: “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”.

Fellow author Raúl Pomares, a vice president of Guggenheim Partners, explains: “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’ programme and investment professionals, which would contribute to a mutual understanding and implementation of a portfolio approach to impact investing.”

Other contributors 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.

The authors emphasize that investors need not choose between social impact OR financial return but can harness what author Jim Collins calls “the genius of AND” as opposed to the “tyranny of OR”. Investors 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 behavioural finance plays in impact investing, and includes examples of investment processes, case studies and resources that focus on specific themes or investment vehicles. The book highlights examples from 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.

Major support for the publication was provided by the KL Felicitas Foundation and the Rockefeller 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.

For more information and links on impact investing, check out the website of the Global Impact Investing Network (www.globalimpactinvestingnetwork.org).

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