Mission Critical

In their latest article, The Chronicle of Philanthropy explores the evolving relationship between impact investing and the (traditionally) donation-fueled world of philanthropy.

…charitable dollars by themselves won’t solve society’s toughest problems. Pioneering nonprofits and foundations have experimented with harnessing markets and investments to catalyze social change for more than a decade, and the Ford Foundation’s embrace of impact investing, announced in April, pushes the idea further into the mainstream.

“But powerful players in the finance industry are also getting behind investments that aim to tackle social and environmental challenges and generate a monetary return. Multinational companies and equity firms are racing to offer advice and products to mission-minded investors.

“Their money and resources dwarf what philanthropy can offer; indeed, some might wonder if it’s best to leave impact investing to commercial entities…”

The author delves into this further when she asks, “Is there still a role for foundations and nonprofits? Can philanthropy do things that the boutique investment houses and financial behemoths can’t?” A condensed history, mounting evidence, and several expert interviews tackle these fears in the second half of the piece.

One of the experts called upon is Caprock’s own Matthew Weatherley-White. “It was activists who galvanized impact investing and pushed its development. They were people who wanted to create a different kind of a world, one that is more just and more environmentally sensitive,” says Weatherley-White. “They turned to the capital markets, in part, because — well, that’s where the money is.”

“If we and others do this right,” says Deval Patrick, a former governor of Massachusetts who landed at Bain Captial in 2015, “there isn’t going to be a difference anymore between investing and impact investing. We’re just going to call it investing.”

Weatherley-White, an early evangelist for the impact investing space, wrote a similarly themed think-piece about just such an evolution in 2014 (we highly recommend it).

No more spoilers, you’ll have to read the rest yourself (or download the pdf).

Written by Nicole Wallace and published in The Chronicle of Philanthropy.