The (Partial) Results Are In!

Building Empirical Support for Impact Investments: Chicago Tribune Highlights The Wharton School’s Research Findings on Impact Investment Returns, Co-Funded by Caprock

Anyone who knows us understands that we are passionate impact investors. And if you don’t know us well, just troll our blogs. They’ll deliver a clear sense of how we think about using the power of the capital market to help create the world in which we all (presumably) want to live.

And if you scratch just beneath the surface of this passion, you’ll also come to understand that we are – first and foremost – investors. We believe that impact investing can, and should, deliver both scalable, measurable social and environmental value as well as competitive financial returns. While we have seen this belief confirmed in client portfolios, we recognize that this evidence is anecdotal. As such, we have long desired third-party validation of what we see every day: positive financial and impact returns. If we were paid a dollar for every time we have wished for objective, academic data to support (or reject) our thesis… well… we wouldn’t be writing this blog, that’s for sure. We’d be on an island somewhere, sipping drinks served in coconuts.

At last, the data is in (well, at least partially).

As part of our ongoing commitment to impact “field building”, Caprock has been working with the Wharton School’s Social Impact Initiative on a study to quantify both financial returns on impact investments, as well as what I’m calling “mission persistence” – the durability of a company’s impact mission post-exit.

We recently sponsored and moderated a panel discussion at Big Path Capital’s Impact Capitalism Summit in Chicago – the event has been described as “Davos for Impact Investors” – to highlight the first phase of the study: a review of the return landscape associated with private impact investments.  And the room was totally packed. Standing room only. Literally. It is not an exaggeration to say that this was the most heavily attended, most discussed presentation at the conference, reflecting just how hungry the discipline is for credible research data. (As an aside, there is plenty of return data on public market investments and shorter duration alternative investments. But return data on illiquid, longer duration investments, such as private investments and real assets, is still frustratingly thin. The Wharton research thus focused exclusively on this latter category.)

The research is ongoing, and the initial survey is just the first part of a longer discussion that will ultimately span a broader base of asset classes.  And we are excited to continue to push forward, both with our practice and with this research.

We’ll be posting a follow-up blog with our thoughts on the meaning of the research and – perhaps more importantly – the challenges that it identifies.

Watch this space…