Impact investing is about a very simple idea: markets and money for good. Impact investing is built on the belief that financial tools can play a powerful role in solving the massive global challenges of our day, and that capital markets should work for good as well as profit. This vision is realized through investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.
Every month, PCV will give you a roundup of what’s new in the field, what conversations are taking place, and how you can get involved. Here are some highlights from September:
[custom_headline type=”left” level=”h2″ looks_like=”h4″]New IRS Guidance on Mission Investments Is a Step in the Right Direction[/custom_headline]
U.S.-based private foundations have roughly $650 billion in combined endowments, and thanks to new guidance from the IRS, those foundations can pursue mission-related investments without fear of tax penalties. This is big news for the impact investing community, as this guidance may prompt some foundations to reexamine the prospects of using impact investing to support their charitable purpose. In 2013, PCV co-founded the Accelerating Impact Investing Initiative (AI3) to spark a national conversation about the federal government’s role in improving and expanding the market for impact investments.
And, we’re already seeing some movement. The Kresge Foundation announced that it would put 10 percent of its endowment, or $350-million, into impact investing by 2020. We strongly support this new IRS guidance, and look forward to working with foundations and other stakeholders to expand the use of mission investments. Read more.
[custom_headline type=”left” level=”h2″ looks_like=”h4″]CDFIs Weathered The Great Recession Better Than Others[/custom_headline]
The Great Recession challenged financial institutions at all levels across America. You’d think that nonprofit loan funds devoted to working in low- and moderate-income communities would have been particularly at risk. After all, the communities we work in were hit hard by both the boom and the bust; and our funds don’t have access to the liquidity that insured deposits provide. Yet the 500 Community Development Financial Institution (CDFI) loan funds, like PCV, came through the recession not only successfully, but stronger! There was not one single loan loss from a CDFI during the Great Recession. Read more.
[custom_headline type=”left” level=”h2″ looks_like=”h4″]Slowing Global Warming Would Save Tens of Trillions of Dollars[/custom_headline]
A report from America’s 3rd-largest bank asks why we’re not transitioning to a low-carbon economy. Citi Global Perspectives & Solutions, a division within Citibank, recently published a report looking at the economic costs and benefits of a low-carbon future. The report considered two scenarios: “Inaction,” which involves continuing on a business-as-usual path, and “Action” which involves transitioning to a low-carbon energy mix. The report found that savings due to reduced fuel costs and increased energy efficiency in the “Action” scenario makes action cheaper than inaction. Read more.
[custom_headline type=”left” level=”h2″ looks_like=”h4″]Navigating Sustainability and Your Fiduciary Duty[/custom_headline]
The importance of sustainability to business and investing is intensifying as financial markets are increasingly forced to address challenges posed by the scarcity of natural resources like fresh water and topsoil, the effects of unabated carbon emissions, rapid urbanization and the widening inequality of wealth and incomes, to name just a few. As the context of business and investing shifts, understanding the economic benefits of a sustainable form of capitalism has become more critical. And identifying the best ways to navigate the transition toward it has become essential. Read more.
[custom_headline type=”left” level=”h2″ looks_like=”h4″]Small Foundations Are Embracing Impact Investing[/custom_headline]
Small foundations aren’t a panacea for all that society faces, but they might be ideally positioned to reduce or eliminate some of those barriers to entry, according to the new guide, “Essentials of Impact Investing: A Guide for Small-Staffed Foundations.” Produced by Arabella Advisors, Mission Investors Exchange and Exponent Philanthropy, it aggregates experiences and highlights the best of the estimated one in 10 small foundations that participate in some form of impact investing. Read more.
[custom_headline type=”left” level=”h2″ looks_like=”h4″]PRI 2015 Reveals the Highs and Lows of Responsible Investment[/custom_headline]
The 2015 Report on Progress analyses the results of 936 investors from 48 countries across six continents, giving unprecedented insight into the global responsible investment market. The assets under management of PRI signatories reached US$59 trillion, demonstrating widespread awareness of responsible investment. And, Asset owners are leading the way in spreading the word about responsible investment. PRI’s asset owners use their public profile and voice to support responsible investment initiatives and public policy, as well as to promote the Principles. Read more.
[custom_headline type=”left” level=”h2″ looks_like=”h4″]The Value of Being Human: A Framework for Impact Investing and Philanthropy[/custom_headline]
A great new report from Barclays: Many investors are keen to embrace impact investment. But while surveys conducted for this study found that more than half the respondents expressed interest in such investments, fewer than one in ten (9%) had actively engaged. Barclays believes the explanation for this gap is straightforward: people may want to use their investment for social good, but they don’t know how to. Read more.