What does revolutionary change look like? That question was at the heart of Confluence Philanthropy’s 2015 Practitioners’ Gathering. In the world of investment advisors and Wall Street finance, a revolution can start with two words: “Sell it.”
Five years ago, my family and I decided that we would start selling off some investments that didn’t match our values. We started small—selling shares in a carbon producer, buying mutual funds with negative screens—but it felt good to know we were taking action on issues that mattered to us.
Five years ago, our advisor thought we were throwing money away. Today though it’s clear, our investments are one drop in a huge pool of capital that is aligning behind issues and impact.
Whether you look at it as an individual or an institution, there are more opportunities than ever before to direct your capital to a cause. And with each closing deal, we have better metrics to gauge your success. Here are three trends in impact I saw at Confluence.
My family’s divestment definitely didn’t move the needle any by itself, but it’s now part of a growing pool of carbon free investments. The IEA estimates that annual investments of $1 trillion in clean energy investments could be enough to finance a renewable technology revolution, and today we’re on a course to achieving that sooner than anyone could have imagined. With more than $300 billion invested in renewables last year, the markets are taking notice.
- Collective Impact
Throughout the Confluence Gathering, it was clear that the foundations have a growing understanding of the intersectionality of issues being confronted. When the Hitachi foundation helps train Advanced Medical Assistants to work in low income communities, it improves health outcomes for those areas, but it also improves the job quality for the workers. One investment in a skilled workforce can have cascading benefits throughout communities.
If your advisors or your investment committee are still scoffing at the low returns on impact investments, it’s time for them to stop and revisit the charts. Foundations like the KL Felicitas Foundation, with 100% impact portfolios, are beating the markets and advancing their missions at the same time. One only needs to look as far as the recent volatility in oil prices to realize that traditional portfolios can misprice the risk of ignoring impact.
The Council on Foundations recognizes the growing importance of impact investing to our members. We work with partners like Confluence Philanthropy, Mission Investors Exchange, Village Capital and others to ensure that foundations have access to the tools and resources needed to get involved. If you’re interested in finding out more, I invite you to browse our website, attend our 2015 Annual Meeting, or send me an email.
John Cochrane is Associate Director, Social Innovation, at the Council on Foundations.