Ideas almost always emerge when traditional routes are not enough. One such idea, emerging in our new economy, is a hybrid blend of time-honored philanthropy and investing for financial return called “Impact Investing” — investing to make a difference in the world and make money simultaneously, or “Blended Value.”
Like many ideas that become more of a movement (such as the rise of technology) than a single invention (such as the iPad), impact investing is completely changing the way many things are done, thought about or made.
Local investors had the opportunity to hear more about this game-changing trend at a special event at the Granada Theatre on Thursday that revolved around the theme “The Ultimate Benchmark: Achieving Traditional Financial Returns with Social and Environmental Impact.” The event was hosted by Pacific Pointe Advisors, a local independent investment advisory firm with a specialty in impact investing.
“Impact investing seeks to generate social and environmental impacts in addition to financial returns,” guest keynote speaker Raúl Pomares said.
Pomares is the managing director of Sonen Capital and co-author of the book Solutions for Impact Investors: From Strategy to Implementation, published by Rockefeller Philanthropy Advisors, one of a handful of relatively new books written on the subject of impact investing.
“Successful impact investing is based on moving beyond false assumptions that investors must choose between social and environmental impact OR financial return,” he said. It’s about “expanding the scope and scale of philanthropic capital and subjecting investments to recognized financial benchmarks while maintaining fiduciary responsibilities.”
This new hybrid approach to philanthropy and investing is obviously working because it is helping to fund projects and build new institutions around the world that otherwise would never see the light of day.
CEO Glenn Pierce of the Canyon-Agassi Charter School Facilities Fund, founded in partnership with tennis star Andre Agassi, described examples in education at the Granada event. Agassi and his partners are focused on helping to fund academically friendly, environmentally responsible charter schools — independent tuition-free public schools — because they believe education is important. And they realize that one of the primary challenges to expanding charter schools is lack of capital. So they came up with some investment criteria, such as shortage of quality public schools in a given area, supportive leadership, strong and competitive student reimbursement rates, supply of affordable land for development or buildings for adaptive re-use, strong demographic and economic fundamentals, successful and proven operators, sensitivity to sustainability, and significant downside protection to investment.
They also came up with compelling reasons to focus their investment fund in this direction, including the fact that more than 1 in 3 American fourth graders (34 percent) can’t read at basic levels, the U.S. overall high school graduation rate trails most other industrialized nations, and for each additional year of schooling, the odds that a student will someday commit a crime like murder or assault are reduced by almost one-third.
“The Canyon-Agassi group saw a societal need, were aware of the funding difficulties in today’s economy, and came up with a way to ‘bridge’ the funding gap to get the facilities built, creating a win-win for everyone involved,” said event host Gary Dorfman, founding partner of Pacific Pointe Advisors.
Dorfman says there are an unlimited number of themes around which impact investors can organize to make a societal and/or environmental difference in the world, including climate change, energy, water, community development, social enterprises, health and wellness, sustainable development, education and so much more.
“The only limit is one’s imagination,” he said. “At Pacific Pointe Advisors, our goal is to educate, encourage and inspire our clients to understand and participate in the multidimensional benefits of impact investing.”
For more information about impact investing, call Pacific Pointe Advisors at 805.845.2400.
— Jonatha King is a publicist representing Pacific Pointe Advisors.