When Impact Investing Is All About the People

Published by Stanford Social Innovation Review, Feb. 21, 2017, written by Jessie Fink 

Get out and be bold. Impact investing as a tool is only as innovative as the investor who wields it. As a lean family foundation, we at The Fink Family Foundation have challenged ourselves to utilize all forms of capital—human, intellectual, social, spiritual, and financial—to make the change we want to see in the world. Impact investing enables us to leverage all these assets to identify, research, and build replicable and scalable solutions that pave the way for follow-on impact investments by larger funders. Our goal is to spark a broader impact investing movement that leverages dollars from larger foundations and market rate investors, and it all starts with people.

Investing in Human Capital

One challenge facing the impact investing field is a widespread lack of knowledge and skilled human capital. Awareness, education, and skillsets among funders, intermediaries, and impact investing advisors need to advance at a faster pace. The latter two groups now can’t resist the pull from their clients to provide advice and investments that align with family and foundation missions, purpose, and investing style.

The Fink family started its impact investing journey in 2001 by focusing on mitigating climate change through energy efficiency, solar business model development, and carbon markets. We believed investment in this area would have the largest impact across the environmental and ecological sectors. We then expanded our investment scope to include adaptation and resiliency, with investments such as green housing in New Orleans and storm water infrastructure, to keep pace with the changing world. Our next focus will be on understanding risk in our portfolio as a whole in this volatile environment, including stranded assets evaluation and longer-term shocks to portfolios due to climate change. Each of these phases has required that we invest in distinct types of human capital—environmental experts in the carbon markets early on; then solar, wind, and energy efficiency practitioners; and now specialists of risks and volatility.

Understanding how important this expertise has been to our own effectiveness, one of our main initiatives is now building the capacity of the impact investing sector, in part through leadership development. We have supported interns, fellows, and MBA students interested in pursuing impact investing, at both for-profit and nonprofit organizations. Proudly, many of those young professionals are now up-and-coming leaders in the field. We are in the company of other pioneering organizations in this area, including Cordes Foundation and Sorenson Impact Foundation, and it is encouraging to see more and more higher-education institutions creating curriculum for impact investing and the CFA Institute and other credentialing organizations building it into their training.

Investing via Collaboration

A common challenge for foundations is getting the investment side of the house speaking with the programmatic side. Without this, we lose the bigger picture of trying to solve a problem.

 

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