The future of impact investing

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By James Frazier

This fall, the Natural Investments team united for a series of exciting gatherings in the San Francisco area.  In our most significant annual tradition, the advisors of NI leave our widely dispersed homes and communities, and come together to help move our industry, and our firm, forward into the future.  This year we met at the SOCAP (Social Capital Markets) conference, which offered a fresh perspective on the future of impact investing.  Adding in a half-day event focused on local investing before the conference, and a three-day retreat for Natural Investments advisors after the conference, we departed Northern California invigorated and enthusiastic about the work we do and where it’s all headed.

The big week kicked off with the Community Capital Symposium, an event dedicated to advancing the local investing movement.  The mission was to empower community-based ventures and locally-focused investors to build thriving communities together.  As coordinator for the nonprofit Local Investing Resource Center, I helped organize this event with several leaders in the local investing field and in the city of Oakland, where the event was held.  A capacity crowd of over 100 showed up on Labor Day (no small feat on a national holiday!) to learn about how both for- and non-profit entrepreneurs can use existing and new techniques for raising community capital, how investors can find and evaluate local investing opportunities, and how community organizers and activists can help build a “community capital ecosystem.”  This ecosystem consists of partnerships between the people (such as local investors and entrepreneurs) and institutions (such as Small Business Development Centers, Economic Development Councils, community colleges, local banks, etc.) that can help connect qualified investment-ready businesses with local financing.  By the end of the day, participants were feeling excited about the opportunities to keep investment dollars, and returns, circulating within their own local communities.

The very next day, SOCAP began in San Francisco, bringing together almost 2,000 people from all over the world to advance the field of impact investing.

The energy and the youth of the crowd was palpable.  The conference focused on entrepreneurs and the power of business to create innovative, cost-effective solutions to the world’s problems.  This incredible sense of optimism was likely due to our proximity to Silicon Valley, hotbed of the technology industry and its multi-decade track record of churning out world-changing products, services, and ideas.  Rather than focus their efforts on large, established public companies, as the SRI industry tends to do, the SOCAP crowd was all about building change from the ground up, by seeding lots of businesses that blend the cost efficiency and speed of a tech startup with the social mission of a nonprofit.  The rationale for this?  Many of these startups will fail, leading to lessons learned, while some will succeed incredibly, and as a result, society will evolve in ways we cannot anticipate.  This blurring of lines between for-profit and non-profit, and even between failure and success, was a recurring theme that we can expect to see more of in coming years.

How was this relevant to investors?  A large part of the conference was about how to channel investment into the best ideas—the ones that help make life better for people and planet.  We met with an amazingly wide variety of fund managers that have developed investment products that blend social and environmental impact with investment returns.  These ranged from lending money to small and medium-sized businesses in the developing world, to buying up American farmland and converting it to organic.  It was heartening to see that some of these investments are open to non-accredited investors, generally meaning people with less than $1 million in net worth.  The movement to bring these types of impact investments to the investing public at large seems to be gaining strength, and getting results, slowly but surely!

After SOCAP was a wrap, the Natural Investments advisors retreated to Sonoma County for a few days of team-building.  We shared wisdom on how to improve our individual practices, our investment process, and our use of technology.  We ate together, relaxed, and visited redwood forests and local wineries.  In the end, it was sad to leave, but at the same time, very empowering to bring all of the insights we shared, and connections we made, back to our homes and communities, to put to work for our clients and for the world as a whole.

This article first appeared in the Autumn 2012 edition of the Natural Investment News

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