At the Wharton Social Impact Initiative, we focus on how businesses and finance can be leveraged to drive inclusive economic development. Over the last decade, we have noticed a dramatic increase in the number of investors seeking to achieve financial returns as well as measurable social or environmental impact across their investable assets. This approach to investment – generally known as “impact investing” – takes many forms across asset classes, impact sectors, industries, and geographies. And, the growth in impact investing is leading to a range of partnerships, approaches, and funding strategies.
At the Total Impact Conference in late April, The Philadelphia Foundation and Reinvestment Fund announced a joint initiative named PhilaImpact Fund. This impact investing vehicle will allow each organization’s investors to fund development projects in Philadelphia and the surrounding counties. The PhilaImpact Fund connects investors, philanthropists and engaged citizens with the projects, initiatives and big ideas that generate results on a local level.
Over the past several decades, investors, economists, and business owners alike have acknowledged the need to move from shareholder capitalism to stakeholder capitalism. Research shows that Millennials seek meaningful work and investments that make money and make a difference. And since Millennials represent 50% of the global workforce and will inherit $40 trillion in the coming decades, they will shape labor and capital markets like no other generation. The existence of this trend raises important questions that B Lab's Liz Fernandes explores in this Perspectives piece.
The Circle of Aunts and Uncles is a group of 35 members that seeks to build local self-reliance by supporting, mentoring, and providing low interest loans and social capital to aspiring entrepreneurs in Philadelphia. The group has loaned out more than $100,000 since 2015 with priority given to entrepreneurs who demonstrate financial need, are from a historically marginalized population, aspire to implement eco-friendly business practices, and plan to maintain local independent ownership.
Last May, Reinvestment Fund announced a $50 million public bond offering to further its mission to build wealth and opportunity for low-income places and people. The bonds were rated AA- by S&P and represent one of the first examples of connecting CDFIs to mainstream capital markets. Demand for these bonds far exceeded expectations and the offering was oversubscribed. It was a testament to the demand among institutional investors for viable options to channel their capital towards impact, while also receiving market-rate returns.
There’s a collective societal consciousness that thinks of traditional stock and bond markets as prudent and safe while viewing direct investments into businesses and non-profits as risky. The Untours Foundation seeks investments with local and/or societal benefits and makes the case that perhaps the level of risk isn’t so different after all.
Why does ImpactPHL chair John Moore feel so strongly about optimizing investments beyond financial metrics, and Philadelphia’s role as a global hub for such innovation? In volume one, he explains the perspective of ImpactPHL Perspectives.