Foundations and Family Offices Create a Fund to Support Impact Investing

Key investors and philanthropic supporters of impact investing have joined forces to announce a new grant-making vehicle intended to strengthen the integrity of investing practices for social and environmental good, and to scale the movement to reach a broader array of investors.  Read the full article here.
The Tipping Point Fund was founded with $12.5 million in grant funding provided by nine inaugural donors, seven of which incubated the idea with assistance from the U.S. Impact Investing Alliance, an awareness-raising group of investors and impact investing networks. The founding donors also include

Ian Simmons and Liesel Pritzer Simmons’ family office, Blue Haven Initiative, and a corporate member, the Visa Foundation. 

By the Tipping Fund’s definition, impact investing spans an array of capital stakes made in public and private companies, and includes environmental, social, and governance approaches as well as responsible and sustainable investing. 

As these investment options have exploded in number and variety in recent years, foundations and other participants have been on guard to ensure that capital deployed in the spirit of addressing inequality and ensuring environmental and social sustainability, is being invested as intended. That’s particularly true as bigger asset managers, such as
Goldman Sachs and
BlackRock, and private-equity funds, such as TPG, Bain Capital, and KKR, enter the market.

The fund’s name, in fact, refers to impact investing “tipping” from the margins to the mainstream. 

“This conversation is starting to happen well outside of traditional impact investing circles,” Mike Kubzansky, CEO of the Omidyar Network, said at a Monday press briefing on the fund. 

Last August, even Business Roundtable, a network of corporate CEOs, encouraged businesses to consider a broader array of stakeholders in their decision making.

“The social purpose of business is finally up for discussion, opening the door for impact investors to play a leadership role in shaping the next phase of our economy,” Kubzansky says. 

“It also calls into sharp focus the urgent need to protect the integrity of the impact investing industry as it scales to include more mainstream players,” he says. “One key is to help investors and those who would hold us to account distinguish between investments that are a little more than marketing fluff from those that have real impact.

The Tipping Point Fund will address these concerns by strengthening the infrastructure that allows impact investing to exist and grow. To that end, it will issue grants in two focus areas: public engagement and policy; and data, metrics and measurement. 

“We’re trying to build the impact investing field to make it easier for others to deploy capital, and, as more mainstream actors come into the field, to make sure it holds the center on impact,” says
Fran Seegull, executive director of the U.S. Impact Investing Alliance, which will help manage the fund’s operations. 

By funding public engagement efforts and public policy, the fund hopes to create broader awareness of the potential of impact investing to achieve positive social and environmental goals as well as financial returns. 

“Whether it’s taxable or retirement assets, retail investors have a right to know what the impact of their investments are, and then they can choose,” Seegull says. 

The power of public policy to facilitate change is evident to Darren
Walker, president of the Ford Foundation, also a founding donor, who pointed to an earlier effort led by a precursor organization to the alliance that resulted in a report called Private Capital for Public
Good.  

“That was meant to be a clarion call to policy makers about the need to lower barriers and provide incentives to the growth of the impact investing market,” Walker said at the press briefing. 

One of several outcomes of that report was U.S. Treasury guidance in 2016 allowing foundation fiduciaries to consider the social and environmental impacts of their endowment investments alongside financial risk and returns. In response, the Ford Foundation, in the spring of 2017, announced it would invest up to $1 billion of its $12 billion endowment in mission-related investments over the following 10 years. 

The Tipping Point Fund’s first request for grant proposals will focus on public engagement and policy, with a round of grants expected to be announced in the first quarter of 2020. The grants will be awarded through collaborative decision making among the donors. 

In addition to public policy and public engagement, the fund also will focus on data, metrics, and measurement, because a single standard for measuring impact doesn’t exist today. Instead, there’s an array of metrics, themes, and principles, although various coordinated efforts have been underway for years to create rigorous guidelines. 

Less rigor was fine when the field was small and comprised of community investment funds, and development finance experts, and others “whose bread-and-butter was high impact investment,” Seegull says. “Now that there’s more mainstream money in the field, we want to make sure it has a set of principles and reporting standards and disclosure so we can showcase the best actors on this path and we can hold folks accountable.”

A hope of the inaugural donors is that the pooled capital in the Tipping Point Fund will grow as a wider range of donors participate. In addition to Ford, Omidyar, Blue Haven, and Visa, the initial group includes the David and Lucile Packard Foundation, the John D. and Catherine T. MacArthur Foundation, Rockefeller Brothers Fund, Surdna Foundation, and The Rockefeller Foundation. 

As Omidyar’s Kubzansky put it, “We hope that this is just the beginning and that other participants in this growing market will join and they will pay their fair share to fund the rails upon which we all ride.”

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