With the noticeable increase in investments made from traditional funders to social-impact organizations, it is clear that impact investing is becoming a mainstay of the philanthropic industry. But for some foundations, impact investing remains as foreign and intimidating as learning a new language, no matter how keen they are to begin their own impact investment-related work.
Recognition of this trend, combined with early successes in the field, compelled the impact investing team at the Max M. & Marjorie S. Fisher Foundation to host its first-ever “Impact Investing Bootcamp.” Thanks to the expertise of Tina Castro, CFA, Co-Founder and Managing Director, and Javier Hernandez, Vice President, of Avivar Capital, more than 30 individuals dove deep into the world of impact investing, from learning basic terms to wrestling with complex case studies. Heidi Reijm, Hudson-Webber Impact Investing & Evaluation Fellow at the Council of Michigan Foundations, and Tomer Inbar, Partner at Patterson Belknap, joined in the session to share their first-hand experience with attendees.
Participants—representing funders, investees and industry leaders from all over Michigan—discussed the “art and science” of tracking the social impact of impact investments, emphasizing that while many groups are creative in their approach to this effort, others are leading the way by establishing new standards for the industry.
Phillip Wm. Fisher, Chairman of the Max M. & Marjorie S. Fisher Foundation Board of Trustees and Impact Investing Committee, as well as a member of the Impact Investing Committee for the Council of Michigan Foundations, highlighted that impact investing is about changing the culture of both an organization and the philanthropic sector more broadly. “We are encouraging people to think differently about how to deploy capital to create impact. Impact Investing helps organizations think differently about building financial sustainability. There are a lot of intentional and unintentional consequences that come from this work.”
The event began with a presentation explaining the basics of impact investing, including definitions for frequently used terms, standard approaches to impact investing, and what makes an impact investment feasible. Following a question and answer session on the presentation, participants heard from Heidi Reijm regarding the suite of services provided by the Council of Michigan Foundations. Tomer Inbar of Patterson Belknap then spoke to fiduciary responsibility and impact investing, noting that as impact investing has become more prominent in recent years, legal responsibilities have become increasingly complex.
Tina Castro, CFA, a close advisor to the Fisher team, underscored that while impact investing is an “innovative tool” of philanthropy, it is not always the most appropriate tool to move the needle on every issue – impact investors must be clear about what problem they are trying to solve and whether investment capital is a necessary part of the solution. If so, what kind of capital is necessary (debt or equity) and how does that capital need to be structured to meet the risk/return objectives of investors while meeting the needs of target investees. Both Tina and Javier emphasized the importance of collaboration among impact investors to share risk, reduce costs and create more efficiency in the diligence process for both investors and investees.
The afternoon was spent in small groups working through case studies that highlighted the many nuances making impact investing both a challenging and rewarding field.
Meredith Freeman, Director of Alignment & Impact Investing at the Fisher Foundation, underscored the role that impact investing can have on the long-term capacity of social impact organizations. Even when an investment is not the best tool to fill a philanthropic gap, often just undergoing the diligence process can “help [an organization] figure out their next steps before re-approaching the Foundation and other potential funders.”
Tina also emphasized the importance of having a diverse investment committee that reflects the communities it seeks to serve, urging participants to look with a critical eye at not only what investments are being made, but also the make-up of those making the decisions. She noted “it takes a village” of diverse perspectives and expertise to ensure investments succeed.
With incredible potential to accelerate the social impact made by the Foundation’s grants, there is no doubt that impact investing will continue to play a large role in how the Fisher team serves its community. Stay tuned to this blog for additional news on the Foundation’s investments!