The Bottom Line: Essays
I. Investing for Impact: Redefining Philanthropy and Investment Strategies
From leading foundations to large-scale financial institutions to emerging boutique investment funds, there is a growing appetite and demand for a variety of investors. We have asked a select few to share their motivations and early lessons learned from implementing impact investment strategies.
After 27 years running the Nonprofit Finance Fund, which she founded, Clara Miller was named president of The F.B. Heron Foundation in 2011. With the help and support of the Heron board and the staff, Miller went all in: expanding from 40 percent to 100 percent the foundation’s commitment of financial resources invested in improving employment opportunities for those at the bottom of the economic ladder.
The McKnight Foundation, a Minnesota-based family foundation, has a $2 billion endowment that puts it in the top 25 largest privately held foundations in the U.S. The McKnight Foundation seeks to improve the quality of life for present and future generations through grantmaking, collaboration, and strategic policy reform in the following areas: arts, education and learning, environment, the region and communities, agricultural research, and neuroscience research.
The Morgan Stanley Institute for Sustainable Investing is dedicated to driving private sector capital to attractive investment opportunities that seek competitive financial returns as well as positive social and environmental outcomes. The Institute’s mandate reflects Morgan Stanley’s foundational commitment that capital markets can and should play a vital role in developing the innovative, scalable solutions that will help us meet some of the largest global challenges ahead.
II. On-the-Ground Innovators: Developing Talent to Invest for Impact
From young professionals who are establishing themselves to retirees who are pursuing encore careers, a growing number of professionals are seeking meaningful careers that are aligned with their values. With a diverse set of experiences and skill-sets, this growing talent pool can help build multidisciplinary teams that apply a market-based approach to persistent social challenges. Organizations, such as Echoing Green, Draper Richards Kaplan Foundation, and ProInspire, provide the financial and capacity-building support that is helping to build the next generation of social entrepreneurs and leaders. We asked them to discuss the trends in entrepreneurs’ motivations and interests as well as what the field needs to build effective, investment-ready enterprises.
Trends in Seed-Stage Social Entrepreneurship: The Importance of Investing in Emerging Social Entrepreneurs to Build Family Economic Security by Cheryl Dorsey, President, and Min Pease, Manager of Impact Investing, Echoing Green
Echoing Green is a nonprofit whose mission is to unleash next-generation talent to solve the world’s biggest problems. Since its founding in 1987 by the leadership and investment of the leading global growth equity firm General Atlantic, Echoing Green has provided nearly 600 promising social entrepreneurs working in over 40 countries with $36 million in start-up funding, customized support services, and access to its global network. These social innovators have gone on to launch, and now lead, some of today’s most important social enterprises throughout the world. Others have gone on to become leaders in a variety of sectors, having been profoundly shaped by their experiences launching social enterprises.
ProInspire was founded in 2009 to address the gap between interest from young professionals in impact careers and opportunities to work for social sector organizations. Through the ProInspire Fellowship program, outstanding business professionals with two to five years of private sector experience in consulting, finance, marketing, and operations are selected to work with our leading nonprofit and social enterprise partners. We have since placed over 100 Fellows with 45 partners, and we continue to see high demand for impact careers — especially in the impact investing field. Our experiences reflect what the Aspen survey revealed: Impact investing organizations and mission-driven enterprises benefit from teams that blend business acumen with deep experience and expertise in social impact areas.
Founded in 2002, Draper Richards Kaplan (DRK) Foundation is one of the country's leading venture philanthropy firms. Since its inception, DRK has funded 64 early-stage, high-impact, nonprofit social enterprises tackling some of society’s most complex problems. Early DRK investments include Kiva, Room to Read, VisionSpring, One Acre Fund, and Grassroots Soccer. In its investment thesis, DRK heavily borrows a point of view from it’s venture capital legacy, which makes it rare among funders in this space. DRK provides early funding and rigorous support to exceptional social entrepreneurs to help them scale their organizations and to achieve the greatest impact.
First Book is a nonprofit social enterprise that distributes new books and educational resources to children in need across the U.S. and Canada. Since 1992, First Book has distributed more than 118 million new books with a retail value of nearly $1 billion. They currently serve more than 130,000 programs and schools in the First Book Network, the largest and fastest growing network serving children at the base of the economic pyramid in North America. First Book’s innovative model has been highlighted on stage at the Clinton Global Initiative and has been featured at World Economic Forum events in Davos and Beijing. Its impact-focused philosophy of social change has also been featured in case studies and lectures at a number of top MBA programs, including Wharton, Yale, Columbia, and Oxford.
Aspen Institute Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination (FIELD) was established in 1998 to build on the work of the Self-Employment Learning Project, the leading domestic microenterprise evaluation and public education program at the time. Since its inception, FIELD has maintained a focus on the U.S. microenterprise industry — exploring innovation, evaluating new ideas, helping to build the industry's infrastructure, disseminating best practices to practitioners, and serving as a resource to donors interested in microenterprise.
Social Enterprise @ Goizueta (SE@G) is based in Emory University’s Goizueta Business School. The focus of SE@G is that of applying business acumen and market-based solutions to achieve meaningful and enduring societal impacts. By actively working across the spectrum of for-profit, nonprofit, and hybrid organizations, its faculty and students become participants in important conversations and debates that are taking place in business schools around the world.
The Aspen Network of Development Entrepreneurs (ANDE), a policy program of the Aspen Institute, is a global network of organizations that propel entrepreneurship in emerging markets. ANDE members provide critical financial, educational, and business support services to small and growing businesses (SGBs) based on the conviction that SGBs will create jobs, stimulate long-term economic growth, and produce environmental and social benefits. Ultimately, we believe that SGBs can help lift countries out of poverty.
Members of ANDE include both for-profit and nonprofit investment funds, capacity development providers, research and academic institutions, development finance institutions, and corporations from around the world. Launched with 34 members in 2009, ANDE now comprises over 200 members who collectively operate in more than 150 countries.
Making Sure the Juice is Worth the Squeeze by John Goldstein, Managing Director, Imprint Capital
In 2007, John Goldstein co-founded Imprint Capital, which has gained a national reputation for no-nonsense help to foundations seeking to examine, launch, and evaluate impact investing programs. Imprint Capital has advised on more than 100 different impact investments with ten of the largest 25 foundations in the country, including the $8 billion W.K. Kellogg Foundation.