We are in the midst of planning the 4th Annual Capital for Cause summit on impact investing. This year focusing on the influence that single and multi-family offices have on pushing the needle through blended investment strategies. A blended investment strategy combines traditional investment models with impact investing, program/mission related investing and philanthropy. In a recent conversation with Genus Capital I learned that only 1% of family office investments are directed towards impact investing or social ventures. This post examines the question of “How much is enough?” when it comes to designing an impact-driven and mission aligned portfolio for your foundation assets.
When a donation/grant is made to a charity the only expectation (if one is even articulated) is that the funds are stewarded properly. How one defines proper stewardship differs from donor to donor. At the end of the day, a grant that isn’t deployed properly ends up being lost capital. Funders get an immediate benefit of this investment through a tax receipt that is then applied as a credit against their income. There is no further investigation on the value of that credit against the impact or shift that the charity makes as a result of the funds received.
When considering the same value of contribution to a social venture however, the expectations and attitudes shift considerably. There is a chasm that needs to be crossed around impact investing that demonstrates to an investor that putting money into a naming opportunity on a wall can be more risky than directing 1% of a portfolio into a for-profit social purpose business. Think about your own charitable investments and the assets that you have in your investment portfolio – what are you willing to lose? What standards are you holding the charity investees to? Are they the same type of return as you hold your investments to? If they are different, why?