Impact investing is gaining traction with funders in Canada as a natural extension of philanthropy that unlocks capital for good and further supports an organization’s philanthropic mission. So, what is impact investing and why is it important to philanthropic investors? These were the questions being asked during "Unpacking Impact Investing: Learning from Experience," a breakout session focusing on the experiences of four Canadian funders that worked through the process of formulating an impact investing strategy. Moderator Llewellyn S. Smith, President at the Helderleigh Foundation, was joined by Terry Cooke, President & CEO at Hamilton Community Foundation; Rosamond Ivey, Chair at the Ivey Foundation; and Desmond Wilson, CFO at the Catherine Donnelly Foundation.
Llewellyn kicked off the session by boldly stating that if each foundation invested 10% of its assets in investments that furthered their mission, vision, and values, they would more than double their impact. Why 10%? Because the Canadian Task Force on Social Finance has set a target for Canadian foundations to invest 10% of their capital in mission-related investments by 2020. If this target were to be achieved, it would redirect an estimated $7B in assets towards greater impact. It’s also an achievable number for many funders.
Funders need to understand that impact investing is a complimentary but separate tool from grantmaking. Desmond challenged funders to think about investing as a holistic part of philanthropy rather than a sidebar and asked funders to be as demanding of their investments as they are with their grants. Philanthropy is not sufficient to solve complex global challenges like climate change. “If you’re disbursing 3.5% each year to meet the disbursement quota, what are you doing with the other 96.5%?” asked Rosamond. She spoke of her own experience transitioning 17.5% (and soon to be 25%) of the Ivey Foundation’s $100M in assets to socially responsible investments (SRIs) and encouraged other funders to “just leap” rather than give in to inertia because it’s hard.
Terry said it all clicked for him when Bill Young of Social Capital Partners asked him and the Hamilton Community Foundation (HCF) Board of Directors: “Are you a mission-aligned organization that deploys all of its assets to advance the mission or are you an investment bank kicking out 3.5% a year?” HCF started impact investing by setting aside $5M of unrestricted capital. Now 20% of their $200M in assets are deployed to advance their mission. They are consciously trying to move towards 100% like the Heron Foundation in the United States.
There are an increasing number of impact investment products available locally, nationally, and globally, as well as a growing body of knowledge around impact investing. Rosamond said that ultimately funders need to cut out the noise and just act. The amount of information out there is overwhelming so she suggested signing up for one or two newsletters while Desmond recommended hiring impact investing consultants and experts to help. To quote Terry: “Impact investing may not be for the faint of heart but it’s also not rocket science.” Impact investing is just one more tool for funders to utilize in their efforts to advance their missions and increase their impact.
Philanthropic Foundations Canada (PFC) is a member association of Canadian grantmakers, including private and public foundations, charities, and corporations. PFC hosts an annual conference for members and other grantmakers in Canada and across the world to exchange ideas, learn from each other, and discuss important issues.
The 2018 PFC conference was held in Toronto on October 16-18, and focused on the themes of connection, creativity, and social change. For more information, visit the PFC website or PFC conference website.
Thank you to PFC for providing Hilborn Charity eNews with a media pass to attend the 2018 PFC conference.