Generosity_SOCAP-2015-opening-night

Attending SOCAP for the first time, I wasn’t sure what to expect. SOCAP (Social Capital Markets) mixes social entrepreneurs who want to use business to change the world for good, with investors who want to use their capital to support social innovation and change while also receiving financial returns.

At the Fort Mason Centre, I spent three days listening, learning, talking and debating with like-minded people from around the world, being challenged to think about ways of moving money to be invested in line with our values.

Having recently established an impact investing intermediary business together with my husband, Quentin, SOCAP provided us with an opportunity to understand the impact investing and social enterprise eco system in the US, as well as the latest trends in the sector.

It also provided a chance to hear from, and meet with, thought leaders and expert practitioners in the space, whether they be impact investing heads of the largest fund managers globally, Foundation CEOs, nonprofits and family offices whose assets are 100 per cent impact invested, academics from leading universities, innovative social entrepreneurs, or heads of accelerators and incubators.

I admit I was star struck by a one-on-one conversation with Bill Drayton, Founder of Ashoka, and a quiet chat with the highly impressive former Massachusetts Governor Deval L. Patrick, now head of impact investing at Bain Capital. So many of the thought leaders whose work I follow presented at SOCAP and it was wonderful to hear their perspectives in person.

It was also great to share the SOCAP experience with a dynamic group of Aussies, including many now living in the US and Asia. With a mix of Australian investors, social entrepreneurs, media and intermediaries hitting the SOCAP circuit, we were well represented and certainly made ourselves known!

SOCAP 2015 featured eight streams: Impact Investing; Meaning; Divest-Invest; Financial Inclusion; Neighbourhood Economics; 21st Century Talent; Living in the Future; Sustainable Supply Chain.

Sessions were a mix of plenaries and breakouts, which were hard to choose from given that there were 10 simultaneous sessions in each time slot.

There was also a huge social enterprise trade show where social entrepreneurs and intermediaries from around the world could connect with one another and with investors, pitching sessions, and ‘Gratitude Awards’ for the best social enterprise ideas pitched.

Reflecting on the many sessions, conversations and people, seven themes stood out for me:

1 – Impact investing is a broad tent and we shouldn’t get caught up with definitions

There was widespread consensus that the complexity of language around impact investing is confusing!

Many share the view that impact investing is a big tent, where there is room for everyone, and what counts as impact investing is personal.

The point was made that all investing is, in fact, impact investing – it is just that for some investments the impact is negative. Jackie VanderBrug, of US Trust, urged investors to find an approachable entry point that makes sense

Amanda Miller, Jackie VanderBrug & Quentin Miller

Amanda Miller, Jackie VanderBrug & Quentin Miller

for them and other opportunities will follow: “People enter the impact investing space in different ways and move around to different types of investments; it doesn’t matter where you start”.

In an insightful discussion with John Goldstein, Co-Founder of Imprint Capital (recently acquired by Goldman Sachs), Goldstein emphasised that impact investing is a process not an act; and that we need to start somewhere, iterate, adapt and improve. We also need to share what we learn along the way with others on a similar journey, while being mindful that everyone will have their own definitions of the impact they are seeking from their investments.

2 – Impact investing is going mainstream as we demand more from our financial advisors

Major investment companies such as BlackRock, Bain Capital and Goldman Sachs participated in SOCAP. These companies have each recently created impact investing arms in response to investor demand; their clients are asking for their investments to be aligned with their values.

CEOs of foundations and family offices challenged us to demand more from our financial advisors. Ron Cordes, co-founder of the Cordes Foundation, urged, “Go to your financial advisor and ask about the options for investing in line with your values— don’t take ‘no’ for an answer”.

David Chen from Equilibrium Capital suggested there would come a day when financial advisors would ask clients how much impact they would like to have, but he stressed that we’re not there yet!

Offering investments with impact would also attract women and millennials as clients. As Fran Seegull, Chief Investment Officer and Managing Director of Impact Assets said, “For wealth advisors, being conversant in impact investing will be a competitive advantage.

The risks around impact investing going mainstream and ‘impact’ being diluted were also discussed, and the need for accountability and transparency was highlighted.

3 – Foundations are taking a holistic approach to their investments and grants

It was refreshing to hear from CEOs of foundations who look at the impact of their grants and investments equally, in terms of fulfilling their mission.

Clara Miller, the highly commercial and articulate CEO of the Heron Foundation, believes that “Philanthropy is not a marginal activity, it is not confined to grants – it is part of life.”

She went on to say, “It is our duty as a philanthropic organisation to track all our investments for financial and social impact,” and explained that the Heron Foundation “aspires to a net contribution framework across our portfolio and asks – ‘What is the best use of our capital to give rise to our mission’?”

This conversation led to the question being posed: if a foundation’s investments do more harm than its grants do good, should it exist?

There were also interesting discussions about ‘blended’ or ‘layered’ capital – foundations using philanthropic capital to fill the ‘pioneer gap’ and then following this with investment capital.

4 – Many investors are seeking to invest with a gender lens

This includes looking at diversity in management and leadership of businesses being invested in, or how their products or services impact on women and girls.

It also includes investing directly in businesses established by women or whose purpose it is to empower women and girls. During SOCAP, the Criterion Institute released a new report, The State of the Field for Gender Lens Investing, which states, “At its core, gender lens investing incorporates a gender analysis into financial analysis in order to get better outcomes.”

It was also emphasised that with the coming transfer of wealth to women, we need to provide women with the opportunity, confidence and skills to make their own investment decisions.

5 – Investors don’t need to sacrifice financial returns in favour of social returns

The Wharton School at the University of Pennsylvania launched its new report Great Expectations, Mission Preservation and Financial Performance in Impact Investing, authored by the Wharton Social Impact Initiative.

The report found that, contrary to perceptions, investors do not necessarily need to expect lower returns as a trade-off for social impact; in fact, in some market segments investors achieve returns similar to those from public indices. For instance, after studying 53 funds with 557 investments, Wharton found that the rate of return from 2000 to 2014 was in line with benchmarks such as Standard & Poor’s 500 index.

Generosity_Australian-contingent-SOCAP-2015

The Australian contingent at SOCAP 2015

6 – There is a move back to investing in local communities

Many sessions focused on empowering local communities and democratising impact investing to create opportunities for people to invest in their own neighbourhoods to create the kinds of places where they want to live. This includes looking at issues such as food systems, investing in small local businesses run by minority and immigrant entrepreneurs, and initiatives such as co-operatively owned solar power.

Democratising impact investing was also discussed.

One way this is being achieved is through new financial investment products that offer the opportunity to invest at very accessible levels, such as around $2,000.

7 – There has been much progress, but we’re not there yet

As far as the impact investing market has come, there is still some way to go. As Cathy Clark, Director of the CASE Initiative on Impact Investing at Duke University contended, entrepreneurs need representatives, or “buyers’ agents,” who can help them navigate the complex financing marketplace. She stressed that we need to invest in investment readiness, as the “grant-to-investment transition is broken” and social entrepreneurs need assistance from professional advisors in taking investment. We also need more innovative ways of investing for impact, and must be proactive in developing these opportunities.

Debra Schwartz, Managing Director of Impact Investments at the MacArthur Foundation said, “For what I call ‘deep impact,’ you have to be prepared to blend public, private and philanthropic capital. Those kinds of investments are not just lying around. They’re made, not found.”

There are many other issues that still need to be worked through, such as impact measurement.

In addition to learning more about the opportunities and challenges in the impact investing space, SOCAP also provided a healthy dose of inspiration.

A moving address from the courageous and charismatic Prince Emmanuel de Merode who has dedicated his life to protecting the Virunga National Park and its mountain gorillas, brought the audience to its feet for a standing ovation.  The incredible Gar Alperovitz led a thought provoking session on the need for investing in global systemic change. Perhaps the most powerful session of all was the closing plenary panel that focused on the importance equity, opportunity and diversity – not just in terms of gender but also in terms of race and culture.

SOCAP had a flavour and an energy unlike any other conference I have attended. It had some of the San Francisco relaxed vibe, complete with beautiful bay views, food truck dinners and plenty of Ubers on hand for transport!Generosity_SOCAP-2015-name-tag-Amanda-Miller

There was a feeling of common purpose, of hurrying up progress in employing capital for good, and unstoppable momentum. Every conversation highlighted another smart idea for making the world a better place, or another smart person enabling these ideas to be supported.

I left SOCAP armed with the hope of what is possible if we continue to work together to drive the alignment of profit with purpose, money and meaning, and doing good with doing well.

 

(For those not able to make it to SOCAP, many sessions and short TED-style talks are now available on SOCAPTV – a clever way to share the content and ideas 360 days of the year. It’s also worth checking out #SOCAP15 on twitter to get a flavor for the themes and ideas discussed).

 

Amanda Miller is Co-Founder of Impact Generation Partners, an intermediary and investor in the impact investing space. She is a Founding Advisory Board Member and Chair of Kids in Philanthropy and has been on the Nexus Australia Youth Summit Organising Committee since its inception in 2013, including chairing the 2014 Summit. Contact her at: amanda.miller@impact-gen.com or follow her on Twitter: @miller_amanda

 

 

Read more from Amanda Miller:

Educating our Youngest Philanthropists: What families can do to nurture the next generation of givers

 

Photos by Amanda Miller