I’m fascinated by the journey people have taken to arrive at impact. Some have dedicated their lives to the service of others in not for profits, philanthropy or the community sector. Others have come from completely different backgrounds – engineering, food, physiotherapy.
While the concept of “impact investment” has been around a long time, the term itself was coined little more than a decade ago. Everyone has a unique path, regardless of whether you’re a new arrival or a pioneer.
I love these stories – a couple of people I’ve been fortunate to meet over the last year:
Jed Emerson – has his roots in social work and community development. Jed was a founding director of a youth centre in San Francisco. He moved into philanthropy and these days he’s known as “the impact investment guy”, a senior strategic advisor to family offices and investment firms, prolific author including his latest The Purpose of Capital (he’s even giving away the e-book for free here). “Impact investing is about the future potential for change in the world, in community, in capital and, finally – if you are lucky – in you.”
Daniel Madhavan – had risen to the heights of traditional finance in roles including Chief Operating Officer and Acting CEO of JB Were. After a six month sabbatical, Daniel joined Impact Investing Australia as their inaugural CEO and has since become CEO of Impact Investment Group. “I am passionately curious about how we can use business and finance as tools for building a better world.”
For what it’s worth, my own quest to invest with purpose is only a few years in. It was sparked when I read about Berry Liberman and Danny Almagor’s family office – Small Giants. Since 2007, Berry and Danny have grown businesses with social and environmental purpose at their core.
After 20 years in finance, I have to admit that what first caught my attention with impact investment was to do with returns. It was the idea that you could achieve a market rate return and also have a positive social or environmental benefit at the same time. It wasn’t one or the other.
I’d always thought of investing only in terms of generating the highest return for a given level of risk, ignorant to a large degree of what I invested in. If I could invest in companies that are trying to solve some of the world’s biggest problems and getting similar market return – why wouldn’t I?
(By the way, if you haven’t read about the Small Giants Philosophy – go do it now – so inspiring and eloquent!)
“Every time we reach for our wallets, we make a choice about the world we want to create.” Small Giants
While I didn’t have a family office or a philanthropic foundation, I felt there had to be a way I could start using these principles in my own investing. When I had previously thought about doing good with my money, it was only in the context of making donations or using a philanthropic sub-fund for more structured giving.
With impact investment, I could use my existing investment capital, not just money that was surplus to my family’s needs. It has been a life changing concept for me.
Over the last 4 years, I’ve gone from knowing nothing about impact investment to committing 100% of my family investing to impact. (We’re not quite at 100% yet but a significant way along.)
In Part 2 of this article, I’ll explore why I think the important part of getting to impact is what you do once you arrive.
For more on the journey of:
Jed Emerson – read his interview in Dumbo Feather magazine
Daniel Madhavan – listen to him on the Good Future podcast