Wednesday, June 10, 2026

Impact Investing Needs more Market Makers

By
Gino Baltazar, MS Finance
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Market Making for Mission
MacArthur Foundation provided impact investments to two Chicago intermediaries so that they could finance social enterprises like Growing Home, an urban farm providing fresh produce, job training, and community building in an underserved neighborhood.

Stanford SSIR examines the work that the John D. and Catherine T. MacArthur Foundation is doing to stimulate impact investing activity through market-making, an important role that is used in conventional markets to promote liquidity and long-term growth through the incentive of bid-ask spread profitability.

Key Message

The field needs institutions who have global but flexible reach, understand what investors and capital seekers need, and know how to scale capital gaps across multiple sectors.

***

..the reality is that there is no straight line from increased interest to increased impact. While there are proven and pioneering enterprises capable of dramatically improving health, reducing poverty, expanding education, or tackling the challenge of climate change, many have unconventional investment profiles that leave billions of dollars in potential investment on the sidelines.

In his annual letter, Bill Gates shared how Warren Buffett’s initial investment of $30 billion helped saved the lives of 122 million children, while doubling the Gates Foundation’s resources.

The many reasons for this mismatch are well known. Risks may be too high relative to modest projected returns. Timelines to profitability and eventual investor exit may be long, with no alternative liquidity option in sight.

That is why impact investing needs more market makers. I do not mean that only in the conventional sense of standing between buyers and sellers to facilitate transactions. I am talking about institutions that work globally across multiple sectors to raise, structure, and deliver flexible capital to high-impact enterprises and funds. The field needs players who understand what investors and capital seekers need, and how to bridge even the most challenging capital gaps. They can unlock and accelerate investments with an eye toward maximizing impact, not just profit.

Think of it as market making for mission. That is what we are doing at the John D. and Catherine T. MacArthur Foundation. In addition to our traditional grantmaking of about $250 million each year, we have expanded our impact investing strategy, working in new ways and tapping a dedicated pool of $500 million to help make the global impact investment marketplace more inclusive, efficient, and effective. Our goal is to drive impact well beyond what we can achieve with our capital alone, and to create high-impact investment opportunities for other investors who are unwilling or unable to engage on their own …

More readings:

Philanthropic Pioneers, Vermont Common Good

Making Markets Work for the Poor, Omidyar Foundation

Bill Gates Foundation Saves the Lives of over 122 million children with Buffett’s $30B Investment, Bill Gates 2017 Annual Letter

***

Source: Stanford Social Innovation Review

Impact Investing Panel’s Advocacy Message

By
Gino Baltazar, MS Finance
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Terrific and informative slides,  video and 4-page impact investing primer by Katharine Bierce on a January 18th #SFTechForGood meetup in San Francisco.  Lauryn Agnew of the Bay Area Impact Investing Initiative, Jenny Kassan of Community Ventures and R. Paul Herman of HIP Investor were the esteemed panelists.  The meetup’s agenda below:

Main Takeaway

Get educated and start being an advocate in your company, non-profit, social enterprise or community.

***

Do you care about social/environmental impact? If so, are your investments are aligned with your values? If not – or if you’re not sure – come learn more from 3 experts in impact investing in the SF bay area and globally.

Join us and learn:

• What impact investing means and why it matters

• How to invest money for impact – even when you’re not a millionaire or accredited investor

• About the Bay Area Impact Investing Initiative

• How you can advocate for impact investing at your company/401(k) plan

• About raising impact capital as a nonprofit or social enterprise.

Panelists:

Lauryn Agnew

Lauryn Agnew leads the Bay Area Impact Investing Initiative in developing customized model portfolios across all asset classes for mission alignment under fiduciary standards of due diligence and performance expectations. Her research about impact investing has been published on place-based endowments, urban regions, and sustainable cities.

Her second in-depth research paper into regional impact investing model portfolios was released in the summer of 2016 by Oxford University. Most recently, she collaborated on a Scan and Toolkit for the Urban Sustainability Directors Network to publish its “Financing Sustainable Cities” report. She is a frequent participant on institutional investment panels and educational seminars on impact investing and presented her research at the Social and Sustainable Finance and Impact Investing Conference in Oxford, England in April 2015 …

Jenny Kassan

Jenny has over 20 years experience as an attorney and advisor for mission-driven enterprises. She has helped her clients raise millions of dollars and advises clients on forming startups and co-ops, structuring legal entities to preserve social/environmental mission, enterprise finance, securities regulation, investment crowdfunding, and nonprofit law. Jenny has helped her clients raise millions of dollars …

R. Paul Herman

R. Paul Herman is a globally recognized leader in impact investing, impact ratings and impact-themed portfolios. Herman founded HIP 10 years ago to show that solving human, social and environmental​ problems can be more profitable and less risky than being extractive of people, natural resources and trust …

Impact Investing for as little as $20

By
Gino Baltazar, MS Finance
-
If You Have $20, You Can Be an Impact Investor
Jennifer Pryce, Calvert Foundation

Jennifer Pryce who runs the Calvert Foundation as its CEO, and who just last year in June partnered with other foundations to launch a $100 million impact investment fund to support a broad range of enterprises in Chicago, from affordable housing to energy conservation to small business, was recently profiled in B The Change Media.

Background

Calvert, in the mid-nineties, was among who pioneered the Community Investment (CI) Note, a high-impact fixed-income bond product that has had a solid track record since its inception.

Calvert’s CI Note, to-date, counts over 13,500 investors who have purchased over $1 billion.  Transacting Calvert’s CI Notes can be done online for as low as $20, thanks to Jennifer Pryce’s leadership, which makes it remarkably accessible to mass retail consumers.

***

“It was born out of a desire to make investing easier and more accessible to retail investors,” Pryce explains. “Also, to keep up with the changing times, as more and more financial products and services are moving to the web.”

In 2014, Pryce increased access for average-income people to CI Notes with the launch of Vested.org, allowing people to invest online with a commitment as low as a $20. Investors who go through a broker or financial advisor must put forward at least $1,000.

About 500 people have invested through Vested.org. Pryce says Calvert has learned a lot about those 500 investors: A recent survey found that the investors are almost evenly split between men and women, that their median age is 44 although some are as young as 20 and that 64 percent have an annual household income of less than $100,000. The median investment is $5,500. More than 80 percent of those surveyed says they invested with Calvert because it aligns with causes they care about.

Pryce says private capital is critical to propel the solutions forward, faster despite the increased risk to investors.

“We’ll get there. My concern is we won’t get there fast enough,” Pryce says. “Some of these issues, like climate change, are time-sensitive. We’ve had linear growth. Now we need to shift to exponential growth.”

“No, I haven’t followed a linear path at all,” she says. “But I was really trying to understand where the intersection of finance and people can exist, and how to create value in that place so you can attract more capital and create change.”

Tech VC Kapor’s new idea: Fund only startups that prioritize diversity

By
Gino Baltazar, MS Finance
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Tech VC’s new idea: Fund only startups that care about diversity

Invest Impactly is a big fan of Oakland California based Kapor Capital, Kapor Center and their work to fund and support startups that are purposely diverse and inclusive, while engaging with communities of color and minorities in the US, and working at the “intersection of technology, racial and social justice.”

Kapor’s Commitment

So it is not surprising to hear the announcement they made last Thursday January 21, a new mechanism called the Kapor Capital Founders Commitment, that explicitly calls for practices among startups that prioritize diversity.

The commitment is expected to be codified in all investment agreements the VC firm arranges, according to coverage by the San Francisco Chronicle.

***

“Despite promises from executives, shaming from outsiders and even goading from the federal government, tech companies still lack women, Latinos and African Americans. So an Oakland venture capital firm is taking a different route: Funding only startups that prioritize diversity.

Kapor Capital’s new Founders Commitment, announced Thursday, is believed to be a first in the venture world. It will be a standard item in all new investment agreements the firm makes.

Kapor expects to invest $25 million over the next three years. The pledge does not include hiring quotas. Instead it requires companies that seek Kapor’s investment to codify diversity goals and regularly report their progress.

The venture capital firm is allowing the 111 companies already in its portfolio — which include Bitly and Uber — to opt into taking the pledge. So far, 52 have. Bitly has, but Uber hasn’t.

The founders have also published a post on Medium announcing the Commitment.

1. Establish diversity and inclusion goals that are appropriate for the company’s funding stage, employee size, customer base, and core business. Include progress on diversity and inclusion in your quarterly investor updates.

2. Invest in tools, training programs, and/or resources that assist with mitigating bias in recruiting, hiring, and employment.

3. Organize volunteer opportunities for employees to engage with underrepresented communities, especially those that reflect the company’s customer base.

4. Participate in diversity and inclusion sessions to learn about what works and what doesn’t. These sessions will be hosted by Kapor Capital and will be made available for virtual participation as needed.”

Sources: SF Chronicle, Medium

Women Driving Social Investment, Trends Suggest

By
Gino Baltazar, MS Finance
-

Women across the world are increasingly driving social investments, entrepreneurship and even household consumption decisions.  This is an important trend as they, according to the Case Foundation, inform actions and influence decisions not only in households, but also in constituencies and communities.

This means founding firms, even large institutions, need to create tools, products and services focused on attracting, marketing to and activating this important demographic in ways that are convincing and genuine.

A recent Calvert Investments report asserts that women, along with younger investors, will indeed drive the growth of the broader responsible investment industry. In a study of affluent women, 95 percent ranked “helping others” and 90 percent ranked “environmental responsibility” as important. And beyond driving the growth of Impact Investing, woman may be our greatest hope to unlocking the kinds of game-changing innovations required to solve the most persistent problems.

Turns out that women wealth holders exhibit more risk tolerance toward new and innovative solutions, once they have met the financial security needs of themselves and their families. As Sallie Krawcheck wrote in her thought-provoking piece, women investors exhibit a slightly different values-based perspective. More women want their investments to not just generate excellent returns, but also have a positive impact on the world they live in. And they’re willing to make some big bets to deliver on that perspective.

Women represent the largest market opportunity in the world. Globally, they control $20 trillion in annual consumer spending. In the next five years, it is expected that this number will rise to nearly $30 trillion.

For context, that is more than the two largest growth markets typically identified—China and India—combined! In the U.S., women control somewhere between $5-15 trillion, with estimates that they will control two-thirds of the consumer wealth in the U.S. over the next 10 years.

  • The number of women-owned firms increased by 45 percent, compared to just a 9 percent increase among all businesses. That’s five times faster than the national average.
  • Their employment growth increased by 18 percent, compared to a 1 percent decline among all businesses.
  • Their business revenues increased by 35 percent, compared to 27 percent among all U.S. firms. That’s 30 percent higher than the national average.

This data reinforces the importance of ensuring that women continue to be aware of the momentum in the Impact Investing space. Remember, their purchasing power and, therefore, their potential social impact power is enormous—women control 39 percent of investible assets in the U.S. today. That number will continue to rise; women currently control 51 percent, or $14 trillion, of personal wealth in the U.S. and are expected to control $22 trillion by 2020.

Advice to High-Impact Entrepreneurs on Successful Funding

By
Gino Baltazar, MS Finance
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High-Impact Business Founders on Successfully Raising Capital

Raising funds is one of the hardest, most complex and time-consuming activities any startup founder will tell you is a necessary process for their endeavour.  It is often brutal, even lonely and entails convincing investors of the viability and likelihood of success not only of the endeavour’s concept, but of its execution and plan.  A lot depends on founder credibility, track record or reputation, timing, and presentation.

***

For Seth Goldman, one of Visram’s early investors, it was Shazi Visram’s passion and determination that initially won him over, not the potential that Happy Family Brands might someday become a billion-dollar brand. Visram, whose company became a Certified B Corporation in 2011, ultimately raised more than $23 million for Happy Family before the company was acquired by Danone in 2013. Happy Family has remained a B Corporation under Danone’s umbrella. 

As this list of high-impact business leaders who have successfully raised capital illustrates, a host of purpose-driven companies have raised significant capital in their pursuit of growth and impact.  Some advice below, and more via the link.

“Momentum matters, so prep before you get started (have your pitch down, your presentation set, your backup materials ready to share, and, of course, a list of appropriate investors you’re going to reach out to). A tight process not only increases the likelihood you’ll raise the money you need at the terms you want, but will allow you to get back to running your business.”

– Neil Blumenthal, Warby Parker co-founder & co-CEO

“In sharing our story with investors, we always lead with our social-impact mission, but it is the business model and product that get them to invest. Doing good isn’t good enough to get investors to invest, or customers to buy. You truly have to offer best-of-class products and show innovation in both product and processes.”

– Davis Smith, Cotopaxi founder and CEO

“The best investor meetings are the ones that become conversations instead of presentations. When you start the meeting with a pitch deck, the dynamic is set. Everyone is looking at the screen instead of at you, and they are expecting a show. If you can start the meeting by asking the investor a relevant question, you will get to know them and better understand whether they are passionate about your sector.”

– Benzi Ronen, Farmigo founder & CEO

April Impact Investing Master Class with R. Paul Herman in San Francisco

By
Gino Baltazar, MS Finance
-

Noted wealth manager and investment advisor R. Paul Herman will be presenting a Master Impact Investing class on April 16th at Presidio Graduate School in San Francisco, California.

Who is R. Paul Herman

Mr. Herman created and manages the Human Impact + Profit (HIP) 100 portfolio and investment index. “The HIP Scorecard” investment approach is featured in his 2010 book (The HIP Investor; Make Bigger Profits by Building a Better World; John Wiley & Sons), Fast Company magazine, business school curricula, and at www.HIPinvestor.com.

Open to the public, the class will highlight practical approaches to choosing investments that have a positive social impact, reflect personal values and meet financial goals. Herman is the CEO of HIP Investor, Inc ., and creator of the HIP (Human Impact + Profit) method of investing to produce both social benefits and financial returns.

He developed a ratings system for companies in multiple industries as well as the HIP 100 investment index and portfolio to assist individual, family, foundation and institutional investors.

Herman also has served as an investment strategist for eBay founder Pierre Omidyar’s impact investing firm and a strategic sustainability advisor to Fortune 500 companies such as Nike, Cisco, Charles Schwab, and Walmart. “We are proud to present this innovative thinker in the area of impact investing as part of our Master Class series,” says Ryan Cabinte , faculty director for the Presidio Center for Professional Development (PresidioPRO). “Paul Herman is a pioneer in examining the relationship between shareholder returns and human impact.

What: Master Class on Impact Investing
Where: San Francisco HUB, 925 Market Street, San Francisco

Cost: General Public: $150
HUB Member: $35
Presidio Alumni: $35
Presidio Students: $35
Official Event Link: http://www.presidioedu.org/paul-herman

Are Social Impact Bonds for Denver’s homeless working?

By
Gino Baltazar, MS Finance
-
June 26, 2013- David, Champagne and Jason at the Renaissance West End Flats. ( Photo by Dennis Schroeder)

Beyond the moral reasons for the humane treatment of our homeless populations in the US, chronically homeless people can be prohibitive cost burdens to many cities and urban areas.

High Costs, Low Returns

In a study cited last year, San Francisco spends more than $240 million per year, almost half of which $112 million alone was spent on supportive housing.  Yet for all it spends, San Francisco remains high in a ranking among cities in the U.S. with the most homeless, second to New York, according to a report in June 2016.

Denver is no stranger to these high costs.  A city commission has calculated that the top 10 percent of its homeless population, in terms of the number of times those people spend in jail and rehab, costs the city “upwards of $11.4 million per year.”

Bonds That Measure Outcomes

Attempting to address the issue, an initiative to pursue using Social Impact bonds was started last year, and its results are being closely watched.  Investors are reimbursed by the city based on impact measures such as home retention rates, or reduction in days spent in jail by participants in the initiatives.

***

“How successful is the SIB initiative so far? “Since the first participants moved in this March, no one has left voluntarily,” said Cathy Alderman, vice president of communications and public policy for the Colorado Coalition for the Homeless (CCH), the initiative’s primary service provider partner.

“Anecdotally, it’s making a huge difference, though we can’t say for certain if the model is exactly right yet. Bringing people in from the streets, we stay pretty close to them for awhile to make sure they are adjusting and making their doctor appointments. They have nothing, so they need a bed.

Case managers teach life skills, like maintaining their space and grocery shopping. They get vocational training. Re-connections with family are made if possible. It is intensive case management upfront, then less as they settle in.”

Investors that will be repaid based on retention rates include Northern Trust Co., a Chicago-based bank with a local office (providing $3 million); and the Denver Foundation and Piton Foundation, both locally based, providing $500,000 each. Five more investors will be repaid based on the reduction in days spent in jail by participants: the Houston-based Laura and John Arnold Foundation (providing $1.7 million); the Colorado Health Foundation ($1 million); the Walton Family Foundation ($1 million); the New York-based Nonprofit Finance Fund ($434,695); and the Living Cities Blended Catalyst Fund ($500,000).

Helping the homeless begins with compassionate intervention, Alderman said. “The co-responder model works, where a mental health worker goes out with police. It’s important to identify people’s needs instead of just moving them along.”

Source: North Denver Tribune

Institutional ESG interest continues to grow, Callan report says

By
Gino Baltazar, MS Finance
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Callan ESG Survey 2016

Callan, an institutional investment consulting firm based in San Francisco and with offices in Atlanta, Chicago, Denver and New Jersey, in December released a report from a survey of 84 unique institutional funds that nearly 37% of those funds now “incorporate ESG factors into investing decision,” up from 22% 3 years ago.

Among its findings:

  • In 2016, 37 percent of all survey respondents have “incorporated ESG factors into decision making,” up from 22 percent in 2013.
  • High adoption among endowments (53 percent) and foundations (48 percent) relative to other fund types.
  • A material uptick in corporate funds’ incorporation relative to a year ago, doubling from 15 percent in 2015 to 30 percent in 2016.
  • Highest  rates of adoption (71 percent) among the largest funds (>$20 billion in assets).
Callan ESG Survey –
Factors why survey participants have NOT incorporated ESG factors into investment decisions. “Unclear Value Proposition” topped the answers.

Additionally, “lack of clarity over the ESG value proposition” remains a high barrier to funds incorporating EST into investing decisions, survey author Anna West, SVP and chair of the Callan’s EST committee.

“This points to a potential opportunity within the EST investment community for ongoing education and dialogue on this issue.”

Source: Callan Survey Report

 

Asia Shows Growing Interest in Impact Investing, says poll

By
Gino Baltazar, MS Finance
-

Interest in responsible social and impact investing is growing in Asia but it won’t really gain more momentum until control of the region’s vast fortunes is transitioned to younger generations in wealthy families and disclosure of SRI practices are made less opaque, leading Swiss private banker Lombard Odier says.

“The millennials are much more interested in it than their parents were,” points out Vincent Duhamel, Lombard Odier’s head of Asia. “Once dad’s given up the controls or he’s no longer able to control the wealth of the family, and the kids take over – they tend to go much more for an impact investing standpoint.”

Duhamel says the bank is having more conversations with high net worth individuals (HNWIs) in Hong Kong and across Asia aged between 30 and 40 years old. Previously, SRI investing had been dominated by big institutional investors like European and Canadian pensions funds, he says. “Before there was always a perception that it meant you had to accept a lower return,” Duhamel believes. “But you might even get better returns in future as more regulations force investors into this space.” An example of regulation affecting SRI is an exclusion list brought in by Dutch regulators three years ago that stops institutions investing in cluster bombs. (Barron’s)

When reallocating wealth to impact investment, the majority of respondents (60.2%) said they would shift money from traditional investments (equities and fixed income), while some (23.1%) would prefer to reallocate money from charitable donations. One quarter (25.2%) of respondents also believe that impact investing allows them to pursue financial and social impact returns.

Despite the clear interest in impact investing, most respondents (89.8%) said they would prefer to allocate less than 50% of their overall wealth to impact investing, while nearly half of the respondents (49.1%) said they would allocate less than 15% of their wealth into the asset class.  (Lombard Odier)

Asia family offices, additionally, tend to use more aggressive investment strategies than their US counterparts, which may represent an opportunity for impact investing.  Many of the families are first-generation entrepreneurs and have great appetite for risk.  (Wall Street Journal)

Sources: Barron’s, Lombard Odier, Wall Street Journal (inc. chart)

 

 

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