Impact Investing Without Experience: 5 Ways to Start

 

 A mirror suggests responsibility for impact investing
A serious look at ourselves and the impact industry. © Sonora Ortiz 2013

 

Folks calling themselves impact investors just aren’t writing checks.

And this is true across the nation (and even across the impact investing industry).

They’re not funding.

Anything.

Time for a little reflection.

Entrepreneurs, who’ve been around for a while, feel understandably wary of giving up precious time from their startups to pitch at one more exciting event only to leave with little support and no funding.

They’re tired of hearing about impact investors. They’re starting to believe they don’t exist.

And, self-proclamation aside, so called, impact investors  just aren’t moving money to impact investments.

They’re attending pitch fests and talking to social entrepreneurs. They may be asking for financials and analyzing spreadsheets. But time after time, they walk away from the opportunity without money changing hands.

There’s a long list of reasons you can blame for an absence of check writing activity.

1.       Investor ready entrepreneurs

2.       Comfort with finance in general

3.       Policy and Laws

4.       Deal Flow

5.       Risk adverse investment policy statements,

6.      Narrow missions for investment policy statements

7.      Scale

As a group troubleshooting the issue, we’ve gotten pretty good at identifying the hurdles. It doesn’t seem to matter which impact investing community we’ve recognized, the barriers look pretty much the same.

It’s a new field so a lack of traction does make some sense. However, that doesn’t help the entrepreneurs, many of whom are early adopters themselves.

Feeling a little disheartened, a colleague recently asked me what we needed to get things moving.

Honestly, I believe it is just a matter of time.

The Good

Some of the most dynamic and innovative minds in the country are considering these ideas.

Foundation folks are coming together to find best practices. Institutions like RSF Financial Services work collaboratively with nonprofits like the Business Alliance for Local Living Economies (BALLE), both of which helped establish the impact investing industry. Together they hold learning communities to support foundation leaders who want to feel confident in making their investment.

Creative individuals are developing investment products and intermediary arrangements for community members to engage their financial resources in easy steps. They’re doing this through technology and partnerships. They’re developing investment platforms for peer to peer investing and partnering with financial institutions chartered with community investment and interested in diversifying their financial portfolios while expanding their reach.

CNote, a company that works with CDFIs is one example of a dynamic and exciting partnership. Millennials, scarred by the Great Recession and scared to move their money out of bank accounts, they’re so-called ‘just in case money,’ are moving their money to CNote in droves.

The Goods

CNote’s products, designed with savings in mind, cater to people wanting to put in at least a few hundred dollars, but the product doesn’t have a minimum investment.

Alternatively, Calvert Funds’ new line, Calvert Impact Capital requires as little as $25 to invest in your community. Calver Funds will be a recognizable name to anyone who’s worked with a financial advisor to do socially responsible impact investing. One of the first mutual fund companies to offer negative screens to help people avoid investments in things like guns or tobacco, today’s Calvert Funds provides attractive ways for people to put money into their communities.

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It’s a great way to get invested!

Crowdfunding is another approach where smaller amounts of money can make a big difference.

Slow Money, Investors Circle, Judy Wick’s Circle of Aunts & Uncles, and others are nonprofits looking to bring community members together to create better funding mechanisms. Dollar amounts for these organizations generally focus on one to two thousand dollars (or more).

Folks are moving money. It’s just a slow and tedious process that doesn’t support all the forward-thinking entrepreneurs of today.

Five places for impact investment today

However, for those of us interested in taking the first step, these institutions and movements organized as nonprofits give us an opportunity to join in with others already knowledgeable in the ways of making a difference while using our financial resources as tools.

Whether you’re accredited investors or community members, you can find a group or an investment vehicle already organized. You can join in and join up to find ways to participate.

You can open our understanding along the way.

These institutions and organizations mentioned in the blog are open to non-accredited investors

1.       RSF Financial Services

2.       CNote

3.       Calvert Notes

4.       Slow Money

5.       Judy Wick’s Circle of Aunts & Uncles

Here’s a sixth opened only to accredited investors

6.       Investors Circle

The Slow Food Comparison

Not too long ago I was at a Small Farm Conference. I happened to strike up a conversation with a gentleman, now a government official for a small island. This gentleman had once been an advocate for the Slow Food movement in the United States before it became a thing.

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He relayed stories about the early days when he and his fellow Slow Food advocates begged chefs to move away from the drama of offseason fruit presented like the overpriced gems that they were.

They advocated for local, seasonal, good tasting food.

No one was listening.

One day the Slow Food emissaries brought in two kinds of corn: a local ear grown on a nearby family farm and another like the corn the chefs were using on their menus.

The chefs tasted.

That one taste test somewhere in New York became the tipping point for Slow Food in the area. Traction for local, organic, slow food was immediate spreading from the farm to the table. A concept we’ve since come to take for granted.

Get Inspired

The work to date inspires me and I believe that someday we’ll have a similar, catalyzing moment for impact investing we’ve seen in the Slow Food movement.

More of us will come to recognize the joy that comes when investment means something. It will become commonplace to feel the connection to something beyond spreadsheets and ticker symbols. We’ll understand the value for impact and relationship as much more, if not more important, than financial return.

For those of us here, we can start today.

1.       Check out the institutions and organization I’ve suggested above, they’re a good place to start.

2.       Consider how much you want to invest.

3.       Don’t be afraid to start with a small dollar amount to get engaged, to get invested in the idea of making change with your money.

Let me know how it goes.

I’d love to hear from you in the comments below!

 

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