How can you align your intentions with actions?
This was one of the key questions that the Put Your Money Where Your Mouth (and Meaning) Is Community (PYMWYMIC) discussed at their annual Impact Days from 7-9th April in Amsterdam. The community of around 250 family foundation members, individual philanthropists, and investors gathered to assess how to link investment actions to meaningful impact.
Can you have 100 percent impact?
One hundred percent impact investment portfolios are possible, according to a keynote speaker Lisa Kleissner from the KL Felicitas Foundation. She challenged the PYMWYMIC participants to review, and if necessary change, the way in which they managed and spent their money, and that of the organisations they worked with. If 1 percent or 2 percent impact was achievable, then there should be no need to compromise on reaching a 100 percent impact goal.
A big barrier to achieving impact for Lisa and her husband had been convincing investment managers that '100 percent impact' was a viable investment strategy. To that end, KL Felicitas Foundation had pioneered an open data approach to their investments, sharing financial information to have a positive demonstration effect. Working with partners Sonen Capital, the foundation published a ground-breaking report in 2013 detailing the financial performance of the foundation's impact portfolio. A second report will be published in late 2014.
The Kleissners are not alone, and connect with other uncompromising impact investors through the action community for global impact investing Toniic and the '100 percent folks'. Their appetite for risk may seem significant, but Lisa is adamant that steady returns are there for all to access. The Kleissners unite 'intention' with strong and active 'attention' to their investments, and hope that their foundation's work will provide a positive example to inspire others to act.
Agriculture for Impact?
In terms of impact investment opportunities, sustainable banker Triodos, and Dutch entrepreneurial development bank FMO led two separate sessions on the challenges, risks and solutions that are present in agribusiness deals. The overriding message was clear: this is a sector that calls for research, patience, and context-specific engagement. FMO summarised some of their primary considerations in assessing potential impacts:
What impact do you want to have?
Being clear on intention and objectives is vital. Impact is different in different contexts. For example, you achieve a very different outcome in different geographies and biophysical landscapes. The risks to manage in New Zealand will be very different to those in Tanzania.
What is the local view about impact?
Is your ambition for impact consistent with that of the local population? How do they perceive and value this intention? Community consultation and involvement is critical. For example, mechanisation might seem a no-brainer, but it might come at a cost of local jobs and traditional farming knowledge and techniques.
Have you considered the wider context?
Intention is not enough. Focusing on one specific issue, without considering the whole picture, might lead to obstacles and challenges later down the line. Agricultural impact investing can be messy and complicated. There may be trade-offs involved. You need to take a holistic approach. Quoting Abraham Maslow, a FMO colleague said,
If all you have is a hammer, then everything looks like a nail.
Impact investing in action
The Impact Days offered PYMWYMIC members the opportunity to put their learning and enthusiasm into action, by pledging support for one or more of 12 social entrepreneurs. Stichting DOEN offered €25,000 of top-up investment to catalyse pledges. The dynamism and energy of this group of entrepreneurs was a striking example of the explosion of high-quality and exciting investment opportunities that can contribute to 100 percent impact investing strategies.
PYMYWYMIC is celebrating 20 years of investing for impact, and the meeting paid tribute to the fact that they are part of a growing global movement of like-minded people who want to match their investing intentions with impact in a practical way. But as this space continues to expand, the pressure to understand impact is greater than ever. Quick polling of PYMWYMIC attendees showed that there was a wide variety of views as to which impacts are important for individuals and organisations.
As the impact investment community continues to enthusiastically grow, we need to ensure that equal, if not greater effort, goes into finding a common language to define impact. We must also research and develop more sophisticated tools to measure it. We can learn from and build on the frontier work that sector leaders such as PYMWYMIC and others have done. In many respects impact investing is just getting started; and the work to achieve impact at scale has only just begun.