IMPACTINVESTOR

THE

Lessons in Leadershipand Strategy for

Collaborative Capitalism

CATHY CLARK JED EMERSON BEN THORNLEY

Foreword by SIR RONALD COHEN

Cover Design: Michael J. FreelandCover Image: © Wavebreak Media / Jupiter Images

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Cathy Clark is director of the CASE Initiative on Impact Invest-ing (CASE i3) and a professor at Duke University’s Fuqua School of Business. She also co-leads the Social Entrepreneurship Accelera-tor at Duke, part of USAID’s Higher Education Solutions Network. She

is a leading authority on for-profit social entrepreneur-ship, impact investing, and impact assessment.

Jed emerson is senior advisor to three family offices, each of which is executing 100% impact/sustainable investment wealth management strategies. He is also chief strategist of ImpactAssets and a senior fellow with the Centre for Social Investment at Heidelberg University.

Ben thornley is the founder and managing director of ICAP Partners and a strategic advisor to REDF and Pacific Community Ventures (PCV). He created the Impact Investing Pol-icy Collaborative at PCV, with part-ners from Harvard University, and consults with CalPERS and other

leading financial institutions on the social and economic impacts of over $25 billion of targeted investments.

“Clark, Emerson, and Thornley are leaders in the impact investing space and with this book offer an opportunity to understand the field from every vantage point—offering real examples of funds that have more than proven the theory that you can do well by doing good. Over just a short period of time, impact investing has transformed from a new concept to a robust sector, with investment opportunities available to every type of investor.”—Judith rodin, president, The Rockefeller Foundation

The Impact Investor: Lessons in Leadership and Strategy for Collaborative Capitalism is a hands-on resource that details the practices and performance of a new class of savvy investors delivering positive social and environmen-tal outcomes alongside competitive financial returns. The book is accessible to business and financial profession-als at all levels and highlights a new form of economic leadership that is more cross-sectoral, transparent, and outcomes-oriented, and in which impact investors excel. The authors offer investors, financial advisors, corporate leaders, foundations, policymakers, and students the tools needed to engage in a generational shift to a new era of Collaborative Capitalism.

The Impact Investor reveals the types of investments that can be profitable and impactful for individuals and the strategies that will enable asset managers to succeed. It also provides an unprecedented level of detail on innova-tive structures and approaches of impact investing funds, providing invaluable guidance for financial institutions on how to create impact investment products or include them in client portfolios.

Foundations will discover innovative ways that for-profit and nonprofit investors can partner to amplify the potential impacts of philanthropic and market-rate investments. Public sector officials and policy advocates will learn how government is harnessing the power of capital markets to pioneer innovative new solutions to social and envi-ronmental challenges. In addition, the authors include essential advice on the way business is—and must be— responding to a new generation of Millennial clients and customers focused on a more sustainable form of blended value creation in all aspects of their lives.

Designed as an informative and practical resource, The Impact Investor highlights strategies for making sound impact investments, offers illustrative case studies, and presents concrete lessons that will build skills and enhance prospects for professional and organizational success.

BUSINESS & ECONOMICS/Finance

CONCRETE LESSONS FOR IMPACT INvESTORS

“The Impact Investor is simply a must-read for those interested in the fast-growing field of impact investing and its emergence as a new and distinct approach to asset and wealth management. The book presents a definitive and indispensable guide for the seasoned entrepreneur, policy-maker, investment professional, and MBA student alike.”

— matt Bannick, managing partner, Omidyar Network; cochair, US National Advisory Board on Impact Investing

“This book comes at a critical juncture in the development of impact investing. A growing set of global investors are excited about impact investing yet remain uncertain about performance and how to achieve it. Fortunately we can now learn practical lessons from those in the trenches. If you are about to invest your first $20 on vested.org or place a client’s $10 million in impact products, you need to read this book.”

— antony Bugg-levine, CEO, Nonprofit Finance Fund; coauthor, Impact Investing: Transforming How We Make Money While Making a Difference

“The authors—all longtime leaders in the impact investing space—provide valuable insights for a new class of investors. Their new book uses real-world examples from funds that meet investor expectations of return on capital and that support impact businesses that are using market-based solutions to solve some of our greatest social challenges.”

—Jean Case, CEO, Case Foundation

“A ‘must-have’ for all interested in impact investing!”—annie Chen, Founder and Chair, RS Group, Hong Kong

“The Impact Investor takes the field of impact investing from theory to proven best practices, demonstrating not only that ‘the train has left the station’ but also that the destinations along the journey are proving quite attractive for both commercially and socially focused investors.”

—ron d. Cordes, Executive cochairman, AssetMark

“This is a significant contribution to the development of impact investing. It moves the debate from well-meaning rhetoric to the challenges faced by real managers making real investment decisions to solve real problems.”

—nick o’donohoe, CEO, Big Society Capital, London

“In these times of global transformation, aligning business and investment with our goals for positive social change is not merely a matter of preference, it is an absolute necessity. The Impact Investor introduces us to the innovators on the front lines already making change happen in markets across the globe.”

—darren Walker, president, Ford Foundation

$37.00 USA / $41.00 CAN

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Contents

Tables and Figures ix

Foreword by Sir Ronald Cohen xiPreface xix

■ ■ ■

Introduction 1

Part One Key Practices and Drivers UnderlyingImpact Investing 17

1 Inside Collaborative Capitalism 19The Roots of Collaborative Capitalism 20The Collaborative Capitalism Pyramid 34Three Core Elements of Collaborative Capitalism 39Putting It All Together: Collaborative Capitalism in Action 44Looking Ahead 56

2 Raising the Curtain on Impact Investing 58Sizing the Market 62Key Actors and Activities 66The Fund Perspective 73The Twelve Funds 81Performance Numbers 93The Impact Investing Fund Landscape 98

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Part Two Four Key Elements of Successful Impact Investing 109

3 Impact DNA 111A Means to an End 114The Need for Clarity 117The Impact Value Chain and Theories of Change 118Getting Everyone Aligned 127From First to Last: Measurement and Reporting 129Bringing It Together: Sequencing the DNA of

Impact Investors 138Mission First and Last Approaches 141The Mission First and Last Tool Kit 149

4 Symbiosis as Strategy 155The Practice of Policy Symbiosis 156Public Sector Innovation in Alignment with

the Private Sector 158The Public Case for Impact Investing 159The Policy Symbiosis Tool Kit 181The Five London Principles 191

5 The New Deal 196The Terrain for the New Deal 196Myths of Catalytic Capital 200Four Purposes of Catalytic Capital 203The Catalytic Capital Tool Kit 222

6 Multilingual Leadership 229New Skillsets for New Leaders 230Multilingual Leadership in the Research 232Multilingual Leadership as Cross-Disciplinary

and Collaborative 235Defining Multilingual Leadership for Impact Investing 239The Multilingual Leader: From Individual to

Team to Firm 243Building a Multilingual Team: Acquiring

Multilingual Capacity 247The Multilingual Leadership Tool Kit 249Beyond Impact Investing 254

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Part Three Looking Ahead: Trends and Challenges 257

7 The Writing on the Wall 259

8 Concluding Reflections 285Ongoing Challenges for the Field’s Development 287Using the Right Tool for the Right Problem 291The Road Ahead 291

■ ■ ■

Impact Investor Resource Guide 293Notes 308Acknowledgments 324About the Authors 332Index 335

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Foreword

When I reflect on impact investing and its prospects of growth to asize somewhere between the $100 billion of microfinance and the$3 trillion invested in private equity and venture capital worldwide,I often think back to the origins of venture capital—the startingpoint of my professional life.

Venture capital was a response to the needs of tech entrepre-neurs, just as impact investing is a response to the needs of a newgeneration of social entrepreneurs who seek to make a meaningfuldifference in improving people’s lives.

Noonehad thought of creating ten-year, illiquid funds, investingin small companies with very limited track records of performance,led by young people with no business experience. The responsecamebecause people sat around a table and said, “We see the future,and we have to provide the tools for it.”When I set up what becameApax Partners in 1972, few in Europe knew what an entrepreneurwas, and fewer still believed that entrepreneurs would achievemuchof consequence for our daily lives. Forty years later, they havecompletely transformed our world.

The microchip, the PC, the mobile phone, and the Internet,with its search engines and instant access to information andpeople, have revolutionized the way we live. They have broughta transformation as momentous as that which followed the creationof the alphabet and the invention of printing. Entrepreneur-ledcompanies have overtaken those that led their fields for nearly acentury. IBM was overshadowed in the space of a couple of decadesby a start-up named Apple, which is now the largest company in theworld bymarket cap; Microsoft, Amazon, Google, andOraclemade

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it from start-up to being among the world’s top thirty companies injust three decades.

The tech entrepreneurial revolution was driven by innovationand risk taking. It transformed the mind-set of governments abouthow economic growth should be achieved. In the United States, inthe space of twenty-five years, it has been estimated that fifty millionjobs were lost by smokestack industries, while sixty million jobs werecreated by new companies.

Our prospect now is to provide social entrepreneurs with thefinancing they require, and in this important book, Cathy Clark,Jed Emerson, and Ben Thornley provide the first detailedinsight into how that financing has—and widely ought to be—provided.

However, even as the outstanding funds profiled in The ImpactInvestor work tirelessly to pioneer a new “Collaborative Capitalism,”there is much work to do building market and public policyinfrastructure to help a new generation of entrepreneurs replicatetheir success.

The Social Impact Investment Taskforceand the Role of GovernmentUnderstanding this need for infrastructure and the paths to itscreation has been the charge of the Social Impact InvestmentTaskforce, announced by UK prime minister David Cameron inJune 2013 and established by the G8. By the time this book ispublished, this group, which I have been privileged to chair, willhave just concluded its deliberations and published its report.

The Taskforce included a private and a public sector memberfrom seven G8 countries and the European Union (EU), andobservers from Australia and development finance institutions; itheld hearings in different countries and created four workinggroups and seven National Advisory Boards to advise on theenabling infrastructure for impact investing in various local con-texts. In total, the Taskforce has engaged more than two hundredof the world’s foremost experts on impact investing in respondingas vigorously as possible to the social challenges we face.

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The Taskforce has played a particularly valuable role, clarifyingthe role of government in impact investing and informing theapproaches of its different member countries by sharing examplesand lessons from efforts in each jurisdiction.

For the United Kingdom’s part, Bridges Ventures, which isfeatured in this book, provides one of the earliest examples. BridgesVentures was created as an outcome of the UK Social InvestmentTask Force fourteen years ago, which I was also privileged to lead,and, after securing half of the funding for its first fund from HMTreasury, has gone on to become one of the largest impact investorsin the world, with more than £400 million under management inboth the United Kingdom and soon in the United States—anexemplar of what this book calls “Policy Symbiosis.”

Another piece of enabling infrastructure in the United King-dom that is particularly powerful is Big Society Capital, an invest-ment “wholesaler” with £600 million of equity capital to invest insocial investment intermediaries, comprising £400 million that hassat unclaimed for fifteen years in bank and building societyaccounts, and an additional £200 million from the United King-dom’s four largest commercial banks.

Big Society Capital has already put the United Kingdom in thelead in terms of its market structure and number of social impactinvestment participants. Two dozen social impact investment inter-mediaries of significant size exist: Big Issue Invest, Bridges Ventures,Charity Bank, ClearlySo, Impetus-PEF, LGT-Berenberg, NESTA,Social Finance, Social Investment Business, and Unlimited, toname but a few. Virtually all of these have been backed by BigSociety Capital, which is building capital flows to these and othersocial organizations through equity, social impact bonds (SIBs), andunsecured and secured debt. At the start of 2013, £25 million was inimpact investment managers’ hands in the United Kingdom; at thestart of 2014, the sum was over £150 million.

From the United States we have much to learn from the expe-rience with the Community Reinvestment Act and the NewMarketsTax Credit, which together bring more than $20 billion of invest-ment a year to poorer areas of the United States. The US federalgovernment has also provided outcomes funding for SIBs and isactively engaged inpromoting impact investment through theWhiteHouse Office of Social Innovation and Civic Participation.

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Preface

Picture . . .. . . making an investment recommended by the local broker managing

your retirement savings and then pulling up an app on your phone thatshows the affordable housing development in your community that theinvestment is helping finance.

. . . seeing a news article on the need for more employment opportuni-ties offering sustainable wages, benefits, and professional training for thepeople of your region and then reviewing the investment report from a localfund quantifying the precise number of jobs it had supported with yourcapital.

. . . collaborating with your start-up team to launch the businessyou’ve been planning for the past few years—and knowing there areinvestors on the other side of the term sheet as interested in the socialrelevance and intentional impact of your venture as they are in its financialhealth.

Over recent years, the world has been witness to an acceler-ated process of economic evolution coming simultaneously fromthe fringe and the mainstream. It is a fusion of previouslydisparate areas of expertise and a vision emerging out of tradi-tional finance, community and economic development, environ-mental finance, and social entrepreneurship. Following two yearsof in-depth research, case-studying the experience and trackrecords of twelve of the leading impact investment funds operat-ing in markets around the world, The Impact Investor offers awindow through which to view this larger transformation.

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The work of the twelve funds has been significant. Amongother things, they

• Created and sustained more than 1.3 million jobs in under-served markets

• Provided more than seventeen million people with access tofinance previously beyond their reach

• Managed portfolios of impact investment with more than40 percent of their investments going into women-led firmsand 60 percent of their funds invested in businesses operatedby individuals from racial and ethnic groups historicallyexcluded from mainstream financial markets

• Have raised and invested in excess of $1.3 billion in impactcapital

The funds represent but a snapshot of larger trends under wayaround the world—trends we believe have the potential to trans-form business and finance as we know them today. Although insomeways themanagers of these funds are simply taking traditionalbusiness practices and applying them to new markets, they bring aprofound new investment perspective that integrates economicopportunity within a social and environmental context. This invest-ment perspective is a new analytic mind from which all financialprofessionals may learn. As you will see explored in the pages tocome, these investors operate with what we call a “multilingual”skillset—with the capacity to speak profit and purpose, financialreturn and social impact.

If you take nothing else away from The Impact Investor, considerthis:

There is a new way of investing that is in the process of deep evolutionand no longer sits on the edge of mainstream economics and capital markets.

These managers do not think in terms of “do well and thendo good” or “financial-social trade-offs.” Rather, they think in anintegrated way that intuitively seeks to capture the full nature ofvalue through their investment strategies, seeking financialreturn with impact. They do not see impact as the uniquedomain of traditional channels of the public and nonprofitsectors. These actors and the funds they bring to market extend

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the work of previous investment pioneers and represent a poten-tially powerful force integrating numerous worlds into a single,sustainable whole.

These new approaches to investing are not being forced onmarkets, but are drawn into them at the same time as they areemerging out of them. The world is changing as we confront theshortcomings of an “either-or” understanding of capital—eitheryou make money or you give it away—in favor of an integratedinvestment practice that rejects the short-term approach to manag-ing long-term goals, with no consideration of off-balance-sheetfactors such as worker health or the availability of water or theenvironmental sustainability of a company’s supply chain. Some ofthe change under way in our world is about simple self-preservation(if you’re a beverage company operating in emerging markets andare not taking water issues into account, perhaps you will be in adifferent line of work five years from now!); other parts come fromthose intentionally seeking to use investment capital to drivepositive social and environmental impacts.

This book is just the latest stepping-stone in a growing body ofresearch across the fields of social entrepreneurship, blendedvalue, community development finance, microfinance, workforcedevelopment, impact assessment, sustainability, corporate respon-sibility, and socially responsible investing. In the past five years,more has been written about the purpose, scope, and activity ofthese fields than ever before, with increasing speed and regularity,from more diverse and global voices.1

What we add to the nearly daily drumbeat of new blogs andreports is a deeper empirical look at what is being done andaccomplished by funds that have established a tangible trackrecord, in order to understand this emerging field with fresheyes and to more confidently predict what will come next.

What this track record of research points toward is the realitythat impact investing is moving from anecdote to analysis, from thewhipsaw opinion of hopeful pundits to perspectives informed bysharp experience and insights grounded in practice. Our researchis drawn from the concrete experiences of twelve funds preciselybecause that level of in-depth analysis is what is now required tomove our collaborative efforts from the initial questions of “ImpactInvesting 1.0” to the next level of informed execution.

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It is no accident that Morgan Stanley, Goldman Sachs, UBS,Deutsche Bank, RBC, Bank of America, National Australia Bank, allof the High Street banks in the United Kingdom, and dozens ofother major financial institutions throughout the globe are makingstrong plays in the impact investing arena. Other investors shouldtake heed:

The train has left the station.The tremors are being felt.

Mainstream investors are reframing assumptions governingtraditional investing just as traditional philanthropists and sociallyresponsible investors are reconnecting with their initial motivationsto effectively manage assets and make use of capital to create achanged world—at the levels of individual, community, company,and market.

The rise of impact investing takes place against a largerbackdrop of innovation within mainstream capital markets andnewly emerging visions of the future of business. And much of thisis now being driven by shifts in “consumer” demand, whether atthe neighborhood level of individuals seeking to better thepossibilities before them; the customer level of those seekingto align the power of their dollars with the world they seek tocreate; or the consumers of investment strategies and vehicleswho are demanding greater transparency, less financial leverage,and expanded understandings of potential value creation gener-ated by their capital.

The funds profiled in this book show us, concretely, whatthis collaborative new world looks like—in the emerging era ofImpact Investing 2.0. The work of the twelve funds stands asa testament to the fact that capital can be structured to changethe economic conditions of those who remain largely outside theeconomic mainstream.

While a great deal has been achieved, a great deal more mustbe done. We do not pretend to offer “the answer” to the manydebates and discussions currently taking place in regard to theability of capital and companies to advance positive change in theworld; nor do we provide a template or defined roadmap. What weoffer in the following pages is a set of organizational data points,

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experiences, and analysis to inform our next steps as we moveforward together. We owe a great deal to these funds willing toopen their balance sheets and reflections to outside researchers.And we are pleased to bring their lessons to all those committed toinvesting with impact to help advance the world to which we aspire.

August 2014 Cathy ClarkDurham, North Carolina

Jed EmersonGranby, Colorado

Ben ThornleyOakland, California

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Introduction

You don’t need a weatherman to know which way the wind blows.—Bob Dylan, “Subterranean Homesick Blues”

THERE WAS PROBABLY NO POINT IN HISTORY when life was truly simpleand uncomplicated. Every age, every time, every life has its chal-lenges, its complexities, its moments of uncertainty and change.Yet, in the midst of each age’s challenges comes a moment ofclarity: the need to engage in the Civil War, the ultimate validity ofbattling the Axis powers, the compelling righteousness of the civilrights movement.

Our moment is no different than others that have come before,save that the clarion call is for a new generation—figuratively andliterally, as the Millennials step into new leadership roles—toadvance new thinking with regard to the nature of capital and thepractices of investing. We now live in a world where injustice andpoverty, down the street or across theworld,may be felt in an instant.One where environmental degradation threatens not just somefuture generations we’ll never know, but the quality of life of ourchildren.Andwhat’sbeingdemanded,moreclearly thanever, acrossgenerations, is the opportunity to align every facet of our lives withmaking a positive difference, with a broader vision of a life well lived.

In this respect, in a world that technology renders increasinglyopen and interconnected, capital markets remain one of the lastbastions of imperviousness. Even though capital flows around theglobe are one of themost powerful forces shaping our societies andeconomies, most of us still invest under the pretense that theimpact of capital is divorced from its uses.

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Yet even as our moment in history demands nothing less than afull accounting of the positive and negative outcomes of capital, athorough understanding of our role in bending environmentaland social systems toward justice, there will be those who continuetheir efforts to play the role of pundits on the sidelines as ourmodern Rome devolves into seeming chaos. Even as trillions ofdollars continue to be invested with the sole consideration offinancial return, and even as companies continue to be managedwith an eye to a single, supposedly unencumbered bottom line offinancial performance, the majority will see that larger forces arebeing unleashed in the form of a new capitalism—capitalismfocused on the generation of financial returns, yes, but a larger,more holistic economic system operated with reference to previ-ously “off-balance-sheet” factors, such as stakeholder interests andcarbon footprint—and a host of additional factors increasinglyunderstood to have influence on long-term value generation andfinancial return to investors, as well as to our well-being on theplanet.

Capitalism will continue its evolution of past decades butincreasingly turn outward, recognizing that economics and financemay no longer be viewed in isolation from those elements on whichthe capitalist engine itself draws. The new capitalism will continueto be revealed as the unifying backdrop against which innovationsand refinements will emerge. The new capitalism will not pit assetowner against wage earner, or shareholder against stakeholder, orcapitalist against community. Rather, the new capitalism clearlyemerging through the mist of history is one of complements—notcontradictions. It is a capitalism of integrated interests. It is acapitalism of shared futures and global markets played out incommunity contexts connected across the planet via the newwireless world and ultimate reality that value is a blend of environ-mental, social, and economic components—value is itself funda-mentally whole andmore than the sum of these parts. The legacy ofthe future will not be one of blind wealth creation but rathersustained value creation across generations. It is a capitalism ofcorporate and community commerce, of individual and societalchange, and, ultimately, our undeniably common interests.

It is, at its core, a Collaborative Capitalism: the realization of acommunity’s highest economic and social aspirations through the

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enterprising deployment of ideas, capital, and shared resources inpursuit of common impact.

It is within this broad flow of global collaborative capitalism thatimpact investing takes place.

As we will explore in the following chapters, impact investing isa banner under which a host of practices now gather:

• Mainstream, private equity investors seek to integrate environ-mental, social, and governance factors into their pursuit offinancial returns.

• Pension fund fiduciaries invest with an eye to the health of thecommunities in which beneficiaries live, as well as their finan-cial interests.

• Foundations seek not simply to make charitable grants butrather to draw on the full tool kit of capital under theircontrol—grants, to be sure, but also program-related invest-ments and public and private securities—all with an eye towardsustained portfolio performance and maximizing total impact.

• Individual investors gather on crowdfunding platforms, aggre-gating their hundreds into hundreds of thousands of dollarsdirected at various types of impact andmultiple types of return.

In some ways, this is all new—yet in others, the song remainsthe same. Over a decade ago, following a presentation at the WorldEconomic Forum in Davos that included a description of the visionand practices of what may now be defined as impact investing, anaudience member rose to express how powerful he felt this newvision to be—and to point out that in many ways it was simply areturn to the fundamental principles of the traditional, privatelyheld family business managed not only for the benefit of thefounding family but also for the community (if not the region)as a whole; the family’s prosperity could not be separated from theplace they called home.

Impact investing is old-school, fundamental investing andeconomic development with a twenty-first century sustainabilitywrap. It is what good business practice was, is, and will ever be. It isearth economics and family values and profit with purpose. Inshort, it is the visible tip of the iceberg within the larger globalsystem of Collaborative Capitalism.

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In the research on which our partnership is based, the three ofus (re)discovered a set of truths that communities and societieshave forgotten:

• The most effective strategies operate with awareness not simplyof the corporate or capital context but with linkage to the “greataround” represented by the public sector and the enablingenvironment it creates.

• The strongest form of capital is a “stack” of all capital comingfrom a variety of private and public investors—each tranche ofwhich buys down risk, and positions enterprise for optimalperformance, thus enabling opportunity to be captured for thebenefit of shareholder and stakeholder alike.

• The best teams are diverse, with leaders who build from pastexperience a complex future that transcends silos and singulardisciplines or doctrines.

• The organizations—whether for-profit or nonprofit orhybrid—that are built to best stand the test of time are thosethat do not seek to artificially separate corporate mission fromfinancial discipline, but rather maintain mission as the touch-stone on which financial sustainability is grounded.

As harbingers of a new way of doing business generally—or,more accurately, a revitalized understanding of back-to-basicstruths—these axioms offer significant challenges to those whocontinue to maintain the illusion that the interests of capitaland impact are antithetical. Business models geared only to finan-cial performance, with no consideration of impact, will be decreas-ingly effective in generating consistent profits. This trend, inconcert with the preferences of Millennials, who more than anygeneration seek to blend meaning with their work and money,mean that these models will quickly become bad business inshrinking markets.

Our Two-Year StudyWe have reached the insights and conclusions in the followingpages as the result of a two-year process of observing best businesspractices in Collaborative Capitalism through our examination of

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twelve outstanding impact investing funds that met or exceededthe expectations of their investors.

With a commitment to concurrently delivering attractive finan-cial returns and intentional social outcomes, impact investors are atthe cutting edge of Collaborative Capitalism, operating in marketsoften smaller, younger, and more idiosyncratic than mainstreaminvestors have the stomach or capacity to tackle, and that demandcross-sector skills that many mainstream investors simply do notpossess.

As a result, successful impact investing fundmanagers are extra-ordinarily creative, nimble, and resilient—all qualities we wanted toexplore and learn from when we first culled an initial universe of350 funds to 30 that were recommended by their investors.

We then decided on the final twelve funds, which were repre-sentative of the breadth of activity in impact investing, with trackrecords of financial and social performance that were suitablyrobust and sharable. The twelve funds are listed here; their impacttarget areas are illustrated in Figure I.1. With the objective ofunderstanding the key factors that had undergirded their success,we interviewed not only fund managers but also the investors inthose funds, the recipients of investor capital, and the actors withintheir immediate peer group.

Twelve Top-Performing Impact Investing Funds

Aavishkaar Calvert FoundationACCIÓN Texas Inc. Deutsche Bank

RSF Social Finance

Bridges Ventures Elevar EquitySmall Enterprise

Assistance Funds(SEAF)Business Partners

LimitedHuntington CapitalMicroVest W.K. Kellogg

Foundation

Chapter 2 provides additional insight into the research process,which, in 2013, led to the largest-ever public release of perform-ance data in impact investing, despite the fact that most impactinvesting funds operate in private markets and, with only accred-ited investors, are under no obligation to share information pub-licly. Our top priority was building trust with the funds, and holdingfast to a detailed process of engagement that would ensure that

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financial performance was contextualized alongside the complete,detailed story of their creation, governance, strategy, deployment,and relationship with investors and investees over the entire life ofthe fund. The aggregate financial and social performance of thefunds is presented in Figures I.2 and I.3.

What we discovered was a sophisticated marketplace that ismuch less haphazard than many have thought, and a pathway ofpractice and expertise we invite you to explore in the followingchapters.

Figure I.1 Impact Targets of the Twelve Funds

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Figure I.2 Fund Investors and Financial Performance of theTwelve Funds

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AudienceOur focus is impact investing—and practitioners in the field arecertainlyacoreaudiencethatwillbenefitparticularlyfromnewinsightsinto the structural and strategic characteristics associated with high-performing impact investing funds. However, this book also hasbroaderapplication, just as impact investing sits at theapexofCollabo-rative Capitalism. (We will discuss this in more detail in chapter 1.)

Although there are ongoing discussions regarding the natureand practice of impact investing, the concept really is quitestraightforward:

Impact investing is capital management in pursuit of appropriate levelsof financial return with the simultaneous and intentional creation ofmeasurable social and environmental impacts.

What’s important to understand is that the lessons of impactinvesting are also the lessons of Collaborative Capitalism, a largerfield of practice that encompasses everything from corporate social

Figure I.3 Aggregate Impact of the Twelve Funds

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responsibility (CSR) to operational and supply chain sustainability,public private partnership, and socially responsible investment (allin an effort to mitigate risk).

Increasingly, financial institutions and corporations around theworld are using Collaborative Capitalism as a tool to proactivelygenerate clear, positive social outcomes in addition to profits andwealth. This is a profound and transformational shift in whateconomic activity and capital make possible (adding an entirelynew measure of extrafinancial performance). From the capitalmarkets perspective, impact investing has the potential to foreverchange the way we consume financial services.

Consider this one data point from theWorld Economic Forum:Although just 6 percent of US pension funds reported in 2013 that they hadmade an impact investment, fully 64 percent expected to in the future.1

Even if it takes these pension funds decades to follow throughand just half pursue the opportunity, the ramifications are clear:impact investing is going mainstream, pushing those alreadyengaged in “risk-mitigating” capitalism to think more clearly aboutoutcomes, and those unfamiliar with Collaborative Capitalism toquickly get up to speed.

The Impact Investor speaks directly to numerous audiencestouched by Collaborative Capitalism and provides some of thefollowing important insights and easy-to-apply tools:

• For mainstream investors, including commercial institutions,fiduciaries, and individuals, The Impact Investor provides action-able insights into the characteristics and performance of arange of proven impact investing strategies. It also paints apicture of the unique skills of impact investors, and the rightquestions to ask when weighing a fund’s likelihood of deliver-ing the financial and social value it promises. The Impact Investoralso recommends concrete steps investors can take directly, intheir own portfolios, to deliver positive social or environmentaloutcomes in addition to attractive rates of financial return.

• For corporate executives, The Impact Investor provides evidencea new era of Collaborative Capitalism is emerging—the nextessential paradigm in business, building on CSR and otherevolutions in thinking regarding the place of business in advanc-ing social or environmental performance. By showcasing the

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work of impact investing funds at the forefront of this trend, thisbook portends a set of practices that, in less than a decade, willbecome commonplace in all business settings. By studying thework of impact investors, business executives will gain materialinsight into a range of strategies for ensuring that their compa-nies remain profitable and sustainable. Executives will also gainskills needed to be more successful operators in a world that ismore sector agnostic than ever and populated by a new genera-tion of Millennial customers.

• Entrepreneurs will learn what makes impact investors tick andthe type of business approaches they typically invest in. Thisbook will provide entrepreneurs with insights into partneringand working with investors, and the other multilingual skillsand new approaches they should master (alongside impactinvestors) in order to be as effective as possible. Each of theimpact investing funds we feature is also entrepreneurial in itsown right. The lessons from the experience of these funds willbe invaluable for any innovative business leader.

• Community and social change agents will gain insights into howcapital can be used to drive social and environmental justice.The tools of finance are increasingly being appropriated tosupport community vehicles—nonprofits, businesses, cooper-atives, social enterprises, and any number of other structures—delivering job creation and opportunities for expandingemployment and development to those presently excludedfrom local and regional economies.

• For teachers and students of business, the book offers a rangeof new analytical frameworks for assessing the structure andrapid development of impact investing, created with the benefitof extensive primary data. These frameworks have broad busi-ness applications, and our research methods and approach todocumenting performance can be applied in most markets.The book also presents clear paths for continuing research andopportunities for further academic and thought leadership. Allstudents will benefit from understanding the operationalapproaches being applied by funds using cutting-edge financialinstruments in pioneering markets.

• For philanthropists, the book presents a comprehensive over-view of what it means to be “catalytic” by delivering amagnitude

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of social value never before seen as an intentional outcome ofprivate investment. The book highlights the involvement of anumber of philanthropic leaders in the funds we researched,two of which are private foundations. The book will helpphilanthropists understand what it means to engage in impactinvesting, how to get started, and the kinds of approaches thatwill increase the probability of success.

• Public officials will recognize a range of private investmentstrategies in The Impact Investor that have already been utilized bypolicymakers to drive the delivery of social and environmentalimpacts at scale. The book describes an ideal form of public-private partnership and the steps needed, primarily on the partof impact investors, to actualize this heightened form of col-laboration. Public officials will see a powerful, evolving role forgovernment in the development of impact investing, and theopportunity to stretch limited resources in innovative new ways.As essential partners in impact investing, public officials willbenefit from the book’s broader insights into the future offinance and business and its relationship to diverse constituen-cies, a perspective already at the heart of government.

No book can be all things to all people. Readers should knowthat much of our data and real-life examples of CollaborativeCapitalism are drawn directly from impact investing funds. Therest is drawn from the broader literature and our personal expe-riences in the fields of impact, philanthropy, policy, and invest-ment. Two of us have been private impact investing fundmanagers,and two of us have been foundation executives making grants andprogram-related investments, a key form of impact investment.One of us has been a business and finance reporter; two of us havewritten guidebooks for practitioners that include models andframeworks that, more than a decade after they were published,continue to be widely used across the social enterprise and impactinvesting sectors. We have experience in successfully changing theway people think about and understand complex topics. Two of ushave been publishing and teaching on these topics for more thanfifteen years each. One of us coauthored the first book everpublished on the topic of impact investing; one of us was a publicofficial focused on economic development before advising the

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largest pension fund in the United States on its impact assessmentpractice; and one of us helped create an emerging standard ratingsystem for impact investing funds worldwide.

A Focus on IntermediariesThrough these experiences, we initiated our major collaborativeresearch effort in 2011 with the strong belief that there is no betterunit of analysis than impact investing funds for understanding theway capitalism is changing.

Why? Because funds interact directly with hundreds of enter-prises and have ultimate responsibility for delivering the blendedperformance of financial as well as social and environmentalreturns on which the case for impact investing rests. They arethe proverbial canaries in the coal mine of the larger sphere ofCollaborative Capitalism. They are test beds and financial R&Dlabs, where in order to succeed, relationships and communicationmust be rock solid even while the work remains innovative.

Indeed, when impact investing funds succeed, many importantresults follow that may positively impact the development ofCollaborative Capitalism: investors increase their investment, rep-licable financial structures emerge for new pools of fund capital,entrepreneurs have clear guideposts of what to expect of invest-ment, and secondary markets more naturally emerge.

Finally, funds are also a crucible of accountability. As BobWebster has written about the Grassroots Business Fund, wherehe is chief operating officer, the formal fund structure provides a“clear and transparent picture of fund financial flows,” includingmanagement fees, legal costs, portfolio investments, investmentinterest, dividend, and principal reflows; “clear expectations forfinancial and social returns and any tradeoffs thereof”; and an“active seat at the governance table.” They also “can incentivize thefund manager through some type of carried interest in the fund’sperformance.”2

What’s Ahead?The Impact Investor is presented in three parts that examine how wegot here, the current state of the market and its emerging bestpractices, and future implications.

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In part 1, “Key Practices and Drivers Underlying ImpactInvesting,” we describe the development and current state ofCollaborative Capitalism and impact investing.

Chapter 1, “Inside Collaborative Capitalism,” explores some of thebig-picture trends driving the shift from incidental to inten-tional impact, including the use of business approaches insolving social challenges, a growing awareness of environmen-tal and economic sustainability, and demand from a newgeneration of more responsible consumers and investors.

Chapter 2, “Raising the Curtain on Impact Investing,” provides acomprehensive overview of this fast-growing market, introduc-ing our twelve funds in detail, their performance, and themarket of which they are a part. We also provide a new estimateof the total size of the global impact investing market, drawingon key subsectors, and propose a new method for categorizingimpact investing funds.

In part 2, “Four Key Elements of Successful Impact Investing,”we analyze current practice and delineate the four key elementsof successful impact investing—and by extension CollaborativeCapitalism—and provide a range of tools for implementing thesepractices:

Chapter 3, “Impact DNA,” highlights successful funds’ coreapproach to impact investing: a process of establishing a clearlyembedded strategy and structure for achieving mission prior toinvestment, enabling a predominantly financial focus through-out the life of the investment. We call this approach “MissionFirst and Last.” Knowing early and explicitly that impact iscontained in a fund’s DNA allows all parties (investors, invest-ees, and the fund itself) to move forward with the investmentdiscipline akin to any other financial transaction, confidentthat any possibility of mission drift can be effectively managed.

Chapter 4, “Symbiosis as Strategy,” explores the ubiquitous role ofgovernment in impact investing, and the multidirectionalrelationships of trust and support that undergird effectivepublic-private partnership. By nature, impact investors repre-sent a marriage of public and private interests. They seamlessly

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integrate a commitment to improving public welfare with thepower and efficiency of capital markets. Policymakers—whohave a vested interest in maximizing the social and environ-mental well-being of their constituencies and hold massivepower to influence the market through laws and regula-tions—are natural partners for impact investors.

Chapter 5, “The New Deal,” focuses on the rigorous and creativestrategies impact investors use to meet the diverse returnobjectives of a range of capital providers. By bringing differenttypes of stakeholders to the table, cultivating “catalytic” inves-tors, and doing the hard work of financial structuring, impactinvestors are able to support markets that would not otherwisebe “investable,” providing access to capital in some of the mostunderserved places and sectors.

Chapter 6, “Multilingual Leadership,” discusses the inherentlycross-sector nature of impact investing and the diversity ofskillsets and strategic approaches needed if one is to succeed.Impact investors are expert at simultaneously seeing the worldthrough the eyes of philanthropy (the “theories of change”),government (market failure and subsidy), and finance (thebest use of capital; return on investment), which is a difficultbut essential approach to master in the era of CollaborativeCapitalism.

In part 3, “Looking Ahead: Trends and Challenges,” we take allthat we have learned and pose a simple question about the future.We claim that Collaborative Capitalism is on the march. What thenare the signs we should look for to indicate that CollaborativeCapitalism is storming the castle? What might still hold it back?

Chapter 7, “The Writing on the Wall” outlines ten trends to watchthat will signal the arrival of a broader practice of CollaborativeCapitalism on a range of investment and business activities,both mainstream and niche.

Chapter 8, “Concluding Reflections,” brings together the themesand explores seven challenges the field must face to success-fully bring forth this new vision.

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Finally, we end with an “Impact Investor Resource Guide” thatbrings together all of the strategies and tools from chapters 3through 6. This is an easy reference for those eager to move quicklyto action.

Impact investing has been called a dark wood in which variousnew and exciting creatures bustle about and explore a new world ofinvesting and impact. The Impact Investor points to the pathsthrough the wood and confirms impact investors, social entrepre-neurs, pension fund fiduciaries, and a host of other actors actuallyknow a lot more about how to “do” impact investing than manyhave to this point believed. We do not have to wonder how impactinvesting may have the greatest impact—the fund managers andstrategies in this book document how leading funds execute theirstrategies for high performance. We do not have to ask, “How doesimpact investing differ from traditional, mainstream investing?”The investors profiled in the following pages show how impactinvesting is not altogether “new” or different, but rather an exten-sion of the fundamentals of sound investing practices. We do notneed to ask, “What will it take for impact investing to go main-stream?” The practices and diverse pool of investors described inthis book show that in fact impact investing has gone mainstreamand that it is only amatter of time before we are truly able to see thedepth and breadth of the adoption of impact investing practiceswithin those mainstream markets.

Every era is an era of change. We need only to lift our heads orclimb a nearby hill to gain a different perspective, to see thepossibility of the changes taking place within our community,region, or market. This book provides an overview of promisinginvestment themes and practices that portend a global economictransformation. The exponential growth of impact investing is wellunder way as we continue to see new ideas, strategies, and oppor-tunities brought from the fringe to the center of capital markets theworld over.

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Index

Page references followed by fig indicate an illustrated figure; followed byt indicate a table.

AAavishkaar (India): Catalytic Capitalpractice by, 207, 208; as early-stageinnovators fund, 105; financial andsocial performance of, 95t; financialPolicy Symbiosis practiced by, 169;founding of, 84; the India microventure capital fund, 84–85; as IndianImpact Investor Council (IIIC)founder, 176; investment philosophyof founder of, 207; investment thesisof change (ITC) enterprise/individual focus of, 124, 126t;multilingual leadership practice by,223, 230, 247; as nongovernmentalorganization, 72; Prabhav tool usedat, 145; public sector investments in,169, 170; size and strategy used by,82t; strategic Mission First and Lastapproach by, 144–145. See also India;Impact investing study

Accel Partners, 69, 217Access to Energy Program, 70ACCIÓN Texas Inc. (ATI): acquireknowledge practice by, 182–183; bevisionary practice of, 189; CatalyticCapital practice by, 205, 207, 208;financial and social performance of,

97t; as first responder fund, 103fig–104; impact as a communitydevelopment financial institution(CDFI), 117–118, 143; Janie Barreraas multilingual leader at, 174, 176,243–244; as microfinanceinstitution, 85; multilingualLeadership practice at, 229–230;public sector investments in, 169,170; regulatory Policy Symbiosispractice of, 174; size and strategyused by, 82t; structural Mission Firstand Last approach by, 143.See also Impact investing study

Accountability: Fair Trade, 20; asimpact investing element, 61;investor driven Mission First andLast approach, 146

Acelero, 177Acquire knowledge (Policy Symbiosis),181, 182–186

Activities (Impact Value Chain),118–119fig

Acumen Fund: “best availablecharitable option” (BACO) ratioused by, 115; Impact Reporting andInvestment Standards (IRIS) projectrole by, 134

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Addis, Rosemary, 127–128Advocacy-driven Policy Symbiosis:definition of, 163; examples of,176–177; MacArthur Foundationprovider of, 177–178

Alignment: external, 128, 149,152–153; internal, 128, 149,151–152; investment strategy,127–129; trend toward corporate,262, 279–281; understandinginvestor motivation of, 153

“All-in” impact investors, 282Allen, M., 29Ambachtsheer, Jane, 33Annibale, Bob, 48, 49–50Annie E. Casey Foundation, 227Apax Partners (UK), 159Archer, David, 237Arey, Lorene, 234Ashoka U slogan, 25Asia Community Ventures, 185Asian Development Bank, 65Aspen Institute’s Business and SocietyProgram, 271

Aspen Network of DevelopmentEntrepreneurs (ANDE), 154

Atlanticmagazine, 21Australia: Impact Investing Australiain, 185; Social EnterpriseDevelopment and Investment Funds(SEDIF) program in, 171–172; socialinnovation funds (SIFs) spread to,270

AXA Financial, 88

BB Corporations: certification of,

29, 30, 42; corporate alignmenttrend and, 280; Etsy, 69–70;IceStone’s outcomes orientation, 43;Indigenous Design’s attention toconstituency, 44; SeventhGeneration’s transparency,43

B Lab, 29, 30, 42, 59Baldwin, Molly, 251t

Bank of America Merrill Lynch(BAML), 217

Bannick, Matt, 157–158Barclays (UK), 166Barrera, Janie, 174, 176, 243–244Barton, Dominic, 21Bay Area Transit-Oriented AffordableHousing Fund (TOAH), 214

Be visionary (Policy Symbiosis), 182,188–189

Ben & Jerry’s, 22“Benefit corporations,” 29Bernanke, Ben, 159–160“Best available charitable option”(BACO) ratio, 115

Big Society Capital (BSC) [UK], 38–39,166, 171, 176

The Blended Value Map, 261, 279Blood, David, 21, 33Bloom, John, 54–55Bloomberg, 263BNDES (Brazil), 65Body Shop, 28Bornstein, David, 238Bottom of the pyramid (BoP) market:Elevar Equity investment in the,111–113; “Elevar method” used toidentify the, 111–113

BRAC, 269Branson, Richard, 21Bridges Charitable Trust, 85, 86Bridges Ventures: aligning internallyapproach by, 151; financial andsocial performance of, 95t; IMPACTScorecard used at, 147; PolicySymbiosis practice of, 156, 158, 159,166; public sector investments in,169; Shifting the Lens report by, 153;size and strategy of, 82t; as solutionspecialists fund, 104; sustainablegrowth funds (SGFs) of, 85–86;thematic Mission First and Lastapproach by, 147. See also Impactinvesting study

Brookfield, Chris, 245Bryce, J., 76

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Buffett, Warren, 27Build partnerships (Policy Symbiosis),182, 186–188

Business for Social Responsibility, 28Business Partners Limited (BPL):Catalytic Capital practice by,206–207, 208; financial and socialperformance of, 96t; as firstresponder fund, 103fig–104;foundational Policy Symbiosis of,163–164; public sector investments inthe, 169, 170; size and strategy of, 82t;as Southern African SME risk financefund, 86–87, 163–164, 206; strategicMission First and Last approach by,144. See also Impact investing study

Business sector: access to capital bythe, 23; “blurring” boundaries ofpublic, nonprofit, and, 260; finalobservations about impact investingand the, 286–287; MultilingualLeadership learning by the, 251t–252t; operational capacity of the,22; power to create markets by the,22–23; profound societal role by the,23–24; relationships within the, 22,223–224, 290; social role andresponsibility of the, 21–24; surveyedMillennials on setting socialimprovement priority of, 274; trendtoward new twenty-first fiduciaryresponsibility in the, 262, 273–275

CCalifornia Department of Insurance,90

The California Endowment (TCE), 44,45–48

California Fresh Works Fund, 45–46California Organized InvestmentNetwork (COIN), 90, 210

Callear, Mildred, 155, 179, 195CalPERS: Golden State InvestmentFund created by, 248; HamiltonLane deploying capital on behalf of,217; investment practices of, 31–32;

Pacific Community Ventures’consulting to, 138

Calvert Foundation: CommunityInvestment Note: be visionarypractice of, 189; financial and socialperformance of, 97t; “Iconic PlacesInitiative” of the, 55–56; ImpactDNA of, 140; institutionalmultilingual team at, 246–247;multilingual leadership practice by,234; online vested.org platformlaunched by, 55; origins anddevelopment of the, 55, 56, 87;public sector investments in, 169;registered as a CDFI, 87, 247; asregistered CDFI, 44, 55–56, 87,246; as scale agents fund, 105–106;size and strategy of, 82t; stakeholdersas investors at, 44, 55–56; structuralMission First and Last approachtaken by, 143–144; Women Investingin Women Initiative (WIN-WIN) of,234. See also Impact investing study

Cambridge Associates, 127Cameron, David, 162, 237Capacity development providers, 72Capital: The Blended Value Map on

blended value concept of, 261, 279;business access to, 23; CatalyticCapital purpose of seeding through,203, 208–211, 220; Catalytic Capitalpurpose of sustaining through,203–208, 219–220; how multilingualleadership practice can help attract,233–234; impact investing fundlandscape “capital in and out,”98–99, 100; RSF’s “integratedcapital” term for, 211; total portfolioreporting (TPR) framework used toaccess, 264; twelve funds’ “capital inand out,” 100t–102t

Capitalism: concerns over inclusivenature and income inequalityoutcomes of, 21; historical contextand continued evolution of, 2. Seealso Collaborative Capitalism

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CapRock Group, 40Carbon Tracker, 260, 267CARE (Cooperative for Assistance andRelief Everywhere), 91, 92, 93, 128,208. See alsoMicroVest CapitalManagement

Career Advisory Board report (2011),25

Carnegie, Andrew, 21CARS (CDFI Assessment and RatingSystem), 69, 144

Cartier, 163Case Foundation’s “Short Guide toImpact Investing,” 136–137fig

CASE i3 Initiative (Duke University),71–72

Case, Jean, 27Case, Steve, 27Casey Foundation, 227Castro, Tina, 46, 47Catalytic Capital practice: DeutscheBank’s comprehensive use of,219–221; four purposes of, 203–221;lessons learned about the, 285;myths of the, 200–203; overview ofthe, 196–200; tool kit of the,222–227

Catalytic Capital purposes: risk-reducing, 200–221, 203, 211–216;seeding, 203, 208–211, 220;signaling, 203, 216–219, 221;sustaining, 203–208, 219–220

Catalytic Capital tool kit: investstrategically, 222, 226–227; knowhow, 222, 223; know who and why,222, 223–224; review collectively,222, 227; think expansively, 222, 225

CDC Group (UK), 65CDFI Fund (US): ATI registered as a,143; ATI’s work with the, 183;Catalytic Capital practice by the,201; CDFIs certification by, 159–160;CDVC funds registered with the,203; New Markets Tax Creditadministrated by the, 161, 203.See also Community development

venture capital funds (CDVCs)[US]; United States

Ceres, 38, 266Ceres Investor Network on ClimateRisk (INCR), 266–267

CGAP, 48Changamka (Kenya), 131Chase Manhattan Bank, 229Chinese development finance

institutions, 164Choi, Audrey, 50–52Chorengel, Maya, 245Citi, 44, 47–50, 175Citi Foundation, 48Citi Microfinance, 48Clara Fund, 219, 234Clarity: getting everyone aligned for,127–129; investment thesis ofchange (ITC) used for, 118,123–127, 131–135, 150–151; LondonPrinciple on, 192–193; Mission Firstand Last investing tool kit forgaining, 149, 150–151; need forimpact investing, 117–118

Clark, C., 29, 119Climate Change Scenarios: Implications forStrategic Asset Allocation report(Mercer), 33

Clinton, Hillary, 56, 236Co-Operative Bank, 221Coastal Enterprises (Maine), 121–122Coca-Cola, 23Cohen, Sir Ronald, 156, 162, 166–167,

176Cold War mind-set (1950s), 25Collaborative Capitalism: aligning“outcome buyers” through socialimpact bonds example of, 44, 52–53;The California Endowment (TCE)as example of, 44, 45–48; CalvertFoundation as example of, 44,55–56; Citi as example of, 44, 47–50;creating relationships and feedbackloops for, 22, 223–224, 290;description of, 2–3, 8–9; examiningthe roots of, 20–34; Fair Trade

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example of, 19–20; global practicesof investing within, 3; impactinvesting funds as the “canaries” of,12, 292; increasing number ofjournals exploring aspects of, 271;Morgan Stanley as example of, 44,50–52; peer-group-basedmicrofinance example of, 20;pyramid of the, 34–39; as responseto a changing world, 56–57; RSFPrime as example of, 44, 53–55; setof truths driving, 4; sizable marketfor, 62–66; as tool to generate socialoutcomes in addition to profits, 9.See also Capitalism; Impact investing

Collaborative Capitalism key elements:constituency attention as, 41–42, 43,44, 47–50, 53–55; outcomesorientation as, 41, 43, 44, 50–53,115–116; transparency as, 40, 43, 44,53–55, 194–195

Collaborative Capitalism roots:aligning risk mitigation and deliveryof better outcomes, 30–34;Millennials and entrepreneurs asthe new fiduciaries, 24–30; socialrole and responsibility of business,21–24

Collaborative Leadership: How to Succeedin an Interconnected World (Archerand Cameron), 237

Colombia’s social innovation funds(SIFs), 270

Communication skills, 242Community Development FinanceAssociation, 185

Community development financialinstitutions (CDFIs): ACCIÓNTexas’s impact as a, 117–118; CalvertFoundation registered by a, 44,55–56, 87, 246, 247; CARS (CDFIAssessment and Rating System) for,69, 144; concerns over how impactinvesting failure might impact,60–61; description of, 55, 159;General Board of Pension and

Health Benefits of the UnitedMethodist Church investor in, 69;risk reduction by the, 214; sizablemarket for, 64; structural MissionFirst and Last approach used by,142–144

Community development venturecapital funds (CDVCs) [US]:Catalytic Capital practice of,203–205; creation and developmentof, 159–161; description of, 156,203–204; examples of loans createdby, 161. See also CDFI Fund (US);United States

Community development venture(CDV) funds [UK], 156

Community finance: broadening inthe US, 63–64; description of, 63

Community health investment, 3Community interest companies (CICs)[UK], 29, 280

Community Investment Note. SeeCalvert Foundation: CommunityInvestment Note

Community Quarterback model, 161Community Reinvestment Act (CRA)[US], 47, 48, 63, 69, 85, 90, 99, 182,183, 210

Constituent attention: aligning“outcome buyers” through socialimpact bonds, 44, 52–53; CalvertFoundation’s stakeholders asinvestors example of, 44, 55–56; Citi’sapproach to, 44, 47–50; CollaborativeCapitalism attention to, 41–43;feedback from constituency, 43;Morgan Stanley’s investing platformfor outcome-driven investorsexample of, 44, 50–52

Consultative Group, 63Core Innovation, 151Corporate alignment trend, 262,279–281

Corporate social responsibility (CSR):Collaborative Capitalism and, 8–9,20; recent developments of, 36–37

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Council on Foundations, 185Council on Institutional Investors, 38Counterculture mind-set(1960s/1970s), 25

Countrywide, 61Crawford, Gil, 128, 229, 234Critical thinking skills, 240–241Crowdfunding platforms, 3

DDannon, 281DBL Investors, 178–179Dees, J. Gregory, 52DEG (Germany), 65Dell Foundation, 217Deloitt, 37Deloitt’s Millennial survey (2011), 25,26fig

Deloitt’s Millennial survey (2014), 26Depression (1930s), 25Deutsche Bank: Global CommercialMicrofinance Consortium: capitalstacks in, 220fig; Catalytic Capitalpractice by, 219–221, 223;description of, 40, 88; ethicalbehavior practice of, 189–190;financial and social performance of,96t; foundational Policy Symbiosispracticed by, 165; investment thesisof change (ITC) sector focus of,124–125, 126t, 127; public sectorinvestments in, 169–170; as scaleagents fund, 105–106; size andstrategy of, 82t. See also Impactinvesting study

Deutsche Bank Americas Foundation,220

Deutsche Bank Group, 34, 175Deutsche Bank’s Essential CapitalFund, 201–202

Development Credit Authority (DCA)[US], 173

Development finance Institutions(DFIs): description of, 65–66;Sichuan SME Investment Fund(SSIF) capitalized by, 93

Development Innovation Ventures(DIV) [USAID], 172–173

DFID (UK), 171, 172Diaz, Arun, 210d.light, 70Doerr, John, 27Domini, Amy, 60, 62Domini Social Investments, 60Doughty Hanson (UK), 159Drexler, M., 77Duke University, 52Duke University’s CASE i3 Initiative,71–72

Dylan, Bob, 1

EEarly-stage innovator funds, 103fig, 105eBay, 27Eccles, Robert, 264Ecobank, 215Economically targeted investment(ETI), 64

Economistmagazine, 65EDF, 65Eggers, William, 235Ehumelu, Tony O., 67Elevar Equity: be visionary practice of,189; bottom of the pyramid (BoP)market investment by, 111–113;Catalytic Capital practice by, 199,217; core impact themes used at,132t–133t; “Elevar method” used toidentify the BoP groups, 111–113;financial and social performance of,96t; “Impact DNA” of, 113–114; asIndian Impact Investor Council(IIIC) founder, 176; investmentthesis of change (ITC) used by,131–134; multilingual team at,244–245; nongovernmentalorganization status of, 72; as scaleagents fund, 105–106; signalingpractice through partnerships by,217; size and strategy of, 83t;strategic Mission First and Lastapproach by, 144; Unitus Equity

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Fund and Elevar Equity II providingmicrofinancing, 88–89. See alsoImpact investing study

Elkington, John, 36, 264Embrace (India), 130–131Employee Stock Ownership Plans,280

Enclude Solutions, 40, 214–215, 223Enterprise Community Partners,168

Enterprise theory of change, 120Enterprising Communities: Wealth BeyondWelfare report (2000), 156

Entrepreneurs. See Socialentrepreneurs

Environmental, social, and governance(ESG) factors: Bloomberg terminalsoffering information on, 263;description and implications of, 24;Deutsche Bank Group’s metastudyon outcomes of investing context of,34; efforts to have companies reporton, 37–38, 39; green bonds focusingon, 64–65; Mercer reports oninvesting context of, 33; size ofmarket for, 62–66; trends towardinvestor’s “right to know” about,162, 265–269. See also Impactinvesting practices

Erikson, Eliza, 199E.T. Jackson and Associates, 67Etsy, 69–70Etsy Values & Impact Annual Report,70

European Union’s social innovationfunds (SIFs), 270

European Venture PhilanthropyAssociation, 185

Eurosif, 185Evergreen Cooperatives, 71“Everyone a changemaker” (Ashoka U

slogan), 25External alignment: description of,128; Mission First and Last tool kiton, 149, 152–153

ExxonMobil, 267

FFair Trade: accountability element of,20; description and outcomes of,19–20

Family offices: as “capital incubators,”282–283; as global impact trend,262, 281–283; leading indicators ofgrowing trend toward, 283

Farias, Sandeep, 111, 112, 229, 245F.B. Heron Foundation, 45, 141Federal Reserve Bank of Boston’sWorking Cities Challenge, 161

Federal Reserve Bank of SanFrancisco, 161

Federal Reserve System, 47, 160, 161,174

Fiduciary responsibility: newperspectives on twenty-first century,262, 273–275; traditional definitionof, 273

Financial impact innovation:globalization trend of, 262, 269–270;leading trend indicators on, 270;microfinancing as, 42, 63, 69, 116,176, 269; Mission First and Lastpractice, 113–154; the New Deal’sCatalytic Capital, 196–228; PolicySymbiosis, 99, 155–195; socialimpact bonds (SIBs) as, 44, 52–53,215–216, 269; social innovationfunds (SIFs), 269–270; trend towardimpact education on, 262, 270–271

Financial Mail (South Africa), 250tFinancial Policy Symbiosis: definitionof, 163; examples of, 168–170; a newera of public innovation through,172–173; power of intermediaries in,170–172

“Find your voice,” 253First responder funds, 103fig–104501(c)(3) nonprofit status, 41“Flexible purpose corporations,”29, 30

Florida Retirement System, 64FMO (Netherlands), 65Ford, Henry, 23

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Forum for Sustainable andResponsible Investment (US SIF),62, 64

Foundational Policy Symbiosis:Business Partners Limited (BPL)example of, 163–164; definition of,163; examples of developmentfinance institutions practicing,164–168

Frances, Pope, 259Freeland, Chrystia, 21Freeman, Edward, 36Fresge Foundation, 55Funds. See Investment funds

GG7 countries (formerly G8), 162,272–273

G8 countries, 176, 185, 236Gallear, Mildred, 155Gandhi, Pravin, 210Gates, Bill, 27Gates, Melinda, 27General Board of Pension and HealthBenefits of the United MethodistChurch, 69, 88

General Electric (GE), 68Generation Investment Management,21, 33

“Getting Started with IRIS” guide, 154Ghana: Ghana Institute forResponsible Investment of, 68; socialinnovation funds (SIFs) spread to,270; Venture Capital Trust Fund(VCTF) of, 68, 172

GHRS, 144Giving Pledge billionaires, 27Global Commercial MicrofinanceConsortium I, 88

Global Development Lab (USAID),236–237

Global Impact Investing Network(GIIN): on core characteristics ofimpact investing, 153; descriptionand function of, 59; ImpactEconomy Innovation Fund (IEIF)

created by, 67–68; impact investingas defined by, 190; ImpactReporting and InvestmentStandards (IRIS) of, 59, 134–135,144, 154, 263–264; Issue Brief on First-Loss Capital (2013) by, 213; J.P.Morgan/GIIN survey (2014) by, 62,129; social investment support by, 30

Global Impact Investing Rating System(GIIRS), 59, 135, 248, 264

Global impact trends. See Top Tenglobal impact trends

Global Learning Exchange on SocialImpact Investing (GLE), 185, 236

Global Reporting Initiative, 38, 263Golden State Investment Fund, 248Goldman, Paula, 157–158Goldman Sachs: Asset Management of,21; Urban Investment Group (UIG)of, 52

Gore, Al, 21, 33Gorman, James, 50Goulay, Christine Driscoll, 24Government. See Policy Symbiosispractice; Public sector

Grace, K., 183Grameen Bank (India), 42, 269Grameen Bank theory of change, 121,122fig

Grassroots Business Fund, 12Great Recession, 25, 160“The Great Thaw” trend: leadingindicators of the, 279; toward impactinvesting, 262, 277–279

Greatest Generation culture, 24–25Green bonds, 64–65Guillot, Janine, 31–33

HHana Health, 213Harris Interactive, 25Harvard Business Review, 254Harvard Business School’s SocialEnterprise Club, 271

Harvard University’s Initiative forResponsibility Investment, 276

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Hattern, Gary, 220Head Start programs, 177Helion Venture Partners, 217Heron Foundation, 45, 141Hirshberg, Gary, 28, 280–281Historic moments: capitalism contextof our, 2; Millennials facing theirown, 1; unique points of, 1

Honest Tea, 68Honesty. See IntegrityHong Kong’s social innovation funds(SIFs), 270

How to Change the World: SocialEntrepreneurs and the Power of NewIdeas (Bornstein), 238

HSBC (UK), 166Huntington Capital: Catalytic Capitalsignaling practice by, 217; creationof the, 210; financial and socialperformance of, 95t; HuntingtonCapital Fund II, LP investmentstrategy, 89–90, 141; multilingualleadership practice by, 247–248;regulatory Policy Symbiosis practiceby, 175; size and strategy of, 83; assolution specialists fund, 104–105.See also Impact investing study

IIceStone, 43“IdEA” platform (US Department ofState and USAID), 56

IGNIA (Mexico), 180, 199Impacct Network, 278Impact Community Capital, 210“Impact DNA”: description of,113–114; sequencing impactinvestors,’ 138–141. See alsoMissionFirst and Last practice

Impact Economy Innovation Fund(IEIF), 67–68

Impact education trend, 262, 270–271Impact investing: accountabilityelement of, 20, 61, 146; AcumenFund’s “best available charitableoption” (BACO) ratio used for, 115;

as Collaborative Capitalism pyramidapex, 39; defining multilingualLeadership practice for, 239–243;definitions and description of, 3, 8,58, 98, 190; examining the fundperspective of, 73–81; finalobservations and findings about,286–287; impact commitmentspectrum, 136–137fig; “ImpactDNA” for, 113–114; increasing trendtoward, 28–29; intentionalityelement of, 61, 64, 196–227; as ameans to an end, 114–117, 260–261;moving toward a single discourse,286; moving toward an integratedCollaborative Capitalism practice,285; numerous audiences of, 9–11;1.0 era of, 74; ongoing challenges of,287–290; outcomes focus of, 30–34,35; performance issue of, 62; policyframework for, 182–183fig;predicted growth of, 9, 259; thepublic case for, 159–162; questionsasked by newcomers to, 260; readinglist on policy on, 184–186; asresponse to a changing world,56–57; theories of change andImpact Value Chain used in,118–127; “Top Ten” global trendsof, 262–284; two-year study on,4–8fig; United Kingdom’s morenarrow definition of, 61. See alsoCollaborative Capitalism; Impactinvesting study; Impact investmentecosystem

Impact investing actors: E.T. Jacksonand Associates’ report on, 67fig;examples of nonfund, 67–72; finalobservations on impact investingand, 286–287; identifying the,66–73; market infrastructurecategory of, 73fig, 202; marketinnovators category of, 72–73fig,202; market scalers category of,73fig, 202. See also Impactinvestors

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Impact Investing Australia, 185Impact investing challenges:continued debate over definitionsand terms as, 287–288; definingroles and responsibilities as,289–290; for early-stage impact-oriented enterprises, 287; metrics,measurement, and evaluation as,288–289; postmodern portfoliotheory and Total PortfolioManagement as, 289; stakeholdervoice development as, 290

Impact investing fund landscape:“blueprint” and “scale” terminologyof, 99; capital in and capital out ofthe twelve funds, 100t–102t; “capitalin” question of the, 98–99, 100;“capital out” question of the, 99,100; early-stage innovators amongthe twelve funds, 103fig, 105; firstresponders among the twelve funds,103fig–104; investor base andinvestment strategy of the twelvefunds, 102fig–103fig; scale agentsamong the twelve funds, 103fig,105–106; solution specialists amongthe twelve funds, 103fig, 104–105;twelve funds research insights onthe, 98–99; understanding impactinvesting and role it plays throughthe, 107

Impact investing funds: asCollaborative Capitalism “canaries,”12, 292; landscape of activities by,98–107. See also Impact investingstudy

Impact Investing Initiative(Rockefeller Foundation), 58–59

Impact investing market: bottom ofthe pyramid (BoP), 111–113;business power to create, 22–23;Collaborative Capitalism’s sizable,62–66; economically targetedinvestment by US public pensionfunds as, 64; global microfinance as,63; green bonds as, 64–65; impact

investing as new “2.0” era evolutionof, 107; international developmentas, 65–66; London Principle onstewardship of the, 193–194; as new“2.0” era evolution of, 107; scale inindicative markets, 66;understanding the size of the,62–63; US community finance as,63–64

Impact Investing Policy Collaborative(IIPC), 60, 185, 191–195

Impact investing practices:accountability component of, 20, 61,146; Catalytic Capital, 196–228, 285;intentionality of, 61, 64, 196–227;Mission First and Last, 113–154, 285;multilingual leadership, 215,229–255, 285; outcomes orientation,30–34, 35, 37fig, 203, 211–216; PolicySymbiosis, 99, 155–195, 285; riskmitigation, 30–35, 37fig, 203,211–216; Total PortfolioManagement strategy, 261, 278, 282,283, 289, 291; transparency, 37–38,40, 43–44, 53–55, 194–195. See alsoEnvironmental, social, andgovernance (ESG) factors; Impactinvestors

Impact investing study: “capital in andout” of the twelve funds, 100t–102t;Catalytic Capital impact on theTwelve funds during the, 198–200;early-stage innovators among thetwelve funds, 103fig, 105; examiningimpact investing related to funds,73–81; first responders among thetwelve funds, 103fig–104; impactinvesting fund landscape during the,98–107; impact investingobservations and findings duringthe, 285–287; introduction andoverview of the twelve funds, 81–93;investor base and investmentstrategy of the twelve funds, 102fig;overview of the twelve funds studiedduring the, 81–93; performance

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numbers of the twelve funds duringthe, 93–97t; scale agents among the,103fig, 105–106; solution specialistsamong the, 103fig, 104–105;successful Policy Symbiosisdemonstrated during the, 162. Seealso Impact investing; Impactinvesting funds; Impact investors;individual funds; specific fund

Impact investment ecosystem:different responsibilities and roleswithin the, 61; funds as being at thecenter of the, 75, 76fig; illustrateddiagram of the, 76fig; six impactinvesting dynamics in the, 78–81. Seealso Impact investing; Investmentfunds study

Impact Investor audiences: communityand social change agents, 10;corporate executives, 9–10;entrepreneurs, 10; mainstreaminvestors, 9; philanthropists, 10–11;public officials, 11; teachers andstudents of business, 10

Impact Investor Council (IIIC)[India], 72

Impact investors: “all-in,” 282;crowdfunding platforms used byindividual, 3; financial-first versusimpact-first distinction of, 138–139;investment thesis of change (ITC)used by, 118, 123–127, 131–135,150–151, 152–153, 189, 252;sequencing the DNA of, 138–141;trend toward “right to know” by,262, 265–269. See also Impactinvesting actors; Impact investingpractices; Impact investing study

Impact Network, 283Impact Reporting and InvestmentStandards (IRIS) [GIIN], 59,134–135, 144, 154, 263–264

Impact Value Chain: on activities,118–119fig; “if-then” sentenceelement of the, 120–121; on inputs,118, 119fig; on outcomes, 119fig–

120; on outputs, 119fig; theories ofchange and, 120–127. See alsoUnitedWay logic model

ImpactAssets, 61, 62Imprint Capital, 40, 177, 223INCR (Ceres Investor Network onClimate Risk), 266–267

Independent Commission onUnclaimed Assets (UK), 166–167

India: Grameen Bank of, 42, 121,122fig, 269; India Impact InvestorCouncil of, 72; Indian ImpactInvestor Council (IIIC) of, 72, 176,230; National Bank for Agricultureand Rural Development (NABARD)of, 169. See also Aavishkaar (India)

Indian Institute of Management(Ahmedabad), 210

Indigenous Designs, 44Individual investors: crowdfundingplatform participation by, 3;Multilingual Leadership practicedby, 243–244

Initiative for Responsibility Investment(Harvard University), 276

Initiative for Responsible Investment(Harvard University), 60

Inputs, 118, 119figInstitute for Sustainable Investing(Morgan Stanley), 51–52

Institutional capacity (LondonPrinciple), 194

Institutional Limited PartnersAssociation “private equityprinciples,” 123

Institutional multilingual team,245–247

Integrated reporting approach, 264Integration Initiative (Living Cities), 168Integrity: GIIN’s definition of impactinvesting inclusion of, 190; PolicySymbiosis emphasis on, 182,189–190; Smart Campaign’s ClientProtection Principles, 190; UNPrinciples for ResponsibilityInvestment, 38, 190

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Intentionality: economically targetedinvestment (ETI), 64; as impactinvesting element, 61; The New Deal’sCatalytic Capital practice of, 196–227

Inter-American Development Bank, 65Intergovernmental Panel on ClimateChange, 267

Internal alignment: description of,128; Mission First and Last tool kiton, 149, 151–152

International development:description of impact investingthrough, 65; examples of, 65–66

International Finance Corporation(IFC), 65, 105, 146, 164, 171, 229

International Social Return onInvestment Network, 263

“Interrogating the Theory of Change:Evaluating Impact Investing WhereIt Matters Most” (Jackson), 154

Investment and Contract ReadinessFund (ICRF) [UK], 167, 172

Investment funds: examining impactinvesting related to, 73–81; exampleof how policy impacts a, 184fig; howmultilingual Leadership helpsmanagers at different life stages ofthe, 233–234; impact investing fundlife cycle of, 139fig; overview of thetwelve funds studied, 81–93;performance numbers of the twelvefunds, 93–97t. See also Impactinvesting study; Impact investmentecosystem; Impact investing study

Investment thesis of change (ITC):Aavishkaar’s use of enterprise/individual focus of, 124, 126t; beingvisionary and robust, 189;description of, 118; Deutsche Bank’ssector focus of, 124–125, 126t, 127;developed for each investmentscenario, 129; efforts to customizeassessment around their, 135;Elevar’s, 131–134; externalalignment and, 152–153;Multilingual Leadership learning by

testing your, 252; overview andelements of, 123–124, 150–151.See also Theories of change

Investor Driven Mission First and Lastapproach, 142, 145–146

Investors’ Circle, 28, 29, 68IRIS (Impact Reporting andInvestment Standards) [GIIN], 59,134–135, 144, 154, 263–264

ISO standards for labor, 29Issue Brief on First-Loss Capital (GIIN),213

JJackson, Ted, 154Jamii, Linda, 131John D. and Catherine T. MacArthurFoundation, 177–178, 214

Jordan, Taylor, 177Journal of Sustainable Finance andInvestment, 154

J.P. Morgan Chase, 61, 66, 178, 259J.P. Morgan/GIIN survey (2014), 62, 129

KKalil, T., 237W.K. Kellogg Foundation (WKKF):Catalytic Capital signaling practiceby, 217–218; financial and socialperformance of, 95t; Mission DrivenInvestments (MDI) initiative of,90–91, 137, 143, 177; as scale agentsfund, 105–106; size and strategy of,83t; structural Mission First and Lastapproach by, 143. See also Impactinvesting study

Kim, Jim, 64Kirkpatrick, Dave, 175Kiva, 70Kiva Zip, 70KKR, 27Kleiner Perkins, 27Kleissner, Charly, 218–219Kresge Foundation, 55Krzus, Michael, 264Kuper, Andrew, 250t–251t

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LLeadership: the Millennial generationmoving toward roles of, 1; newskillsets required for, 230–232; trendtoward postpartisan public, 262,271–273. See alsoMultilingualLeadership practice

Leapfrog, 251tLEED certification, 29Lender theory of change, 120–121Levinson, Ted, 212–213LIBOR (the London InterbankOffered Rate), 54, 221

Life challenges, 1Limited partners (LPs): CatalyticCapital practice by, 198–200;Catalytic Capital purpose ofsignaling by, 203, 216–219, 221;financial Policy Symbiosis practiceby, 169; increasing impact investingby, 145, 146; strategic as well asfinancial reasons for investing by,224; trend toward ESG strategiesand performance reporting by,267–268; understanding alignmentmotivations of, 153

LISC, 168Living Cities (US), 167–168, 196, 213Lloyds Banking Group (UK), 166London Principles (IIPC): clarity ofpurpose, 192–193; institutionalcapacity, 194; market stewardship,193–194; overview of, 191–192;stakeholder engagement, 193;universal transparency, 194–195

Long, D., 119Low Income Investment Fund (LIIF),161, 218

Low-profit limited liability companies(L3Cs), 29, 30

MMacArthur Foundation, 177–178, 214Macmillan, Paul, 235Macquarie Funds Management, 210Mahmood, Asad, 88, 190, 220

Mahon, Marc, 219Market. See Impact investing marketMarket infrastructure, 73fig, 202Market innovators, 72–73fig, 202Market landscaping. See Impact

investing fund landscapeMarket scalers, 73figMarket stewardship, 193–194Mass Mutual, 178Massachusetts Pay for SuccessInitiative, 251t

Matthews, Jessica, 127MBA programs: socialentrepreneurship as field of studyin, 27; social good focus of, 24; trendtoward impact education in, 262,270–271

McAdams, Ben, 250tMcKinsey, 21Mercer, 33, 35MetLife, 178MeXvi (Mexico), 180–181Michael and Susan Dell Foundation,217

Microfinance: BRAC pioneering(1972) of, 269; as established impactinvesting market, 116; exploitationwhen there is no ownership elementin, 42; Indian Impact InvestorCouncil (IIIC) response to crisis in,176; United Methodist ChurchBoard investment in, 69

Microfinance Information Exchange,63

Microfinance institutions (MFIs):definition of, 85; Elevar Equityfunding of, 88–89; improvingavailability and flow of informationfrom, 48; MeXvi’s work with,180–181; Microfinance InformationExchange tracking of, 63; scaleagents operations with, 106

MicroVest Capital Management:balanced financial and socialinterests of, 91–92; Catalytic Capitalpractice by, 201, 202, 218–219;

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MicroVest (Continued)creation and mission of, 91;financial and social performance of,96t; financial Policy Symbiosis,168–169; internal alignmentapproach used at, 128; multilingualleadership practice by, 229, 234;public sector investments in, 170; asscale agents fund, 105–106;signaling practice by, 218–219; sizeand strategy of, 83t. See also CARE(Cooperative for Assistance andRelief Everywhere); Impactinvesting study

“MicroVest Effect,” 218Millennials: “agency” feeling amongthe, 21; Deloitt’s 201r survey on, 26;Deloitt’s 2011 survey on, 25–26fig;investing preferences of, 4; “profitwith purpose”mind-set of the, 25;social improvement priority of, 274;stepping into new leadership roles, 1

Milway, Katie Smith, 24Minority Enterprise Small BusinessInvestment Company (MESBIC)program, 204

“Mission-driven companies,” 28–29Mission Driven Investments (MDI)[WKKF], 90–91, 137, 143, 177,217–218

Mission First and Last investingapproaches: how they relate to otherkey practices, 147–149; investordriven, 142, 145–146; mission lockelement of, 141; strategic, 142,144–145; structural, 142–144;thematic, 142, 146–147

Mission First and Last investing toolkit: aligning externally with investorsand other stakeholders, 149,152–153; aligning internally, 149,151–152; gaining clarity, 149,150–151; tracking and reportingimpact, 149, 153–154

Mission First and Last practice: gettingeveryone aligned for, 127–129;

impact investing fund life cycle ofthe, 139fig; impact value chain andtheories of change used in the,118–127; lessons learned about the,285; as a means to an end, 114–117;measurement and reporting in,129–138; need for clarity in,117–118; overview of the fourdistinct approaches to, 141–147;sequencing the DNA of impactinvestors in, 138–141;understanding implications of,113–114. See also “Impact DNA”

Mission Investors Exchange, 276Mission lock, 141Mission Related Investment Group(Cambridge Associates), 127

Moellenbrock, B., 29Monitor Institute, 58–59, 99, 138Monitor Institute report (2009), 58–59Montblanc, 163Morgan Stanley: CollaborativeCapitalism in action at, 44, 50–52;Global Sustainable Finance group of,50; as impact investing actor, 68–69;Institute for Sustainable Investing at,51–52; Investing with Impact platformcreated by, 50, 69

Mozilo, Angelo, 61Multilingual leaders: the individual as,243–244; institution as, 245–247;mindset and skills of, 240–242;multilingual team as, 244–245;nonideological position of, 241

Multilingual Leadership practice:Aavishkaar’s, 230; ATI’s use of,229–230; cross-disciplinary andcollaborative nature of, 235–239;defining for impact investing,239–243; Enclude Solution’sapproach to, 215; how it can aidfund managers at different stages offund’s life, 233–234; leadershipneed for skills related to, 230–232;lessons learned about the, 285;lessons learned from experience of,

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248–249; MicroVest use of the, 229;tool kit, 249–254; USAID GlobalDevelopment Lab’s, 236–237. Seealso Leadership

Multilingual Leadership tool kit: act,249, 253–254; adapt, 249, 252–253;learn, 249–252

Multilingual teams: acquiringmultilingual capacity to build,247–248; as multilingual leader,244–245

NNageswaran, Anantha, 210National Bank for Agriculture andRural Development (NABARD)[India], 169

National Consumer Advisory Council(US Federal Reserve Board), 174,244

National Interagency CommunityReinvestment Conference (2014),160–161

Neighborhood ReinvestmentCorporation (now NeighborWorksAmerica) [US], 167

Net Impact, 24, 28The New Deal. See Catalytic Capital

practiceNew Markets Tax Credit (CDFI Fund),161, 203

New Statesmanmagazine, 155New York Life Insurance, 93, 105, 209,210

1950s/Cold War mind-set, 251960s/1970s counterculture mind-set,25

Noble, A., 77Nongovernmental organizations(NGOs): CARE (Cooperative forAssistance and Relief Everywhere),91, 92, 93, 128; Catalytic Capitalpractice for forming relationshipswith, 223–224; DIV fundingprovided to, 173; as impact investingactor, 72

Nonprofit organizations (NPOs):“blurring” boundaries of business,public, and, 260; as impact investingactor, 70–71; MultilingualLeadership learning by the, 251t;REDF, 72, 269; Riders for Health,70–71

Nonprofit Quarterly, 254

OObama, Michelle, 46O’Donohoe, Nick, 38–39Olsen, S., 119Omidyar Network (ON): CatalyticCapital seeding practice by, 217; asIndian Impact Investor Council(IIIC) founder, 176; investing inElevar Equity by, 199; investmentthesis of change sector-level used by,125; as philanthropic investmentfirm, 72; Priming the Pump report by,157–158, 202–203; program-relatedinvestment (PRI) from the, 245;three classifications of impactinvesting actors by, 72–73fig, 202

Omidyar, Pierre, 27, 72One Report (Eccles and Krzus), 2641.0 era (impact investing), 74Onyeagoro, C., 29Operational capacity, 22Operational sustainability, 9, 20OPIC (US Overseas Private InvestmentCorporation), 35, 49, 65–66, 68,165–166, 171

Opportunistic Policy Symbiosis:description of, 163; examples of,178–181; process of, 178

Opportunity Finance Network (OFN),60, 62, 161, 185

Organizational Research Services, 227Outcomes: aligning risk mitigation andelivery of better, 30–34; descriptionof, 35; Deutsche Bank Group’s studyon ESG factors and, 34; globalimpact trend on integratedperformance from outputs and, 262,

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Outcomes (Continued)263–265; Impact Value Chain on,119fig–120; “intentionality” of the“Mission First and Last” approachto, 41

Outcomes orientation: aligning“outcome buyers” through socialimpact bonds, 44, 52–53; TheCalifornia Endowment (TCE), 44,45–48; Collaborative Capitalism’s,41, 43; Morgan Stanley’s investingplatform for, 44, 50–52; as not beingan end in and of itself, 115–116

Outputs: global impact trend onintegrated performance fromoutcomes and, 262, 263–265; impactvalue chain/logical model on, 119fig

Overseas Private InvestmentCorporation (OPIC) [US], 35, 49,65–66, 68, 165–166, 171

Oxford University, 81

PPacific Community Management(PCM), 125, 127, 138

Pacific Community Ventures (PCV),60

Parnassus Investments, 219Pay-for-success contracts, 52Peer-group-based microfinance,

description of, 20Pension fund fiduciaries: continuedevolution of fiduciary responsibilityof, 275; economically targetedinvestment by US, 64; investing inthe health of communities, 3;overarching goal of, 116. See also USpublic pension funds

Performance: definition of“exceptional,” 75; global impacttrend on moving from outputs tooutcomes to integrated, 262,263–265; impact investing issue of,62; integrated approach toreporting on, 264; twelve funds andtheir financial and social, 93–97t

Peruvian social innovation funds(SIFs), 270

Pfund, Nancy, 178–179“Philanthrocapitalism”movement, 27Philanthropy: philanthropic rebirthtrend, 262, 275–277; “venturephilanthropy”movement, 27, 72,291

Pincus, Warburg, 245Pine Hill Waldorf School (NewHampshire), 211–212

Pinsky, Mark, 60, 62Policy Symbiosis forms: advocacy-driven, 163, 176–178; financial, 163,168–173; foundational, 163–168;opportunistic, 163, 178–181;regulatory, 163, 173–175

Policy Symbiosis practice: differentforms of the, 163–181; lessonslearned about the, 285; overview ofthe, 156–158; the public case forimpact investing using, 159–162;public policy vs. private interestdistinction and, 99; public sectorinnovation in alignment with theprivate sector, 158–159; Unilever:The Corporate Perspective onPublic Principles, 191. See also Publicprivate partnerships

Policy Symbiosis tool kit: acquireknowledge, 181, 182–186; bevisionary, 182, 188–189; buildpartnerships, 182, 186–188; overviewof the, 181–182; proceed withintegrity, 182, 189–190

Porter, Michael, 37Posada, Johanna, 245Positive Social Purpose (PSP) [UnitedMethodist Church Board], 69

Postpartisan public leadership trend:description of, 262, 271–272; leadingindicators of the, 272–273

Power to create markets, 22–23Prabhav tool (Aavishkaar), 145President’s Advisory Council onFinancial Capability, 174, 244

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Priming the Pump report (ON),157–158, 202–203

Private equity investors, 3Pro Mujer, 48Proceed with integrity (PolicySymbiosis), 182, 189–190

“Profit with purpose”mind-set, 25Program-related investments (PRIs),175, 182–183, 245

Pryce, Jennifer, 56, 247Public policy: collective strength ofinvestors to influence, 38; exampleof impact on a fund and investees,184fig; policy framework for impactinvesting, 182–183fig; reading list onimpact investing and, 184–186;Unilever Sustainable Living Plan on,191

Public private partnerships: advocacydriven Policy Symbiosis, 163, 176–178; Collaborative Capitalismapproach to, 9, 20; collaborativenature of, 39; financial PolicySymbiosis, 163, 168–173;foundational Policy Symbiosis,163–168; opportunistic PolicySymbiosis, 163, 178–181; regulatoryPolicy Symbiosis, 163, 173–175;USAID as leader in, 236. See alsoPolicy Symbiosis practice;Relationships

Public sector: “blurring” boundaries ofbusiness, nonprofit, and, 260; finalobservations about impact investingand the, 286–287; Ghana VentureCapital Trust Fund (VCTF), 68;global trend toward postpartisanleadership in the, 262, 271–273; asimpact investing actor, 68; impactinvesting opportunities and role of,157; Impact Investing PolicyCollaborative (IIPC) LondonPrinciples of the, 191–195; makingthe case for impact investing by,159–162; Multilingual Leadershiplearning by the, 250t; new era of

innovation from the, 172–173; ON’sPriming the Pump report on impactinvesting and, 157–158, 202–203;private sector alignment with impactinvesting by, 158–159; trend towardnew twenty-first fiduciaryresponsibility in the, 262, 273–275

RRagin, Luther, 45Rai, Vineet, 169, 207, 210, 233, 247Rallo, Eduardo, 125RBS (UK), 166Red Cross, 229REDF, 72, 269Regulatory Policy Symbiosis: definitionof, 163; examples of, 174–175;process of, 173–174

Reis, Tom, 217Relationships: Catalytic Capitalpractice for forming, 223–224;Collaborative Capitalism, 22, 290. Seealso Public private partnerships

Reporting: efforts to encourage ESG,33, 37–38, 39; Global ReportingInitiative on, 38, 263; identifyinglevel wanted by stakeholders onimpact, 137–138; Impact Reportingand Investment Standards (IRIS)for, 59, 134–135, 144, 154, 263–264;integrated approach to, 264; MissionFirst and Last investing tool kit onimpact tracking and, 149, 153–154;Mission First and Last practice formeasurement and, 129–138; totalportfolio reporting (TPR)framework for, 264

Republic of Tea, 28Retail investors, 68Richemont (South Africa), 163Riders for Health, 70–71“Right to know” trend, 262, 265–269Risk mitigation: better outcomesaligned with, 30–34; CatalyticCapital purpose of, 203, 211–216;Collaborative Capitalism pyramid

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Risk mitigation (Continued)component of, 34–35, 37fig;description and expansion of,34–35; RSF Social Finance’sapproach to, 211–213; sustainabilityembraced as fundamental way toreduce long-term, 39

Risk-taking skills, 242RJ Lumba, 202A Roadmap for Impact report (RootCapital), 154

Roberts, George, 27Rockefeller Foundation: Ghana’sVenture Capital Trust Fund (VCTF)support from, 172; grantees of,59–60; Impact Economy InnovationFund (IEIF) created by, 67–68;Impact Investing Initiative of, 58–59;Impact Reporting and InvestmentStandards (IRIS) work by, 134;research on impact investing by, 259

Rockefeller, John, 21Roddick, Anita, 28Rodin, Judith, 23, 115Rodríguez Arregui, Álvaro, 180–181,199

Root Capital’s A Roadmap for Impactreport, 154

Rosenzweig, Will, 28, 119RSF Prime, 44RSF Social Finance: RSF SocialInvestment Fund: Catalytic Capitalpractice by, 199, 211–213; customand standard metrics balanced at,135–136; description of, 53, 92; asearly-stage innovators fund, 105;financial and social performance of,97t; Impact Certified status of, 136;risk-reducing by, 211–213; RSFPrime borrower rate of, 53–55; RSFSocial Enterprise Lending Programof, 53, 92–93; size and strategy of,83t; structural Mission First and Lastapproach by, 143; transparency of,44, 53–55. See also Impact investingstudy

Rubin, Julia Sass, 204Rupert, Anton, 163Rupert, Johann, 163Rutgers University, 204Ryla Teleservices, 149

SSaïd Business School (University ofOxford), 81

Scale agent funds, 103fig, 105–106Schwartz, Debra, 177, 214Screwvala, Ronnie, 176SEAF: Sichuan SME Investment Fund(SSIF): Catalytic Capital practice bythe, 208–209; creation and economicdevelopment goal of, 93, 164–165;equity finance model used by the,155; financial and social performanceof, 96t; foundational Policy Symbiosispracticed by, 164–165; investor drivenMission First and Last approach by,146; opportunistic Policy Symbiosispractice of, 179; public sectorinvestments in, 170; size and strategyof, 83t; as solution specialists fund,104–105. See also Impact investingstudy

SEAF (Small Enterprise AssistanceFunds), 164–165, 208–210

Seattle entrepreneurs, 26Seeding Catalytic Capital purpose, 203,208–211, 220

SEEP, 48Sequoia Capital, 217Seventh Generation, 43Shaffer, Don, 135Shah, Raj, 236Shared value, 37Shifting the Lens report (BridgesVentures), 153

“Short Guide to Impact Investing”(Case Foundation), 136–137fig

Sichuan Fund. See SEAF: Sichuan SMEInvestment Fund (SSIF)

Signaling Catalytic Capital purpose,203, 216–219, 221

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Silicon Valley Bank India CapitalPartners, 217

Silicon Valley entrepreneurs, 25, 26Sisters of Charity of the IncarnateWord, 230

SJF Ventures, 138, 148–149, 175SJF Ventures II, 175SJF Ventures III, 175Skill, Jeff, 27Skoll World Forum, 81Small and medium-sized enterprises(SMEs): BPL’s risk finance forunderserved, 86–87, 164; Ghana’sVenture Capital Trust Fund (VCTF)created to develop, 68, 172;Huntington Capital HC II financingof, 89–90; internationaldevelopment of, 65; market successby operating below the radar, 195;The State of Measurement Practicein the SGB Sector report (ANDE)on, 154

Small Business Administration (SBA)[US], 90, 171, 183, 201, 204

Small Business Investment Company(SBIC), 90, 171, 175, 183–184

Small Enterprise Assistance Funds(SEAF). See SEAF (Small EnterpriseAssistance Funds)

Smart Campaign’s Client ProtectionPrinciples, 190

Smith, G., 237SOCAP conferences, 30, 81Social Enterprise Club (HarvardBusiness School), 271

Social Enterprise Development andInvestment Funds (SEDIF) program[Australia], 171–172

Social entrepreneurs: description andexamples of, 27–28; as field of studyin MBA programs, 27; leading theway toward sustainability, 24–30;market innovators category of,72–73fig

Social enterprises: description of,38–39; government recognition of

solutions offered by, 157; as impactinvesting actor, 69–70

Social Finance UK, 71, 269Social good: agency of business asforce for, 30; capital used as tool for,52–53; impact investing as a meansto an end for, 114–117, 260–261

Social impact bonds (SIBs): aligning“outcome buyers” through, 44,52–53; Catalytic Capital risk-reduction purpose and, 215–216;description of, 52; Social FinanceUK’s development of, 269; SocialOutcomes Fund’s use of, 215

Social innovation funds (SIFs),269–270

Social Investment Task Force (UK),155–156, 162, 176, 185

Social Outcomes Fund (UK), 215–216Social problems: agency of business asforce for solving, 30; capital used astool to solve, 52–53; governmentrecognition of solutions offered bysocial enterprises to, 157; impactinvesting as a means to an end forsolving, 114–117, 260–261; MissionFirst and Last practice to clearlyidentify, 117–118, 149, 150–151

Social return on investment (SROI),269

Social Venture Network, 28“Social ventures,” 28Socially responsible investment:Acumen Fund’s “best availablecharitable option” (BACO) ratioused for, 115; CollaborativeCapitalism approach using, 9, 20,21–24; Millennials andentrepreneurs leadership in, 24–30

The Solution Revolution: How Business,Government and Social Enterprises AreTeaming Up to Solve Society’s ToughestProblems (Eggers and Macmillan),235

Solution specialist funds, 103fig,104–105

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South Africa: Business PartnersLimited (BPL) risk finance of SMEsin, 86–87, 163–164, 206–207;foundational Policy Symbiosispractice in, 163–164

Specialized Small Business InvestmentCompany (SSBIC) program, 204

Speirn, Sterling, 177Spengler, Laurie J., 214–215Stakeholder engagement: advocacyorganizational promotion of, 38;final observations about impactinvesting and the, 286–287;identifying level of impact reportingwanted by, 137–138; LondonPrinciple on, 193; MultilingualLeadership learning by identifyingand securing, 252

Stakeholder voice challenge, 290Stanford Social Innovation Review (SSIR),179, 254

Starr, Kate, 141The State of Measurement Practice inthe SGB Sector report (ANDE), 154

State Street Bank and Trust, 88, 175Steiner, Rudolf, 55Stonyfield Farm, 22, 28, 281Storebrand Life Insurance of Norway,221

Strategic Mission First and Lastapproach, 142, 144–145

Strategic philanthropy’s socialpotential, 115

Structural Mission First and Lastapproach, 142–144

“Subterranean Homesick Blues”(Dylan), 1

Sullivan, Teresa, 42Sullivant, S., 183Supply chain sustainability, 9, 20Sustainability: aligning risk mitigationand delivery of better outcomes for,30–34; embraced as fundamentalway to reduce long-term risk, 39;environmental, social, andgovernance (ESG) factors of, 24, 33;

Millennials and entrepreneursleading the way toward, 24–30;operational and supply chain, 9, 20;United Nations Global Compactpromotion business role in, 23

Sustainability Accounting StandardsBoard, 38, 263

Sustainable Apparel Coalition, 38Sustainable growth funds (SGFs)[Bridges Ventures], 85–86

Sustainable Investing: Establishing Long-Term Value and Performance study(Deutsche Bank Group), 34

Sustainable Investment and FinanceAssociation (UK), 155–156

Sustaining Catalytic Capital purpose,203–208, 219–220

TTCE (The California Endowment), 44,45–47

Tesla Motors, 179Thematic Mission First and Lastapproach, 142, 146–147

Theories of change: as applied toimpact investing, 118; CoastalEnterprises (Maine), 121–122;enterprise, 120; Grameen Bank, 121,122fig; Impact Value Chain and,120–127; Institutional LimitedPartners Association “private equityprinciples” application of, 123;lender, 120–121. See also Investmentthesis of change (ITC)

Theory of change, 118Thornley, B., 1833i (UK), 159Through the Looking Glass: How InvestorsAre Applying the Results of the ClimateChange Scenarios Study (Mercer),33

Toniic eGuide to Early Stage Global ImpactInvesting, 154

The Toniic eGuide to Impact Assessment,154

Tony Elumelu Foundation, 67–68

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Top Ten global impact trends: 1: fromoutputs to outcomes to integratedperformance, 262, 263–265; 2: theinvestor’s right to know, 262,265–269; 3: the globalization offinancial impact innovation, 262,269–270; 4: innovation in impacteducation, 262, 270–271; 5:postpartisan public leadership, 262,271–273; 6: new perspectives on thetwenty-first-century fiduciary, 262,273–275; 7: the promise ofphilanthropic rebirth, 262, 275–277;8: the great thaw, 262, 277–279; 9:corporate alignment, 262, 279–281;10: the family office as foundation,investor, and advocate, 262, 281–283

Total (France), 70Total Portfolio Management strategy,261, 278, 282, 283, 289, 291

Total portfolio reporting (TPR)framework, 264

Toyota, 65Tracking and reporting impact:Mission First and Last took kit on,149, 153; resources and examples of,153–154

Transparency: as CollaborativeCapitalism key element, 40, 43; IIPCLondon Principles on university,194–195; RSF Prime example of, 44,53–55; trend toward ESG reports aspart of, 37–38

Trends. See Global impact trendsTwelve funds. See Impact investingstudy

UUK Cabinet Office, 185, 215–216, 252UK Department for InternationalDevelopment (DFID), 219

UKSIF, 185UN Financing for Developmentconference (2002), 23–24

UN Principles for ResponsibilityInvestment, 38, 190

UNICEF, 115Unilazer Ventures, 176Unilever, 22, 65, 191Unilever Sustainable Living Plan, 191Union Bank of California, 210Union Square Ventures, 69–70United Bank, 178United Investment framework (WorldEconomic Forum), 61

United Kingdom: Big Society Capital(BSC) of the, 38–39, 166, 176;community development venture(CDV) funds in the, 156; communityinterest companies (CICs) in the,29, 280; DFID of the, 171, 172;Enterprising Communities: WealthBeyond Welfare report (2000), 156;foundational Policy Symbiosispracticed in, 166–167; impactinvesting as defined in, 61;Independent Commission onUnclaimed Assets of, 166–167;Investment and Contract ReadinessFund (ICRF) of, 167, 172; SocialFinance’s work with socialinvestment market in the, 71, 269;social innovation funds (SIFs) firstintroduced in, 269–270; SocialInvestment Task Force of the,155–156, 162, 176, 185; SocialOutcomes Fund in, 215–216;Sustainable Investment and FinanceAssociation of the, 155–156; UKCabinet Office of, 185, 215–216,252; UK Department forInternational Development (DFID)of, 219

United Nations Global Compact, 23United States: broadening ofcommunity finance in the, 63–64;Community Reinvestment Act(CRA) of the, 47, 48, 63, 69, 85, 90,99, 182, 183, 210; DevelopmentCredit Authority (DCA) of the, 173;foundational Policy Symbiosispracticed in the, 167–168; Head

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United States (Continued)Start educational initiative in the,177; Neighborhood ReinvestmentCorporation (now NeighborWorksAmerica) of the, 167; program-related investments (PRIs) in the,175, 182–183; Small BusinessAdministration (SBA) of the, 90,171, 183, 201, 204; social innovationfunds (SIFs) spread to the, 270;USAID of the, 56, 165, 172. See alsoCDFI Fund (US); Communitydevelopment venture capital funds(CDVCs)

United Way logic model, 118. See alsoImpact Value Chain

United Way of Salt Lake, 250tUniversal transparency (LondonPrinciple), 194–195

University of Virginia, 42US Air Force’s Morale, Welfare,Recreation and Services Agency, 230

US Department of Housing and UrbanDevelopment, 144, 178

US Department of State, 56US Department of Treasury’s CDFIFund, 143, 159–160, 161, 174, 203

US Environmental Protection Agency,263

US Federal Reserve Bank of Boston’sWorking Cities Challenge, 161

US Federal Reserve Bank of SanFrancisco, 161

US Federal Reserve System, 47, 160,161, 174

“U.S. Global Development LabLaunches to Develop and ScaleSolutions to Global Challenges”(USAID), 237

US National Advisory Board of ImpactInvesting, 58

US Overseas Private InvestmentCorporation (OPIC), 35, 49, 65–66,68, 165–166, 171

US public pension funds: continuedevolution of fiduciary responsibility

of, 275; economically targetedinvestment by, 64; investing in thehealth of communities, 3;overarching goal of, 116. See alsoPension fund fiduciaries

US SIF (the Forum for Sustainable andResponsible Investment), 62, 63–64

US Small Business Administration, 90US State Department, 229US treasury’s CDFI Fund, 85USAID (US Agency for InternationalDevelopment): CalvertFoundation’s partnership with the,56; created for Public Symbiosis,165; Deutsche Bank’s funding from,219; Development Credit Authorityof, 236; Development InnovationVentures (DIV) of the, 172–173;Global Development Lab asMultilingual Leadership in action at,236–237; as public-privatepartnership leader, 236

USSIF, 185

VVenture Capital Trust Fund (VCTF)[Ghana], 68, 172

“Venture philanthropy”movement,27, 72, 291

Veris Wealth Partners, 69Virgin, 21Visionary practice (Policy Symbiosis),188–189

WWagle, Sameer, 210WestBridge Capital, 217What Works for America’sCommunities, 161

W.K. Kellogg Foundation (WKKF).See under “Kellogg”

Wolfensohn Capital Partners, 217Wolfensohn, James D., 245Women Investing in Women Initiative(WIN-WIN) [Calvert Foundation],234

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Women’s World Banking, 48Wood, D., 183World Bank, 64, 164, 239World Economic Forum (WEF): casestudy on the ICRF by, 167; on impactinvesting as a strategy, 62; on theimpact investing ecosystem, 75; asimpact investing resource, 185;predictions on impact investinggrowth by the, 9, 259; sociallyoriented businesses trendssupported by the, 30; United

Investment framework of the, 61;vision and practices of impactinvesting presented to, 3

World War II, 25

YYellen, Janet, 160–161Young, Doug, 218Yunus, Mohammed, 42

ZZipcar, 68

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