The G8 Social Impact Investing Forum: A Defining Moment on the World Stage

Posted on June 7, 2013 by patrick

Lisa Hall

Lisa Hall, President and CEO, Calvert Foundation

By Lisa Hall, President and CEO, Calvert Foundation @LisaGreenHall

During yesterday’s G8 Social Impact Investment Forum, I was inspired and encouraged as one of my favorite quotes by Victor Hugo was repeated several times – “there is nothing more powerful than an idea whose time has come.” Impact investing arrived on the world stage this week, heralded as a transformative tool with the potential to reshape global capital markets in the years to come. Impact investing, very simply defined, is investing which generates both a social and financial return. Held at the Bloomberg European Headquarters, the Forum was sponsored by the UK government, conceived of by the Big Society Capital Chairman Sir Ronald Cohen and attended by impact investment professionals from across the globe with delegates representing all of the G8 nations.

A highlight of the event was a keynote address by this year’s G8 Chair and UK Prime Minister, David Cameron, who has included impact investing on his agenda as a part of his G8 Presidency. Prime Minister Cameron spoke with passion yesterday about the power of impact investing to “tackle the most difficult social problems…problems that have frustrated government after government, country after country, generation after generation.” He also announced several policy efforts on the part of the UK government, reinforcing Europe’s leadership in the impact investing arena. In particular his proposal for tax relief could serve as a model for other G8 countries to follow.

G8 Letter Signatories (click to see them all)

Many attendees remarked that the Forum was a defining moment for impact investing. Calvert Foundation was proud to be in attendance and to be a signatory on a letter organized by the Global Impact Investing Network (GIIN), endorsing impact investment along with more than 90 other institutions including banks, foundations, capacity building organizations, and multilateral funds. Together with many of these leading organizations we are in the trenches, helping to democratize impact investing.

The case for impact investing is clear. We face stark economic and fiscal realities at a time when climate change, the wealth gap between rich and poor, and social injustice make it more important than ever to secure financial inclusion for all. We realize that familiar models of public investment and corporate philanthropy alone cannot uphold our commitment to build and sustain thriving communities at home and around the globe. As an organization well positioned to bring impact investing into the mainstream, Calvert Foundation believes that this movement is fundamental to our organizational objectives. We are excited and inspired to be doing this work in concert with so many other visionary organizations who are similarly building the impact investing ecosystem. Together we are contributing to a new paradigm to empower all investors to become agents of economic opportunity, dignity, empowerment and social change.

For more than 18 years, Calvert Foundation has enjoyed a track record of success raising investment capital from more than 13,000 individual and institutional investors who have invested over $567 million in under resourced communities. Through the capital raised by selling our Community Investment Notes, Calvert Foundation has provided financing to affordable housing organizations, community facilities, microfinance institutions, and small and medium enterprises in more than 80 countries for nearly two decades. We’ve steadily grown our investor base and lending activity, helping to create jobs, build homes and improve lives in the US and around the world. Throughout, we’ve maintained a 100% repayment rate to investors. We have demonstrated that it is possible to be responsible stewards of capital across a range of geographies and social impact areas, and we have grown our portfolio of loans over time, supporting the needs of markets and social sectors around the globe.

The Forum highlighted several examples of impact investing and I was proud that many of our investees and partners spoke on panels including d.light and Shell Foundation. In 2009 Calvert Foundation, in collaboration with the Lemelson Foundation, made the very first loan to d.light, a company that has now sold more than 3.2 million solar lanterns in the developing world. Donn Tice, the CEO of d.light, shared with me how critical our flexible and affordably priced loan was in helping them establish a track record of debt repayment, which later opened up substantial growth capital for them to expand their impact. In 2012 Calvert Foundation partnered with Shell Foundation and Barr Foundation to support Envirofit International, the largest efficient cookstove manufacturer, with working capital to scale their operations and bring improved cooking technology to families in Africa and India.

The Forum was attended by several US government officials representing the public sector, which has played a critical role in building pubic-private partnerships in collaboration with Calvert Foundation, including the Overseas Private Investment Corporation (OPIC), the Inter-American Development Bank (IDB) and the Small Business Administration (SBA). OPIC provides a guaranty for our microfinance lending and we have co-invested in loans with the IDB in Peru and Ecuador. And here in the United States the SBA is an important guaranty and subsidy provider, enabling impact investing through many of our CDFI borrowers who make small business loans to entrepreneurs in low and moderate income areas.

Today, more and more examples abound to demonstrate that deep social impact and financial return are not mutually exclusive. An unexpected and growing movement of investors is coalescing around this concept and it is clear that we are on the verge of a tipping point. We have the opportunity to accelerate this movement and mainstream impact investing as an imperative to meet the global challenges of extreme poverty and environmental degradation. It has been said that we are the first generation of people who will choose if we are the last. I am energized by our place in a community of leaders who have chosen a brighter path forward. We hope you’ll join us to sound a rallying cry for impact investing and make this brighter future a reality for all communities.

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Ensuring a Resilient Financial Future

Posted on May 9, 2013 by andrew

Editor’s Note: This article was authored by Lisa Hall, and originally published on the Investing in What Works for America’s Communities Blog. 

Photo of hands holding coffee beans

Coffee producers and personnel from our portfolio partner Sustainable Harvest inspect green coffee beans in Peru

At Calvert Foundation, we envision a future where it is possible for all investors to be impact investors. We believe that empowering “everyday people” to invest in their own communities is a key step in ensuring a resilient and sustainable economic future. With the substantial decrease in state and local budgets since 2008 and the recent federal budget sequestration, reduced public spending is a reality in the foreseeable future. Other traditional sources of capital for community development including lending from banks motivated by the Community Reinvestment Act and grant dollars from private foundations are also increasingly scarce. These trends contribute to an uncertain environment, leaving the social sector with tough questions to answer. Where will local community organizations turn to fulfill their financing needs? How will we protect the commitments we’ve made as a society to build strong communities with equitable access to education, housing, healthcare, credit, and most importantly, opportunity?

Calvert Foundation makes it easy for individuals who want to invest in their own communities through initiatives focused on women’s  empowerment and place-based efforts, so that anyone can participate in the economic recovery. In contrast to other sources of funding, which are subject to bureaucratic and unpredictable decision making, these diversified pools of private capital from individual investors are much more “sticky.” They are less likely to diminish quickly at the whim of one decision-making body. There is no replacement for public funding, corporate philanthropy, and private grant making, which are all critical to the sustainability of the social sector; but as a society we must think creatively about other mechanisms to augment and leverage these traditional sources of funding.

Calvert Foundation connects private sources of capital to Community Development Financial Institutions (CDFIs) that provide a range of financing options for small businesses, childcare centers, healthy food retailers, community healthcare clinics, charter schools, and affordable housing providers – the core elements of stable communities. With the prospect of reduced public funding for traditional nonprofits and direct services organizations, CDFIs remain well positioned based on their ability to attract private capital. To date, our investors and supporters have helped us build or rehabilitate over 17,000 homes, create 430,000 jobs in the U.S. and in developing countries, and finance over 25,000 cooperatives, social enterprises and community facilities.

Last year, in partnership with several organizations, we identified a $650 billion market opportunity for financial advisors and investors to invest for impact in a research study entitled Gateways to Impact. Impact investing presents an opportunity to build a financial future for low-income communities that is far less reliant on variable funding sources. But, there remains a great deal of work to be done in building the infrastructure to realize this opportunity. Among other things, we need to improve our ability to evaluate social impact, build more reliable distribution channels for impact products, and establish more of a track record.

Calvert Foundation has a unique role to play in connecting CDFIs to sources of private capital. Through our Community Investment Note, people can invest in our loan portfolio which directly supports CDFIs and other high impact organizations across the United States. Over the years we’ve built new partnerships that have allowed us to create a more inclusive approach to impact investing. Our partnership with Incapital has enabled us to offer our Community Investment Notes through traditional brokerage platforms, resulting in more than $175 million in new investments to benefit community development organizations across the United States. Through our collaboration with MicroPlace, we’ve reduced transaction costs and lowered our minimum investment to just $20 online, making impact investing a possibility for millions of people who never would have considered it before.

The $650 billion impact investing market can help to improve low income communities and reduce the social sector’s reliance on unpredictable funding sources. To be sure, accessing capital at this scale will require further financial innovation, collaboration, and efficiency in impact investing markets. And, while we recognize that private capital will never be a perfect substitute for public funding, the prospect of a mature impact investing industry is transformative – for investors, for the nonprofit community, and for government. Laying the groundwork for access to private capital at scale will mitigate the long term risks posed to our vulnerable communities by financial uncertainty and market volatility.

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Impact Investing for an Abundant Clean Energy Future

Posted on April 12, 2013 by patrick

Lately, we’ve been doing a lot of thinking, writing, and speaking about why it’s important to democratize impact investing. Not only does impact investing present a huge opportunity for the social sector to benefit from new sources of capital, but it also empowers everyday people to participate in our national economic recovery. So, we’re always excited when we see other participatory models gaining momentum.

Solar Mosaic is one particularly good example. Solar Mosaic lets individuals crowdfund renewable energy growth by investing in solar energy projects. The funding enables projects to become a reality, and as the projects gain momentum and earn revenue, the investors are paid back with interest.

Crowdfunding solar projects is a great entry point for individuals to become impact investors. As Solar Mosaic explains, the solar sector is poised for growth. The cost of solar energy per watt has decreased dramatically in the past three decades, advances in technology have made capturing and harvesting solar energy more efficient, and consumers are becoming increasingly more conscious about supporting clean energy. Small investments by individuals can make a big difference in supporting and enabling the growth of promising new solar energy projects within a community.

In this video, Founder and President Billy Parish explains the Solar Mosaic vision to promote clean energy abundance for and by the people.

We look forward to sharing other examples of impact investing for “the people.” It’s important that we continue to demystify the myth that impact investing is an activity reserved only for high net worth individuals and institutional investors. If you have other examples of interesting opportunities for individuals to get involved in impact investing, please share with us in the comments or on Twitter at @calvert_fdn and compile and re-share here on the blog.

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Impact Investing for “Toe-dippers”

Posted on March 27, 2013 by patrick

Calvert Foundation in New Orleans

Calvert Foundation staff lead financial advisors on a tour of redeveloped homes in New Orleans in 2012

At Calvert Foundation we are committed to “democratizing” the field of impact investing. We believe that by creating easy ways for individuals to invest according to their values, we’re helping to build a broader movement.

This movement has implications for large institutional investors like university endowments and pension funds, as well. As individuals take steps to become impact investors themselves, they are more likely to put pressure on the institutions they belong to, represent, work for, and support to also think critically about the impact of their investment portfolios. We are seeing examples of this today with the student movement 350.org and the decision of Calstrs to divest from all firearms holdings in the wake of the Sandy Hook incident.

Recently we were interviewed by Financial Advisor Magazine about our role in bringing “easy-to-use” impact investing tools to financial advisors and their clients. Among financial advisors, we are often seen as a natural first step for investors looking to dip their toes into the world of impact investing. Over the years, we’ve seen many advisors and their clients begin with a small investment in a Community Investment Note, and graduate to targeted portfolios supporting the causes most important to them.

We’re proud to provide that bridge from impact investing “toe-dipper” to impact investing extraordinaire. We hope you’ll take a moment to read the article in Financial Advisor Magazine, and share with us any thoughts on your own personal journey in impact investing.

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