By Sally Boulter, Manager of Individual Initiatives at Calvert Foundation

Which is better? Coke or Pepsi? Even a casual reader of the commentary around impact investing and philanthropy will note that much of the discussion is centered on which is better. But it is not a Coke-or-Pepsi decision with one option being clearly superior.
Impact investing and philanthropy each have their own unique roles to play in moving society forward. They are distinct and yet collaborative tools that can be accessed and employed to improve people’s lives.

To oversimplify, investment capital can help build things like small businesses, affordable housing, community health clinics, senior centers, schools, water systems in the developing world, etc. On the other hand, philanthropy is essential to providing funding for the arts, job and literacy training, pregnancy prevention, eldercare, and similar programs which will never be supported by the market alone. In many situations, these needs and the programs that support them aren’t exclusively served by one or the other. In fact, in many cases, we see the clear benefit in having both, working in partnership.

A prime example of the investment-philanthropy partnership can be seen at St. John’s Bread & Life in Brooklyn, NY. Every day at St. John’s more than 1,000 hungry Brooklyn children, families, and individuals receive nutritious meals. Recently the Low Income Investment Fund, a Calvert Foundation borrower for the last five years, provided a $7 million loan to enable St. John’s to expand their facilities and serve a total of 450,000 meals annually. Using a loan to fund St. John’s space needs meant that more philanthropy was available to provide services to the recipients of the meals, like Naishaune Spencer (pictured right with his daughter). At St. John’s, Naishaune receives nutritional counseling, health and hygiene products, and social services such as workforce development, literacy training, psychiatric services, and substance-abuse counseling. “I ran with the wrong crowd and ended up homeless, jobless, and in a whole lot of trouble,” he said. “With the help of St. John’s Bread & life, loving family and friends, and sheer dedication, I was able to go back to school, get a great job, have a steady income and, most significantly, get my first apartment.”

Traditional philanthropy and government programs, while critical to improving the lives of the poor, can never by themselves meet all the needs of disadvantaged communities. Impact investing offers a new way to bring capital to improving lives and a new way for people to connect with each other based on mutual benefit.

At Calvert Foundation, our aim is to transform investment culture so that every investor becomes an impact investor. As a nonprofit, however, we recognize and value the vital role that philanthropy plays even within the impact investing sector, for things like risk capital and technical assistance for social entrepreneurs.

I look forward to the day when we stop viewing philanthropy and impact investing as a Coke-or-Pepsi choice and start to see them for what they are: natural allies in the struggle to make the world a better place for ALL of us to live, work, raise our families, and perhaps have a little fun.

As for soda, we all know Coke is it.