Apologies, as it's been some time since my last newsletter. Later this summer I intend to get back into the regular swing of bringing you curated insights from across the spectrum of impact: responsible investing, impact investing, effective philanthropy, and a wildcard topic.
(Please do continue to send me any relevant articles, reports, events, job postings, or interesting tidbits worth sharing, even things like this dog confused by a shadow.)
In the meantime, I wanted to share with you a recap of the Future of Impact event my company Liquidnet hosted earlier this month, to mark the 10th Anniversary of Liquidnet For Good, the corporate impact program I helped launch and continue to run. The following piece was originally published yesterday on ImpactAlpha.
All the best,
‘Future of Impact’ requires investment, philanthropy — and business as a force for good
The world of impact is large and contains multitudes: people working in diverse fields and organizations, ranging from nonprofits to foundations to impact investing funds, to government agencies to companies and financial institutions.
For the 10th anniversary of Liquidnet For Good, the corporate impact program I run for the global fintech company Liquidnet, we didn’t want to just look back; we wanted to look forward. Bill Gates famously wrote: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”
What will the next ten years of impact look like? How might we generate impact using the tools of philanthropy, investing, and traditional companies? How can we learn from others who are also working to generate impact, yet do so in very different (yet adjacent) organizations and fields?
To explore these questions, Liquidnet hosted a forum June 15 at our NYC offices: The Future of Impact. The 100 guests came from diverse organizations we have partnered with over the years: large banks, grassroots nonprofits, foundations with multi-billion dollar endowments, family offices, technology platforms, government agencies, and public companies, to name a few.
I’ve been fortunate to work with those working to make philanthropy more effective, those working to accelerate the practice of impact investing, and those trying to leverage the vast and largely untapped resources of traditional companies and the capital markets. Through three all-star panels, we explored the current and future states of effective philanthropy, impact investing, and business as a force for good.
Our approach to impact involves not only empowering our employees to make their mark on the world, but also applying our core strengths to social challenges. Please see here for Liquidnet For Good’s Decade of Impact report, which captures the impact we’ve had and the lessons we’ve learned over the past 10 years.
A lot has changed over the past ten years. Consider the state of the world in June 2007, when we launched Liquidnet For Good:
- George W. Bush had 19 months left in his Presidency, Barack Obama was a junior Senator from Illinois, and Donald Trump had just wrapped up hosting season 6 of The Apprentice.
- The financial crisis had not yet hit; people would think you were a lunatic if you predicted that Lehman Brothers, Bear Sterns, Washington Mutual, and an independent Merrill Lynch would soon no longer exist.
- The first iPhone was released on June 29, 2007, though the Apple app store would not exist for another year.
- Many multi-billion dollar companies which have become integral to life in 2017 did not yet exist: Airbnb (2008), Uber (2009), BuzzFeed (2009), Instagram (2010), WhatsApp (2010), and Snapchat (2011)
- The term “Impact Investing” had only just been coined
At the beginning of the event, Liquidnet Founder & CEO Seth Merrin spoke about his struggles convincing Liquidnet’s board of directors to support a corporate impact program, “I couldn’t quantify the return we were going to have on giving money away,” Merrin said. “It’s a difficult thing to do. But through persistence I was able to convince [the board] to at least give it a shot. That was the beginning.”
“Clearly, over the years, the impact that we’ve had has been incredible for this company, and those are the things that we have to share, those are the returns that we have to talk about,” he continued, “the ability that it has given us to attract the right people, retain the right people, to give our people a higher purpose to what they do.”
“It’s not just about making the last dollar, and especially in the financial services industry, especially around 2007–2008. We have to provide an example and I think that Liquidnet For Good is that example — that we can do really good things and we can stay really profitable and it’s really good for this company.”
The audience heard from Emmanuel Nkundunkundiye, the valedictorian of the first class from the Liquidnet Family High School at the Agahozo-Shalom Youth Village (ASYV), Liquidnet’s signature charitable partnership in Rwanda.
Emmanuel told of his journey — after his father was killed in the 1994 Rwandan genocide, his grandmother raised him in a mud hut without electricity or running water. He came to the ASYV in December 2008 as the equivalent of a high school freshman with no English skills, nor a vision for what his future might look like.
After four years of living, learning, and healing at the ASYV, Emmanuel gained the skills and the confidence necessary to chart a new trajectory. He is now a rising senior at the University of Pennsylvania, interning this summer as an equity analyst at a financial institution.
From a mud hut in rural Rwanda to an Ivy League university in the United States, Emmanuel has had an incredible journey. But his story is just getting started; he intends to continue to learn the tools of business and investing, so that he might help build in his home country the businesses which can provide people with affordable products and quality jobs.
Podcast: The Future of Effective Philanthropy
“We set out to improve philanthropy principally through helping foundations hear from the people we seek to help with our funding. How can we bridge the gap between what we really know to be elite institutions, and how can we bridge that gap between the elite institutions of philanthropy and hearing the voices, the perspectives of the people we seek to help.
The Fund for Shared Insight has tried to do that and has made some inroads in helping both nonprofits systematically solicit the views, ideas, perspectives of the people they’re seeking to help. What are their experiences receiving services? What are their experiences as customers? How can their insights inform nonprofits so that nonprofits can be more responsive and how can their insights also inform the considerations, deliberations, and decisions of foundations so that we’re accounting for them, our ultimate customer?” — Fay Twersky
“At Feedback Labs we ask three questions: 1) What do people want and need to make their lives better? 2) Are we, as aid agencies, governments, foundations, and nonprofits helping them get it? 3) And if not, what should we do differently?” — Dennis Whittle
“We looked at our most advanced grantees and saw that they were serving, still, a single-digit share of the addressable market for what they do in this country. That just didn’t feel like success. So we knew we needed more money, which is kind of the end that we’re responsible for. What would it take to get other prideful, accomplished, ambitious philanthropic investors to check their ego, or at least a portion of it, at the door and roll up their sleeves and work together with us on this? So what we did, the theory was, if we brought them in as true partners, not after-the-fact co-investors they would be incrementally motivated.” — Chuck Harris
Podcast: The Future of Impact Investing
Featuring Brian Trelstad of Bridges Fund Management, Daniel Pianko of University Ventures, Liz Luckett of The Social Entrepreneur’s Fund, and moderated by Georgia Levenson Keohane of the Pershing Square Foundation
“[At the Acumen Fund] we played a catalytic role in the evolution of the impact investing field, but as I got off the 14 hour flights from New Delhi to Newark, and realized that the same challenges of access to education, and quality health care and environmental challenges existed here at home, I wanted to work with entrepreneurs solving problems in my own backyard.…[Now at Bridges Fund Management], we’re tremendously excited to see the evolution of the field, and think that there continues to be a role for that ‘built-for-purpose impact fund’ that can build businesses that have impact intrinsic into how they do their work.” — Brian Trelstad
“[TSEF] started with the idea of looking at the intersection of philanthropy and investing by…people who were really interested in whether a social investment is more like philanthropy in terms of 100% losses and a tax credit, or more like venture. What does this market look like? Are there these investments? Could you make investments and have returns?” — Liz Luckett
“When we raise our capital, historically we run from the social impact label. Why? Because once someone puts you in the social impact bucket, they think it’s concessionary capital. I hate concessionary capital. Who the heck can tell you why I should be at 6% return versus an 8% return vs. 12% return. I don’t know. Is graduating Latino doctors more or less important than graduating students in Africa? I don’t know which one should have a better return.” — Daniel Pianko
“There is a perception, or has been, that impact investing must be concessionary, and I think one of the challenges for the impact space is that it’s one label for a multiplicity of strategies. What Acumen does with philanthropic capital to invest in businesses in early stages in Kenya is fundamentally different from what Bridges does with more commercial capital in the United States.” — Brian Trelstad
“Indigent populations mostly intersect with society today through prisons, emergency rooms, and homeless shelters, essentially. There are lots of better ways, and lots of business models to interact in a way that saves taxpayer dollars, and puts a lower cost on addressing this community, creates better ways to educate them and better ways to find jobs.” — Liz Luckett
“As you see more and more money going to larger and larger asset managers, who may or may not understand what impact is, I think it’s a fundamental risk for the sector that we don’t figure out the way that you measure and report on impact, so that an asset manager (like the Rise Fund or like University Ventures which doesn’t call itself impact but is having impact and may be raising impact capital) can play on the same playing field as an Acumen Fund or a Bridges or a TSEF. And if we don’t answer that, I think in the next 3 to 4 years, then the question about impact investing will be a different one.” — Brian Trelstad
“Our impetus for a lot of our work is saying that government and nonprofits are necessary but insufficient alone to address all of these issues and I see no better time than now to unleash the power of business to address some of our biggest challenges.” — Andy Fyfe
“I’m hopeful about the role that business can play at this place and time. I’ve spent my career working at the intersection of nonprofit, private sector, and I’ve also done some work with governments, and I truly do believe that cross sector collaboration is key. I’m feeling really inspired, actually, about all the great work that many companies and leaders are doing right now to step up.” — Cammie Erickson
“We work within a capitalist system, and businesses have the resources and mechanisms with which we can really scale.” — Jennifer Field, Social Impact Director, GLG
“I would be remiss not to mention the importance of employee voice. I do think that employees now are expecting their companies to be aligned with their values and are putting a lot of pressure on their leaders to walk the walk and I find that very encouraging. It’s incumbent upon us to live those values.” — Cammie Erickson
“How do we take this behavioral change and make it more normative and institutional? Market investors are buying into this paradigm shift. It’s inspired more and more companies to think through what is the role of business and how can we inspire the next generation of younger leaders to follow suit as well.” — Andy Fyfe
View From Europe
Nicolas Hazard, Founder of INCO, offered some European insight on the future of impact:
“I wanted to create, in Europe, the first impact investing fund…The idea of this fund was to help set up social enterprises and invest in these companies that have “double impact”. But we wouldn’t have been able to do it without regulation. As I am European I really believe in regulation and the way it’s helping and fostering the market to grow.
For the last five years now the impact investing market in Europe has doubled every year. So it’s become a huge trend and it’s about to become 1% of the global investment market for continental Europe.”
Disclosure: I am a long-time advisor to ImpactAlpha (where this was originally published) and co-host of its Returns on Investment podcast. As part of Liquidnet's impact investing field-building efforts, we are an investor in ImpactAlpha through the Liquidnet For Good Fund, a donor-advised fund with the nonprofit financial services provider ImpactAssets.