Challenges and Opportunities for Impact Investing in Chicago
I just spent a few days in Chicago at the Impact Capitalism Summit hosted by Big Path Capital. First I want to congratulate everyone involved in organizing and sponsoring the event. It was a great conference, bringing together over 300 impact investing professionals with a wide range of backgrounds and experiences to engage in varied, interesting, and important conversations. But bringing together such a diverse group also highlights some of the issues inherent in today’s discussions about impact investing. Here are two observations.
The first is about the idea of impact. Although the headline for the conference was: “Maximize Impact + Maximize Return,” at this and other events like this I sometimes feel the concept of impact is absent. There is a lot of discussion on how to measure impact and how to factor that into investment decisions, but the actual impact itself--how the individual investments are creating change--is lost. Very few speakers offered specific examples of how their capital was being used to improve people’s lives, improve the environment, etc. And even fewer talked about what they learned while they were trying to create change and what they would do differently in the future.
My second observation is about accessibility. Part of the problem with bringing together a diverse group of participants is that they bring a diverse set of interests. These interests ranged from institutional investors looking to invest tens of millions of dollars to local investors who want to create smaller, incremental change on the ground. That is why you can have one speaker say (and I’m paraphrasing) “I had $40M to invest in a project, but we were limited to being only 25% of the fund which meant the fund had to be greater than $160M.” And another speaker say, “The first day’s conversations seemed to be dominated by large institutional investors, looking to invest millions in a fund, and then finding a problem to solve.” Right now it seems that more discussions are happening at the institutional level, and often the smaller investor feels left out.
I think these issues are related and point to the fact that sometimes discussions about impact investing become too abstract, particularly at the higher investment levels. The reality is that everyone in the room is committed to creating some type of social change. The challenge, and the opportunity, for impact investors is to be more willing to discuss the actual changes their investments are making on the ground. By better understanding their impact, and responding to the communities they are trying to serve, investors can make impact investing more “real” and get more people excited about what their investments can actually achieve.