Sep
20
2012

Sonal Shah
Printer-friendly version

Today I had the great honor of being interviewed by US Treasurer Rosie Rios for the keynote at the White House’s Forum on Philanthropy Innovation. Under the leadership of Jonathan Greenblatt and the Office of Social Innovation and Civic Participation, the Forum brought together leaders from the philanthropic and financial communities to discuss our role in driving economic recovery, expanding opportunity, and strengthening community — with a special focus on new forms of social capital and forging smart partnerships.

My keynote conversation with Treasurer Rios focused on the burgeoning impact investing marketplace, and the opportunity to deepen impact and expand reach by leveraging the many forms of capital investment available to us  not just the ones that are most familiar.

Although the definitions vary, impact investing is generally seen as a new form of capital, where investors seek both social and financial returns. So why are we so interested in impact investing? First, it is no coincidence that Steve and I chose the same mission statement for both the Case Foundation and for our investment firm, Revolution: “We Invest in People and Ideas that Can Change the World.” We believe that there is more than one way to tackle social challenges  we don’t look at opportunities though a single lens of “for profit” or “not-for-profit” and we don’t think about the Case Foundation checkbook as our only investment vehicle to drive change. Through Revolution, we’ve invested in blended-value companies like Zipcar, which has taken cars off the road while transforming the way people think about transportation; and we’ve invested personally in for-profit companies focused on social good like Causes; and in unique nonprofit models like Network for Good and MissionFish through the Foundation.

As the demand for nonprofit and social services has grown immensely and traditional funding streams have decreased considerably (like government and foundations), we find ourselves in great need of a disruptive, fearless approach to who delivers social services and how they are financed. There are many different approaches and we’ve tried many of them in recent years  PRIs, loan guarantees, equity investments, and more. In the midst of our Be Fearless campaign, which is focused on finding new approaches to solving old challenges, impact investing represents a big, bold idea with the potential to make a real difference.

Naturally, we’ve been keeping a close eye on the developments as impact investing has continued to evolve  and we’ve made many investments along the way in our effort to be supportive and learn what’s possible. We can see the momentum, energy, and excitement all around us as many social challenges are beginning to be addressed by diverse firms from B Corps to L3Cs to LLCs  and as more investors and investment funds are deploying capital to these innovative enterprises. And, thanks to the brave  dare I say Fearless  first steps in this space by individuals and organizations like the Omidyar Network, Calvert Foundation, Rockefeller Foundation , F.B. Heron Foundation, and more, we see a burgeoning impact investing marketplace ripe with opportunity.

Recent studies predict that impact investing could grow substantially in the next five to 10 years as the $100 trillion global capital markets seek investments and a new class of mission-driven business seeks investors. Pro-social funds, such as university and foundation endowments and pension funds, along with traditional investors seeking philanthropic opportunities more aligned with their private sector experience, are at the leading edge of enthusiastic potential impact investors just waiting for a push in the right direction and clearer on-ramps to take action.

It’s not to say that impact investing is without its critics and skeptics. I’ve learned through the years that anything worth doing will have some detractors. There are investors who believe you can’t serve two masters (profit and mission). Some investors believe that any impact investing company must contribute a portion of its profits back to the community. And, others believe that in an effort to lift up hybrid businesses we are disparaging or displacing the role of the nonprofit sector. I say we need more of what works  not just more of something  and the only way we’ll find out what works is if we are willing to ask the tough questions, get our hands dirty and make some mistakes along the way.

As part of today’s Forum, Jonathan Greenblatt issued a call to action for the sector to take bold steps in moving new approaches forward  and the Case Foundation is proud to answer this call. We see an opportunity to move this marketplace from burgeoning to bustling  but we know we can’t, and shouldn’t do this alone. We’ve found throughout the years that the quickest way to move from interest to action is to build cross-sector alliances  where we are all playing to our unique strengths  with a shared mission, a clear goal, and an urgent deadline to drive engagement and impact in a big way.

At the Case Foundation, we’ve used this approach on multiple efforts like bridging the digital divide in the U.S., expanding economic opportunity and promoting peace in the Palestinian West Bank, or most recently, working to champion and strengthen entrepreneurs through the Startup America Partnership. We have a hunch that this powerful call to action and cross-sector coalition model could provide the momentum and mechanism needed to unleash significant new capital and build new on-ramps to engage investors who are sitting on the sidelines today. And while there are many questions that need to be answered, we must act with urgency to bring together smart, passionate leaders to ensure that the momentum continues, that the tough questions are answered, and that action trumps debate.

And so we’re thrilled today to welcome the first director of the White House Social Innovation office and former Google executive Sonal Shah to the Case Foundation as Senior Fellow. Sonal, a long-time friend of the Case Foundation and a proven, hands-on, get-it-done innovator, will lead a multifaceted analysis and series of cross-sector conversations to explore the potential to launch a targeted, time-limited campaign to inspire an exponential increase in impact investors and investments. In addition to a comprehensive landscape assessment and opportunity analysis, she will coordinate an advisory group, which I am excited to lead, charged with expanding this conversation and contributing to a detailed plan of action.

The analysis and conversations will explore challenges and opportunities associated with more rapidly expanding the impact investing ecosystem  such as strategies to attract additional investment capital to the need for simplified definitions and measurement standards  and offering clear policy and practice recommendations for the government, investors, enterprises, and intermediaries.

Today’s announcement is not about making specific investments, which we will continue to do, but it’s about exploring the possibilities of moving a groundbreaking field from good to great. It’s about sending a clear and collective message that the old way of doing things is not keeping up with the rapid pace of disruption to capital streams and organizational structures. It’s about joining with our partners and friends to make a big bet, test new strategies together, and transparently report back what we find in a short timeframe so we can quickly double down on what works and discard the rest.

We hope you’ll join us on this journey. Let us know what you think about our hypothesis, what questions you think we should be asking ourselves and the field, and what exemplary investors and enterprises you think we should be watching. We look forward to hearing from you and reporting back soon.

Do you like this story?