Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Impact Investing History

608 views

Published on

Presentation by Jeff Rosen and Michael Lent of The Solidago Foundation and Veris Wealth Partners; at the Take Action! 2010 Impact Investing Conference in Boston.

Published in: Business
  • Be the first to comment

  • Be the first to like this

Impact Investing History

  1. 1. Solidago Foundation & Veris Wealth Partners Impact Investing History Michael Lent, Partner - Veris Wealth Partners Jeff Rosen, Finance Director - Solidago
  2. 2. <ul><li>Firm Overview </li></ul><ul><li>Sustainable Investment Focus </li></ul><ul><li>Recognition that Clients Need a Customized Approach to Impact: </li></ul><ul><ul><li>Consulting in policy and asset allocation development </li></ul></ul><ul><ul><li>Investments in all asset classes: public equities, fixed income, alternatives, impact investments </li></ul></ul><ul><ul><li>Shareholder Engagement </li></ul></ul>Overview of Veris
  3. 3. <ul><li>IPS should reflect mission </li></ul><ul><li>Discussion at the finance committee level and then brought to the board. </li></ul><ul><li>Identify a consultant who understands what options are available and is able to educate and guide the foundation through its process. </li></ul><ul><li>Asset allocation – Integrate Impact </li></ul><ul><li>Identify a starting point with institution </li></ul>Importance of IPS Process in a Mission Driven Culture
  4. 4. <ul><li>Foundation Opened Doors in 1996 </li></ul><ul><li>Commitment from the beginning: </li></ul><ul><ul><li>Developed social guidelines both avoidance and positive approaches in investments </li></ul></ul><ul><ul><li>Screened traditional managers (overlay screens) </li></ul></ul><ul><ul><li>Customized approach: globalization, etc. </li></ul></ul><ul><ul><li>Green Investing </li></ul></ul><ul><ul><li>Community Investments: up to 10% in community loan funds </li></ul></ul>Relationship to Solidago
  5. 5. <ul><li>Changes at the end of 2008: </li></ul><ul><ul><li>Best in Class </li></ul></ul><ul><ul><li>Strict Screens </li></ul></ul><ul><li>Corresponded to the specific mission of the foundation: what issues/concerns based on mission and grantees. </li></ul>ESG Screening
  6. 6. <ul><li>Community Loan Funds bought by manager </li></ul><ul><li>Additional due diligence </li></ul><ul><li>Fund of Funds: Calvert Foundation Notes </li></ul><ul><li>Private Equity Fund: Clean Technology </li></ul>Direct Investments
  7. 7. <ul><li>Partnership Between Financial Advisor and Foundation – But need Process to Determine Impact Accountability: </li></ul><ul><ul><li>On the spectrum of impact investing, what is financial advisor’s accountability for financial performance </li></ul></ul><ul><ul><li>If a market discount is tolerated for program returns, how is program impact assessed </li></ul></ul>The Gray Area
  8. 8. <ul><li>Worked Closely with Veris on Traditional Portfolio Management </li></ul><ul><ul><li>Cash Flow </li></ul></ul><ul><ul><li>Asset Allocation </li></ul></ul><ul><ul><li>IPS </li></ul></ul><ul><li>Worked Closely with Veris on Refining Screens </li></ul><ul><ul><li>Avoidance Screens </li></ul></ul><ul><ul><li>Manager Searches </li></ul></ul>How Did Solidago and Veris Work Together Across Spectrum?
  9. 9. <ul><li>Continue to Work with Veris in Search of Sustainably Integrated Managers </li></ul><ul><ul><li>Portion of Endowment Currently Allocated via Manager </li></ul></ul><ul><ul><li>Ways to Transition with relatively conservative risk tolerance (From IPS) </li></ul></ul><ul><ul><li>Are new, well understood options coming to the mainstream </li></ul></ul><ul><ul><li>Conducted research on sustainability oriented or green real estate funds </li></ul></ul><ul><li>Screened traditional alternative investments (Hedge Funds etc) for green and sustainable characteristics </li></ul>Continuing Efforts to Enhance Financial First Investments:
  10. 10. <ul><li>High Mission Engagement with Financial Manager </li></ul><ul><ul><li>Veris conducted due diligence on intermediary loan funds in early days. </li></ul></ul><ul><ul><li>Transitioned us to Calvert, which worked well for all </li></ul></ul><ul><ul><li>Worked with us on a few specific deals which they were bringing to multiple clients (equal exchange) </li></ul></ul><ul><li>Veris led some investments that were borderline PRI/MRI or designed for financial return: Clean Tech </li></ul>Collaboration on Blended Impact and Financial Investments
  11. 11. <ul><li>PRI Program changed over the years </li></ul><ul><ul><li>Initially crafting a diversified portfolio </li></ul></ul><ul><ul><ul><li>Scale makes this hard </li></ul></ul></ul><ul><ul><ul><li>Couldn’t ask Veris to conduct due diligence on one off deals that appealed to us </li></ul></ul></ul><ul><ul><li>Seek more connection to our program areas </li></ul></ul><ul><ul><li>We learn by doing (mistakes as much as planning) </li></ul></ul><ul><li>Impact Investing Strategy </li></ul><ul><ul><li>Program driven model, integrating grantmaking and program related investments – Grantmaking Enhanced by supporting investments: </li></ul></ul><ul><ul><ul><li>E.G. PVGrows – Lynchpin Activist Role </li></ul></ul></ul><ul><ul><ul><li>E.G. Green Jobs/Green Justice – Early Adopters Needed </li></ul></ul></ul>PRI Targeting – From IPS Set Aside (Implementation Open)
  12. 12. <ul><li>Financial Requirement: Return of Principal </li></ul><ul><ul><li>Below market rate deals cannot cover losses </li></ul></ul><ul><ul><li>Apply conservative financial review to assess programmatic returns </li></ul></ul><ul><ul><li>To date, few write-offs </li></ul></ul><ul><li>Now Apply Program lens to PRI work </li></ul><ul><li>Small funders have to assume alignment between strategic thinking and outcomes </li></ul><ul><li>We’re a small funder, focused on system change. We are not looking at particular impact measures such as jobs, displaced carbon or food miles. </li></ul><ul><ul><li>Program Partners Focus on Measurables </li></ul></ul><ul><ul><li>We do measure impact in financial leverage </li></ul></ul><ul><ul><ul><li>Financial Partnerships Critical at Scale </li></ul></ul></ul><ul><ul><ul><li>Program Partnerships Drive Models </li></ul></ul></ul>Measuring Impact - Program Side First
  13. 13. <ul><li>Process informs itself and discipline to mission generates positive, though unpredictable outcomes </li></ul><ul><li>Process Evolves </li></ul><ul><li>No one “correct strategy”. Needs to be customized for each institution </li></ul><ul><li>Clients are interested in collaborating where there are similar investment focuses. </li></ul><ul><li>Chance to leverage both experience, simplify follow-up. </li></ul>‘ Conclusions’

×