As Impact Investing Reaches a Tipping Point, a Fund to Scale the Market with Integrity
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A powerhouse coalition of impact investors hopes to build out the field through a donor collaborative launched last week with an initial $12.5 million in philanthropic capital. The mission of the new Tipping Point Fund (TPF) is creating and scaling a high-functioning market that operates with integrity.
The U.S. Impact Investing Alliance will manage the work. Fran Seegull, its executive director, said that the fund comes at a time when impact investing is “tipping from margins to the mainstream,” growing by “leaps and bounds” in the last couple of years as even conventional money managers move to generate positive social and environmental impact alongside financial returns. Mike Kubzansky, CEO of the Omidyar Network, a major player in this space, said, “Impact investing has experienced remarkable growth over the past decade, but further scale requires continued investment in public goods that provide a foundation for all market players.”
The Global Impact Investing Network (GIIN) puts the size of the market at $502 billion across a diversity of asset classes, sectors, regions and investor types. Despite steep growth, Seegull acknowledges that the scale of capital in play “pales in comparison” to what’s needed to solve the world’s most pressing problems.
A Collaborative Approach, Backed by Key Funders
As a pooled grant fund, the TPF will take a collaborative approach to investments and field-building, establishing a unified vision and strategy for creating and scaling critical market infrastructure. Seegull says that too little support for such infrastructure has put market growth at risk. A key goal behind the new fund is to broaden funder engagement in work that’s best addressed collectively and unlikely to be funded alone.
The TPF has nine founding funders, including leading private foundations, a family office and a corporate foundation. Private foundations include the David and Lucile Packard Foundation, the Ford Foundation and the John D. and Catherine T. MacArthur Foundation, which began impact investing more than 30 years ago. Also on board are Omidyar, the Rockefeller Brothers Fund, the Rockefeller Foundation and the Surdna Foundation, which started impact investing more recently, in 2014. Blue Haven, the family office of investors Liesel Pritzker Simmons and Ian Simmons, and the Visa Foundation, bring a diversity of perspectives to the collaboration.
Two Key Priorities
Seven founding donors helped incubate the Tipping Point Fund with the Alliance and worked to identify gaps where funding is needed to bolster impact investing infrastructure. TPF will initially focus on two priorities that are ripe for collaboration and less likely to draw funding from the general marketplace.
The first is public engagement and policy work, from advocacy and implementation to public awareness campaigns that may help attract other forms of capital such as pension funds.
The second priority is data, metrics and measurement to ensure higher standards of impact accountability and clarify market fundamentals. That work is expected to eliminate gray areas that have sometimes allowed bad actors to deny transparency to advance their own interests, or engage in “impact washing.” Kubzansky of Omidyar Network said the efforts will hold impact investors to account and distinguish between investments that are little more than “marketing fluff” and those that have “real impact.”
Debate continues as to whether private foundations should put endowment capital at risk through impact investing.
First Move
The TPF plans to release its first RFP later this month, focusing on public engagement and policy with a particular eye on the implications of the upcoming 2020 election. That includes initiatives like Opportunity Zones, the first community investment incentive adopted in 15 years, and one that can benefit from better safeguards. The first recipients are expected to be announced in early 2020.
The fund will succeed in its goals if it helps grow the funding base, promotes shared learning about the importance of field-building, creates alignment around key priorities, and highlights the essential importance of impact investing in ways that attract new donors to the collaborative over time.
Kubzansky championed the fund as both an important means of “keeping the impact in impact investing,” and allowing others to fund their fair share of the “rails upon which we all ride.”
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