Investing In All Of Us
May 22, 2014– This week, I had the privilege of participating in Redefining Returns: The Impact of an Emerging Investment Model, a session at CECP’s 2014 Summit: What Counts in New York for almost 300 corporate giving professionals. The session focused on impact investing, which Amy Bell, Executive Director and Head of Principal Investments at JP Morgan Chase Social Finance, defined as an investment with the intent to create a financial return and social impact.
One of the challenges of impact investing, said Sonal Shah of the Beeck Center for Social Impact & Innovation, is defining and measuring what one really means by return and impact. And there is no perfect impact metric, pointed out Ommeed Sathe, Director of Social Investments at Prudential’s Community Resources Department.
Despite some of the challenges inherent in measuring returns and impact, this session was an important reminder that solutions that address community needs can also provide financial returns to both individual organizations and to the community-at-large. These solutions also can often attract greater support from both the private sector and political leaders from both parties.
For example, Opportunity Nation’s diverse, bipartisan coalition is currently focused on creating stronger education and career pathways for young adults, recognizing they are our greatest national asset. Currently, 5.8 million young adults (ages 16-24) are disconnected from work and from school, a tragic loss to them personally and to our nation as a whole.
Obviously, as corporate and nonprofit leaders, we all care deeply about the trajectory of young people’s lives. But there is more than just a moral imperative to help reconnect this generation. Young adults who are not in school or working cost taxpayers $93 billion annually and $1.6 trillion over their lifetimes in lost revenues and increased social services, according to a report by Civic Enterprises. And ManpowerGroup reports that 39% of companies have trouble attracting the talent they need to drive revenues. Opportunity Nation believes – and has demonstrated through its Opportunity Index – that when more teens and young adults are connected, we all prosper.
The impact investment framework provides a valuable lens for nonprofits and other organizations focused on education and career pathways for young adults. Panelist Dana Pancrazi, Director of Capital Management at the Heron Foundation, discussed their commitment to invest 100% of its capital in its mission to improve the lives of low- and moderate- income residents and their communities whether through traditional grants or other program related investments. This approach opened up their creative thinking about the solutions that are available to communities. For example, one of their recent investments was in a company called Ecologic that is bringing recycled paper to market while re-skilling residents and connecting them to new jobs in manufacturing
As our nation struggles with a sluggish economic recovery, it’s clear that leaders across sectors — employers, educators, philanthropy and community organizations – must work together to engage our youth and address critical issues facing our communities. Impact investing is yet another approach that allows communities to thrive and creates positive returns – personal, social and financial.