Inventor of impact investing flies to MaRS and invites us into his ‘dark wood’

Two of the world’s most influential figures in social investment have set out a powerful vision for the opportunities around putting your money where your values are.

Antony Bugg-Levine and Jed Emerson set out their ideas for ‘transforming how we make money while making a difference’ in their seminal new book, Impact Investing.

Bugg-Levine explored his ideas with delegates at the Social Finance Forum held at the newly formed MaRS Centre for Impact Investing in Toronto, Canada, last week, where he delivered the keynote speech.

The MaRS Centre is being developed with a combined financial contribution of $1.3m from the Rockefeller Foundation and the J.W. McConnell Family Foundation.

Bugg-Levine is a former MD of the Rockefeller Foundation and is now CEO of US-based Nonprofit Finance Fund, and also board chair of the Global Impact Investing Network (GIIN). He is widely acknowledged to have convened the 2007 meeting that coined the phrase ‘impact investing’.

Bugg-Levine told forum delegates that the way ahead wasn’t just about doing deals but about building new systems that were “worthy of the world we are in”.

He said this meant disrupting the status quo of a “bifurcated world where business makes money and charities solve problems”.

Five systems needed change, he said: new laws and regulations, a new system of measurement, a new system of leadership development, a new philanthropic system and a new set of capital markets.

“Currently, it is taught that doing good business is about making money and then, to be ethical, you give back. What if you are a young person who wants to run a business because that business is the best way to solve a social problem? We need to allow leadership to be about the whole,” he said.

He described current philanthropic practice as “archetypical bifurcation”, in which foundations were used to sitting on huge assets and only putting a tiny percentage of these to work for social change.

In capital markets, he said, not only did we need new kinds of stock exchange but also a new type of wealth advisor. “IFAs should not just be saying, ‘I will help you invest but you need to go elsewhere for the social stuff’,” he added.

In an approach which he called “total capital”, he said it was necessary to bring together the financial capital of grants and investments, with intellectual capital, human capital and social capital. It was necessary to “fundamentally re-imagine the society we are in”.

The book examines the emergent world of impact investing alongside international development, microfinance, social enterprise, regulation, policy, impact measurement, philanthropy and capital markets.

“This book is not an invitation to a picnic,” the authors say in their preface. “We do not offer the intellectual equivalents of a crocheted blanket to lie on, a chilled bottle of wine to sip, and your favorite breads and spreads. Instead, we invite you into a dark wood, beyond the comforting confines of your established routines and secure homes.

“These woods are exploding with life,” the authors claim. “Every week, it seems, we hear about new investors who are taking an integrated approach to the management of their assets.

“We need to make an open and honest case for the fact that impact investing is both morally legitimate and economically feasible.”

In further sessions at the MaRS Social Finance Forum, Stephen Huddart, President and CEO of the J.W. McConnell Family Foundation, cited the Occupy movement around the world and claimed that the private sector was “looking for a new licence to operate”.

He told delegates that “to not use 96% of our capital in the service of our mission seems perverse at best”, adding: “We need to address arcane and frankly obstructive regulations that limit charities.”

The conference also hear from Stanley Hartt, Chairman, Macquarie Capital Markets Canada; Nancy Neamtan, President & Executive Director, Chantier de l’economie sociale; Bill Young, Founder, Social Capital Partners (SCP) and Jonathan Jenkins, CEO of the UK’s Social Investment Business.

Tim West, co-founder of the Good Deals, the UK’s leading social investment conference, also led a “pitch doctors” session in which social entrepreneurs pitched their business ideas to the forum. Details of the pitching session are covered here. 

A video from the forum is available through SocialFinance.ca.