CEO blog | Impact investing: a fad or here to stay?
28 August 2024
Carol Mack, ACF chief executive, explores the growing popularity of impact investing among trusts and foundations.
In May, the World Economic Forum highlighted a top trend in private markets - the rise of impact investing, which aims to generate positive social and environmental outcomes alongside financial returns. The Financial Times backed this up by featuring a report from the Global Impact Investing Network (GIIN) showing that impact investment is now worth over $1 trillion globally - and growing. But as Amit Bouri, CEO of GINN, pointed out: “This represents 1% of total global assets and is not enough simply because of the scale of the world’s problems.”
At ACF we’ve long been supporting foundations with their approach to investments by running investment seminars with our Official Partners, Cazenove, CCLA, Mercer and Ruffer. The seminars provide an introduction to investment strategy for foundations, with an agenda centred around our Stronger Foundations investment principles. We also convene the Social Impact Investors Group (SIIG) of foundations which today has 50 members actively making social investments and sharing insights. And in 2023, in partnership with the Impact Investing Institute, Charities Responsible Investment Network and Better Society Capital, we launched a new seminar series, focusing on impact investing in the main endowment.
Ten years ago, impact investing would have been considered niche by many trustees who were narrowly focused on financial return. But like the World Economic Forum, ACF has seen a growing interest in impact investing. Members are asking how their assets can work harder to drive impact, without compromising their social purpose and still ensuring they generate the income needed to support their grant-making.
As a membership body, ACF is well placed to support peer learning, and our members generously share their insights through our seminars. For example, Guy’s and St Thomas’ Foundation has developed a distinct approach to impact investing, explaining the theory of change that underpins their strategy. Similarly The Bell Foundation, Dunhill Medical Trust and Golden Bottle Trust have all shared their experiences too.
Place-based funders are making their investments work harder too, like Barnwood Trust who are driving social change in Gloucestershire through social investments. Prior to seeking a new investment manager, Essex Community Foundation reworked its investment policy around sustainability after reviewing what their key stakeholders would consider to be good or bad investments. ACF members can access valuable learning through case studies from members like Barrow Cadbury Trust, who remind us that “doing something, however small, is better than doing nothing".
And many foundations are looking at how they can steward their investments for a post-carbon future. Over 130 have pledged to do just that by signing the UK Funder Commitment on Climate Change. And 800 (including these UK foundations) have signed the global #PhilanthropyForClimate commitment.
While sustainability and thinking through the impact of our actions aren’t new concepts, what is new is the growing range of opportunities to prioritise impact while also pursuing financial returns.
Impact investing feels to me like it is here to stay…
Interested in finding out more?
We’ve got lots of opportunities for you to explore, including our upcoming investment seminars and Social impact investing - is it for us? event. And if you want to consider how impact investing can help foundations rise to the challenge of climate change, you won’t want to miss the ACF leaders’ forum on 18 September!