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Bringing Scale to the Impact Investing Industry

Saadia Madsbjerg — Former Managing Director, The Rockefeller Foundation
Photo by from Pexels

In 2007, the term “impact investing” was coined by The Rockefeller Foundation, putting a name to investments made with the intention of generating both financial return and social and/or environmental impact. Ten years on, unprecedented capital is flowing into the space with many of the world’s blue-chip investment firms creating dedicated funds and products. From TPG’s Rise Fund to Bain Capital’s Double Impact Fund, asset managers are responding to their clients’ demand for investments with purpose.

I believe this trend is just the beginning. I also believe that philanthropy has a unique role to play in engaging these new entrants. While some may be tempted to view these players entering the impact investing space with skepticism, we see traditional asset managers as bringing to the table something the traditional impact investing community has thus far lacked: scale.

We see traditional asset managers as bringing to the table something the traditional impact investing community has thus far lacked: scale.

At The Rockefeller Foundation, we are committed to shaping the next wave of innovation and growth in impact investing through the development of new products and partnerships. Our history, our dedication to impact integrity and analysis, and, perhaps most importantly, the flexibility of our capital, all position us to test new approaches and support new partnership structures.

We are embracing this opportunity by actively and directly engaging the world’s leading investors and asset managers in order to catalyze private sector capital against the United Nations Sustainable Development Goals (SDGs), and deepen the potential for large asset managers to not only generate value through their investments but, more importantly, to generate impact.

Why is this a priority for us? Much has been made about the $2.5 trillion annual financing gap required to achieve the ambitious yet achievable SDGs. There is broad acceptance that the private sector will have to make up the bulk of this gap. The entrance of traditional asset managers and their unprecedented scale into the impact space is an opportunity for all of us.

What role can The Rockefeller Foundation play? We are directly working with asset managers on three different levels. First, we are using our flexible, albeit limited, catalytic capital to de-risk fund structures and investments. Second, we are able to translate our knowledge of impact—gained from more than 100 years of applying the frontiers of science, data and finance to accelerate breakthroughs in health, food, power, jobs and resilient cities, thus improving millions of lives—and impact investment to develop standards and approaches for the next generation of impact investment funds. And third, we are leveraging our reputation for convening and collaborating to bring together unconventional actors to tackle some of the world’s biggest challenges.

For example, we are currently exploring the feasibility of a new, targeted $750 million infrastructure fund that will invest in resilient infrastructure projects in cities around the world. This fund will ensure that cities—and particularly their poor and vulnerable populations—can better cope with the major shocks and stresses of the 21st century: urbanization, climate change, and population growth. We expect to provide risk-tolerant capital to facilitate the commercial orientation of the fund’s structure; leverage our 100 Resilient Cities network to provide a pipeline of suitable projects and city-level support for project implementation, and use our broad network and convening power to develop an industry standard for what resilient infrastructure is and is not. Coupled with a blue-chip asset manager’s ability to execute on the fund’s investment mandate and mobilize capital from institutional investors, this fund will look to demonstrate the impact that directly leveraging the respective resources of philanthropy and traditional finance can have.

Given our unique experience, perspective and team, The Rockefeller Foundation is eager to develop additional opportunities that couple impact integrity with world-class expertise in asset management.

This blog should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell securities or to adopt any investment strategy.

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