Impact Investing: Taking Note on "The Street"

Glad to see the investor publications such as The Street having more interest in impact investing, with this article featuring several of the social ventures we founded and helped found, like, Ultra Testing, and Benestream. Impact Investing Works Best When It Works Small

By William Richards

When we talk about wealth transfer from longtime investors to the nearly 80 million Americans who qualify as Millennials, skirting the issue of values driven investing (or impact investing, or whatever label you want to use) is impossible. It’s real, and what’s behind it is a critical mass of companies that demonstrate ethically responsible and sustainable environmental, social or governance practices (ESG). To wit, the growth of targeted ESG-themed funds, according to the Forum for Sustainable and Responsible Investment (USSIF), has been impressive—doubling from $3.74 trillion in assets in January 2012 to 6.57 trillion two years later. New insights from Stax DevCorp, an incubator for socially driven start ups, points to a values-driven investing movement that’s not just a Millennial thing, either. Boomers, on the other end of the wealth transfer, are starting to share those values, says Stax CEO Rafi Musher...


This interest is in parallel with large investment firms such as BlackRock, Goldman and Morgan Stanley all increasing their efforts on impact investing, because they see high net worth individuals with interest in impact investing as a valuable strategy to have in the portfolio—even if small. The concepts of investing in a for-profit-social venture and getting social impact plus either financial gain or just capital preservation are both intriguing because of the potential to expand impact for the dollars. The risk in backing a social venture is in many cases similar to philanthropy in many ways, whether you are trying to develop a better solution, backing a new team, trying a new program and determining the potential for self-sustainability. It just makes sense to try and develop for-profit solutions for social impact, because those will scale with fewer dollars. If fewer dollars are used to solve for a social need, then philanthropists and foundations have more remaining dollars to devote to those non-profits for which there is no profitable delivery model – many of which I fully support too. In my personal journey to deliver substantially greater social impact than my financial capacity, I’m trying multiple strategies for my social portfolio and invite partners to discuss, debate, teach, coach and collaborate.

Rafi Musher is a JFN member, founder of Israel & Co., and CEO of Stax, a global strategy consulting firm.