Community Partner Spotlight — ImpactAssets

ImpactAssets
http://impactassets.org
Ron Cordes, BS 81, Founder and Board Member

Like many successful new enterprises, ImpactAssets began as a way to address an unmet need. Ron Cordes, Haas BS 81, needed advice on investing the assets of his new family foundation. He quickly fell into what he calls the “5% — 95% conundrum”. Advisors pushed the foundation to have a grant budget equal to 5% of its assets and invest the rest. “Why can’t we have an impact with our other 95%?” Ron pushed back. The answer to that question led to ImpactAssets, a nonprofit financial services company whose mission is to build the field of impact investing and provide investment opportunities to a wide range of investors.

Ron Cordes, BS 81

ImpactAssets is a 501(c)3 nonprofit public entity designed to be a field builder and to create an ecosystem to benefit the field and the public at large. It is also a financial services company committed to being financially accountable with a sustainable revenue model based on earned income. It manages $150 million in assets, having surpassed an initial goal of $100 million last year. It engages the field in two main ways;

1. acting as a catalyst, promoter and supporter of impact investing, and
2. democratizing impact investing by providing financial products accessible to small investors.

Building The Field

In 2010, when ImpactAssets was founded, there was both a nascent demand for impact investment opportunities and a supply of possible investments, but no infrastructure or ecosystem in the middle to bridge these two as there is in every other category of investments.

In response, ImpactAssets launched an initiative called the ImpactAssets 50, the first publicly available database containing the 50 most relevant investment managers doing private debt and equity investment for impact. The ImpactAssets 50 was designed as a service to aggregate information on fund managers and create a system that would help investors and wealth managers. The managers on ImpactAssets 50 represent the best and brightest of direct private impact funds and deals.

In addition to this database, the organization publishes Issues Briefs, thoughtful articles exploring topics of interest to impact investors, wealth advisors and others active in the field of impact investing. The briefs are authored by senior ImpactAssets staff and provide key industry information, insights, and guidance for those interested in investing for impact.

And all this effort is working. There has been a growth in impact investing over the last 7 years. Ron attributes it in part to the millennial generation. Financial services firms are attuned to the evolving giving priorities of millennials, who seek to have an impact with their money. A handful of funds have grown to surpass $100 million in assets. This benchmark is important because that size begins to attract larger institutional investors. Ron estimates that the first fund to cross the $1 billion mark will do so in about 3–4 years.

Democratizing Impact Investing

ImpactAssets provides two products for investors looking to have an impact with their money.

The ImpactAssets Giving Fund is a donor-advised fund that focuses on impact investment options and allows for the seamless giving of grants through an online platform. Members of the fund are encouraged to move beyond the typical 5% per year grant budget and have an impact through investments as well. The donor-advised fund features a $5,000 minimum contribution. “Investors don’t need a million dollars to create a foundation; they can be a philanthropist and an impact investor with a much smaller amount,” notes Ron.

Impact Notes are 5 year notes, one focused on microfinance and a second focused on sustainable agriculture, that will be essentially a diversified pool of loans in each of those sectors. Expected to launch this fall, they will enable investors to support these two sectors with minimum investments that are much smaller than traditional financial products in the impact space. These notes will open the door to more modest sized investors that cannot provide amounts. Impact Notes is a concerted effort to create solutions available to a much wider array of investors.

Through his work Ron has witnessed the MBA student focus shift to impact investing. “This is an area that the best and brightest students are gravitating toward because impact investing merges traditional investment & finance careers and an emerging social consciousness,” he observes. Ron’s insight for Berkeley-Haas MBA students interested in impact investing:

1. “You’ve made a smart decision to go to a forward-thinking school that cares about this and is offering some curriculum in this area. Impact investing is consistent with the core values of the school. Haas is becoming a leader in that space from a curriculum perspective.
2. ”Take advantage of geography; the Bay Area (along with NY) are where impact investing activity is the most active. There are great opportunities to reach out to the social enterprise impact investing community in the Bay Area. Participate in events, sessions, etc., become aware of what’s happening in this space, and look for the opportunities.”