Impact Investing is Growing in Chicago — Here’s Why It Matters

By Jessica Droste Yagan

On Tuesday, January 30th, Impact Engine hosted the Chicago Impact Investing Showcase sponsored by MacArthur Foundation. We gathered to highlight our work and the work of Benefit Chicago, a fund that invests for both financial and social return, as well as a handful of investments that demonstrate this focus on dual return. We were happy to welcome over 300 people who are learning about, celebrating, and advancing impact investing in Chicago. This rising tide of interest in impact investing is incredibly exciting. In case you missed it, we’ve drafted some key takeaways about how impact investing is growing in Chicago and why that matters.

There is a lot of variation on how to execute impact investing, all with great potential to achieve different types of impact and different levels of financial return. At our showcase, the presenting companies represented an amazing range of examples of impact investing, everything from low-interest loans through LISC to market-leading telehealth providers like Regroup. We did a quick survey of impact investing funds in Chicago and found 21 funds which are all based here, intentionally investing for both financial and social return, and measuring both. Some of these have been around for decades, doing impact investing before impact investing was a thing. Others are very new, and there are still more in formation that will be added to our growing list.

The growth of the impact investing ecosystem in Chicago is so exciting because it matters. When we make progress as a society, it’s because we question the status quo. In January, over 1 million people across the country attended the women’s march. Some people marched for health care rights, some people marched to support electing more women into office. All of us marched because we know that our government is not static: we have a voice and an opportunity to change it.

We are also comfortable with using philanthropy as a tool for changing the status quo. We give money to nonprofits to provide services, research, and other tools that help move the needle on things we care about. Both government and philanthropy are great paths for change, but we are missing a huge opportunity.

There are 14 times more investable assets in the United States than philanthropy and government spending combined. Every investment does have impacts in the world — some positive and some negative, but most of us aren’t aware of them. If you are fortunate enough to have an investment portfolio, you most certainly have some investments that are adding some societal value like creating jobs or infrastructure. You also most certainly have some investments that are perpetuating inequity or damaging the planet. The opportunity so many of us are missing is to be informed and intentional about aligning our investment dollars toward creating the type of world we want to live in, like we do with our votes and our philanthropy.

This type of intentionality is not incompatible with profit. Larry Fink, CEO of Black Rock, the largest asset manager in the world, recently sent a letter to CEOs of public companies, outlining his expectation that they start accounting for their impacts on society. “Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings, and, in the process, sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth. … ultimately, that company will provide subpar returns to the investors who depend on it to finance their retirement, home purchases, or higher education.” I believe this 100% — both that those companies will provide subpar returns and also that they are perpetuating problems like inequality in the process. It’s a lose-lose proposition. In Chicago, we must focus on the opposite — the win-win opportunities to invest in companies that are intentionally solving problems and creating positive impacts through for-profit models.

Positive impact cannot only co-exist with capitalism. In fact, caring about what the world needs can actually lead to better financial returns. I firmly believe there is no limit to what we can do if we are using all of the tools at our disposal to create the world we want. I will continue to spend my time, energy and dollars advocating for, enabling, and demonstrating the use of capitalism as one of those tools.

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