New fund seeks to scale impact investing through collective action

WASHINGTON — A fund launched on Thursday by a group of foundations seeks to provide collective support for the type of field-building work that will allow impact investing to grow “with integrity.”

As impact investing expands, it needs clarity around metrics and new policies, especially as concerns mount over new entrants into the field claiming the label but not achieving impact, according to the fund’s creators.

The Tipping Point Fund, which launched with $12.5 million in funding from a group of nine organizations, will have two central focuses to start: public engagement and public policy to help grow the industry; and data, metrics, and measurement to provide clarity as it develops.

A proliferation of standards and metrics have allowed some companies that are not centered on impact to take advantage of the confusion, which threatens the integrity of the industry, said Fran Seegull, executive director of the U.S. Impact Investing Alliance. Rather than standing up new efforts, the fund will look to collectively push best practices and help support the completion of some of the core standards work that is already being done by a number of organizations in the impact investing space.

One of the goals for the new fund is to expand and diversify the group of donors committed to building the field and preserving the industry’s focus on impact, Mike Kubzansky, CEO of Omidyar Network, said on a call with reporters this week.

“We deeply understand the need for shared public goods to allow the industry to grow,” he said, adding that successful markets have important shared infrastructure, norms, and guardrails.

As the industry grows and more large companies get involved in impact investing, Kubzansky is looking to them to “pay their fair share for the rails on which we all ride,” he said.

Omidyar has supported other efforts around impact measurement and management, including funding the Impact Management Project. Building on the work of IMP, the efforts the new fund supports can help bring people together to agree on market-wide standards, Kubzansky said.

The public policy work that the fund will facilitate could also be critically important, said Darren Walker, president of the Ford Foundation.

“When you shape rules to prioritize impact, you can do great things,” he said on the call, adding that this will not be easy and would require collective leadership.

Walker pointed to the 2014 report “Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing — and Why It’s Urgent,” produced by the U.S. National Advisory Board on Impact Investing, which laid out a series of steps the government could take to help promote impact investing as a good example of collective action. The report was “meant to be a clarion call to policymakers to lower barriers and incentivize growth,” and many of its proposals and recommendations have been achieved, he said.

One example is a shift in guidance from the U.S. Treasury Department to private foundations about how they invest their endowments, allowing them to consider impact alongside returns. That change led the Ford Foundation to commit $1 billion of its endowment to mission-related investments.

“We see this as a prime opportunity to craft a new agenda in the area of policy,” Seegull said.

Many of the organizations involved in the Tipping Point Fund have worked together in the past. Walker said a key lesson that Ford has learned from a number of its collaborations is that partners must cede control — which, he admitted, foundations don’t like to do — as well as work iteratively and come to a consensus around grants. Kubzansky added that it’s important to establish a shared vision from the beginning, co-design with partners, and have a clear decision and governance process for the fund.

The fund will release its first request for proposals, which will be tied to the 2020 U.S. election, in the coming weeks, and the first round of grant recipients will be announced early next year.