2 New Marketplaces Bring Impact Investors and Products Together

There are a lot of missed connections in impact investing. On the one hand, there are people and foundations that want to put their money to work for social good, and on the other hand, there are investment funds and social enterprises that need capital. The two sides often have a hard time finding each other.

Two new efforts aim to play Cupid — with the goal of speeding and expanding the flow of money.

ImpactUs Marketplace, a nonprofit in Washington, has launched an effort to make raise the profile of impact-investment deals with support from the Ford and MacArthur foundations. The first four investments include Iroquois Valley Farms, a finance company that rents and sells land to organic farmers, and Envest Microfinance, a for-profit fund that makes loans to microfinance institutions in developing countries. ImpactUs hopes to have 20 to 30 investment funds and social enterprises in the marketplace a year from now.

The goal is to help impact investing expand by improving the marketing, sales, and administration of social-purpose investments, says Liz Sessler, vice president for client engagement. Oftentimes, she says, nonprofits and social enterprises that have created impact investments have to pay for someone to hit the road and talk to the same investors that all the other groups are talking to.

“Each of these institutions is forced to spend that money on their own,” she says. ImpactUs’s goal is to raise the profile of those groups and help them connect with more investors.

Setting Terms

The Calvert Social Investment Foundation has started a new business, Capital Aggregation, to pool money from foundations, banks, and wealthy individuals for mission-related businesses and investment funds looking to raise $10 million to $50 million.

The Calvert Foundation has been testing the idea for the past year. So far, it has closed five deals that raised more than $70 million. In one of those deals, the Calvert Foundation helped Greenline Ventures raise $20 million to provide loans to small businesses in low-income neighborhoods.

Capital Aggregation sets the terms of the deals, and investors decide whether they want to take them. That’s far different from the way impact investments are usually negotiated, says Jenn Pryce, chief executive of the Calvert Foundation. Investors often have specific requirements for how and where their money is used. “Capital markets can’t work that way.”