Community foundations have a history of being faced with competition for donors from commercial banks and investment firms, as well as crowdfunding platforms and giving circles (Forbes). Today, mission investing and social enterprise is a growing initiative that has been gaining traction as a way for community foundations to take a more aggressive approach to making grants and fostering economic development within their communities.
When it comes to market potential, the Global Impact Investing Network’s
yearly report states that $212 trillion is available for investment worldwide and $600 billion is available for philanthropic giving. However, the Nonprofit Finance Fund states that there are currently only 50 pay-for-success projects in progress around the country and less than ten social impact bonds launched to-date.
There needs to be more effort toward empowering community foundations to deploy those assets for investment into social good. That’s why the Mission Investors Exchange and the Council of Michigan Foundations have collaborated to create a one-of-a-kind Mission Investing Institute for community foundations across the region, which took place at the office of Jaffe Raitt Heuer & Weiss in early September. More than 40 community foundations joined forces to gain knowledge in mission investing opportunities to further enhance their communities. Speakers traveled across the country to Detroit to share their experience, guidance and knowledge within the social enterprise and investing space, including corporate powerhouses like Fisher, Kresge and Kellogg.
It is no coincidence that our city was chosen to host the Mission Investing Institute, as Detroit is currently leading the way as an example for community foundations and social enterprises for impact investing nationwide. Michigan was one of only eight states to receive a social impact bond fellow from Harvard’s Kennedy School, and my company, Jaffe, is currently involved in three more bond transactions. Jaffe has a goal to obtain Detroit as a top destination for expertise and support toward funds for social good.
However, Michigan continues to struggle with government support dollars leaking out to contractors and vendors in other states. Although Gov. Snyder has been extremely supportive of the “pay-for-success” model, our state has an abundance of talent and resources that are not being deployed here.
One of the most exciting aspects within the world of mission investing and social enterprise is the endless opportunity for innovation. People are collaborating and innovating in this space everyday. For example, social entrepreneurs are coming up with new ways to create social good and support the social justice movement, and investors are following suit to come up with creative solutions to help facilitate investments by additional parties. Jaffe is also organizing new financial instruments to help create equity type investments in charities that offer favorable tax treatments for investors who want to get involved. This supports Detroit as a notable location for those looking to explore mission investing, and creates an opportunity for young talent to be a part of that exploration.
Much like the revitalization in Detroit, there is great hardship in building an infrastructure from the ground up, but that collaboration and effort turns into opportunity. The process flourishes new talent and energy that attracts attention from around the world. Detroit has always been a hub for innovation, beginning with the automotive era and continuing into the manufacturing era. Now we are taking it to an entirely new level in the mission investing space.
