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Impact verification specialist BlueMark, together with CASE at Duke University, today published a new guide to impact management for asset allocators – “A Field Guide: Impact Due Diligence and Management for Asset Allocators” – available for download at https://bluemarktideline.com/impact-allocator-guide. The guide, which brings together the wisdom of leading impact investing practitioners and best market practices, is designed to drive more rigor and consistency in how allocators evaluate and manage private market funds that invest for positive impacts on people and the planet.

The guide and the research that informed it was funded by the Tipping Point Fund on Impact Investing, a donor collaborative committed to supporting the creation of public goods critical to long-term growth and integrity of the impact investing industry.

“The asset allocators we spoke to overwhelmingly stressed the importance of continuously learning how to better assess and manage the impact funds that they have trusted with their capital,” said Sarah Gelfand, Managing Director at BlueMark.

“As best practices in impact management continue to evolve, it’s important to level-set about where the market is today and where it needs to go,” said Cathy Clark, Faculty Director for CASE. “While we recognize asset allocators are wary of over-burdening fund managers or creating more friction points when allocating capital, we believe this guide lays out key practices for how and when allocators should engage with managers throughout the investment lifecycle.”

The guide offers tools and tips for allocators during due diligence and as part of their ongoing management of impact funds, as well as potential red flags that could signal a lack of rigor, capacity, and/or intentionality on the part of these managers. The guide also includes practice guides to help highlight differences between light and high-touch engagement and taking into consideration manager’s size, the size of particular investment, and the manager’s thematic focus.

As part of due diligence, the research uncovered key areas for asset allocators to evaluate:

• Impact Strategy: The manager’s impact thesis, which includes their strategic objectives as well as how they have incorporated these objectives into the fund’s governance.
• Impact Integration in Operations: The ways the manager has integrated its impact strategy into its systems and processes across the investment lifecycle.
• Team Capabilities & Resourcing: The expertise, capacity, and structure of the manager’s team with regard to impact.

Post-investment, the key areas for allocators to focus on when working with managers include:

• Impact Reporting & Disclosure: Supporting adherence to and use of impact management systems, as well as reviewing reported impact results.
• Impact Monitoring & Improvement: Providing feedback and input to help strengthen the manager’s impact management approach and practice.

The report was released in tandem with a webinar hosted by BlueMark and CASE. Expert practitioners and report contributors representing leading asset allocators and asset managers engaged in a discussion surrounding key takeaways from the report. Specifically, the group discussed ways asset allocators and asset managers can collaborate to promote efficiency and strengthen impact-focused efforts.

Photo courtesy of Micheile Henderson.