NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, June 6, 2014

Foundations just make grants, correct? Not necessarily. Grants are becoming one option in a more complex menu of financial tools for the social sector.

Judith Rodin, president of Rockefeller Foundation, is taking risks with philanthropic capital, risks she says have the potential for bigger impact long term. These experiments come in different avatars: social impact bonds, impact investments, and crowdfunding – to name a few.

The coauthor of a new e-book, The Power of Impact Investing, with Margot Brandenburg, Rodin says that “impact investment” is not just for the 1%.

Wait, you don’t have to be filthy rich to be an investor? Rodin explains.

Esha Chhabra: You state clearly that this book is not just for the 1%. Explain.

Judith Rodin: There is a sense that when one is talking about investment, it’s only for the affluent. This is a book for those who are interested in learning about how to make both a financial return as well as impact. We think it’s critical and opportunities like crowdfunding are providing a way in to those who are not among the super affluent.

But, more so, it’s also of interest to those who are somewhere near the middle. Hope Consulting did a survey last year, talking to more than 4,000 Americans living in households of $80,000 and up – so, clearly not billionaires. Forty-eight percent said they were interested in impact investing products. But only 12% had any experience with these products. We want to help those individuals learn about how their money can be used for social impact.