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

Friday, June 28, 2019

ImpactAssets, a nonprofit financial services firm that increases the flow of capital into investments delivering financial, social and environmental returns, celebrated its ten-year anniversary by announcing today that assets under management in The Giving Fund, its donor advised fund, have topped $1 billion.

In less than six months, ImpactAssets has more than doubled assets from $483 million at the end of 2018 to $1 billion as of June 2019, and grown to more than 1,200 client accounts.  The rapid growth reflects the intellectual and structural ecosystem that ImpactAssets has created over the past decade—as a leading field builder, thought leader and impact investment innovator.

In particular, ImpactAssets has developed a 100% impact investing platform with a wide range of high-impact investment options—from direct deals and private debt and equity funds to blended portfolios and strategies—that enable donors to transform their charitable dollars into a source of risk-tolerant catalytic capital for social enterprises tackling the world’s most pressing problems.

“We started The Giving Fund as an alternative to conventional donor advised funds because we believed that investment capital idling in philanthropic endowments—and particularly donor advised funds—needed to move rapidly and fully into impact investing,” said ImpactAssets CEO Tim Freundlich.  “Our community of donors, fund managers and social enterprises are helping us push boundaries as we move first, fast and fearlessly to respond to the climate crisis and community injustices plaguing the planet.”

Custom Investments: Beyond Meat and Beyond

The Custom Investments program exemplifies ImpactAssets’ innovative approach.  Since the program’s launch in 2011, the firm’s donor advisors have sourced and recommended $92.47 million in close to 600 direct investments into private mission-driven businesses, impact funds and nonprofit organizations at roughly $150,000 average per deal.

In 2018, ImpactAssets added a record 108 custom investments—an average of two a week—totaling $17.34 million. But 2019 is turning out to be another record-breaker. Through May 31, 2019, donor advisors have already recommended a record $19.76 million to custom investments. The firm is averaging four custom investments a week, and the average investment has nearly doubled to $315,000.

One of the first custom investments was Beyond Meat, the plant-based meat maker that issued its IPO in May. ImpactAssets was an early investor through its donor clients Seth Goldman, Founder of Honest Tea, and Mark Van Ness, Founder of SVN International, who made seed investments using charitable assets at ImpactAssets.

All told, the Beyond Meat IPO turned $1.1 million in philanthropic investments made through the ImpactAssets Giving Fund into $16.9 million of charitable dollars, based on Beyond Meat’s close on opening day. Since then, Beyond Meat’s shares have continued to climb to a trading range more than double that, adding to the charitable windfall.

“Beyond Meat is a great example of why I agreed to serve on the founding board of ImpactAssets,” said Van Ness. “Foundations have a duty to invest philanthropic funds for impact, and this shows that you can change the world and generate strong financial returns for even greater good.”

Freundlich, who founded ImpactAssets as a spin out from Calvert Impact Capital in 2010 with Wayne Silby, co-founder of Calvert Investments, and Ron Cordes, co-founding CEO of AssetMark, said the firm was created of, by and for impact investors to provide a flexible solution for the innovative and creative impact investing that philanthropists are increasingly seeking.

“After a decade of breaking new ground in impact investing and challenging the status quo, we are excited about the future of ImpactAssets,” Freundlich said. “Together with our passionate, dynamic donor community, we are finding and funding multiple, new impact investments literally every week of the year.”

As donor advised funds continue to grow, topping $110 billion, Freundlich sees the opportunity for impact across the donor advised fund landscape. “With the tax deduction afforded these assets, they should be pledged to create positive impact for society,” he said. “In addition to the roughly 14% of assets we granted out last year, ImpactAssets and its donors believe that 100% of investment capital should be enabled to create better outcomes for people and planet every day while awaiting grantmaking to charities.”

“There is a time value to impact, with a massive opportunity cost to the world every day there is inaction. Every dollar sitting idly by, left unexamined and undeployed for good, is a dollar unleveraged.”

Photo courtesy of Helloquence.