A Fund Backing the Impact Investing Field Makes Its First Moves. Where’s the Money Going?

At the close of 2019, a powerhouse coalition of impact investors rose to create the Tipping Point Fund on Impact Investing with the goals of building out the field and creating and scaling a high-functioning market that operates with integrity.

TPF was named to reflect a time when impact investing was “tipping from margins to the mainstream,” as even conventional money managers were moving to generate positive social and environmental impact alongside financial returns. The market had also reached critical mass, with the Global Impact Investing Network putting the size at $502 billion across a spectrum of asset classes, sectors, regions and investor types.

While interest in impact investing has certainly been growing, it’s still far from the status quo at foundations, with some 17% of them currently employing the strategy. The debate over the practice raises legitimate questions on the risks and rewards of deploying endowments, but impact investing proponents argue that resistant foundations are not using the full power of their wealth in service of their missions.

To advance the field, the donor collaborative launched with $12.5 million in philanthropic capital from a cross section of private foundations, family offices and corporate foundations. They include longtime market makers like the John D. and Catherine T. MacArthur Foundation, which has more than three decades of experience, and newer investors like the Surdna Foundation, which has employed impact investing since 2014. The Ford Foundation and Omidyar Network are two other big names on the list.

Since then, the fund has attracted another combined $1.5 million from the Phillips Foundation and Meyer Memorial Trust, bringing the total to $14 million, and the number of collaborators to 11. It remains open to additional funders who share its interests.

As a pooled grant fund, TPF takes a unified approach to investments and field building. Grants are decided through collaborative decision-making from the partners, and overseen by the U.S. Impact Investing Alliance, a nonprofit dedicated to building the impact investing ecosystem.

TPF’s first recipients are focusing on two priorities: first, public engagement and policy work to build the kind of public awareness that may attract other forms of capital like pension funds; second, data, metrics and measurement to ensure higher standards of accountability and fundamentals—all with a particular eye on the implications of the upcoming 2020 election.

A changing world has made the fund’s bedrock goal of equality even more imperative. Chris Jurgens, chairman of TPF’s executive committee, says, “Both the COVID crisis and the movement for racial justice call urgent attention to the need to address profound structural inequality in our economy. We need solutions to ensure capital is deployed to promote opportunity for all, not to further entrench injustice.”

Jurgens says policy advances like those sought by TPF’s first round of grantees offer a critical means to meeting the times. Here are the fund’s first eight moves, totaling $752,000:

Funding for B Lab, a nonprofit that supports a global movement to use business as a force for good, to advance its advocacy for economic systems change via a white paper on new fiduciary standards. Conclusions support mandating increased accountability and transparency for key stakeholders.
Support for a leading global think tank, the Center for Strategic and International Studies, will fund a series of round tables and the development of a policy brief to guide lawmakers and officials in supporting micro-, small and medium enterprises through development finance strategies.
Grant capital for the Opportunity Finance Network, which helps underserved individuals and communities gain access to affordable and appropriate financial products and services, will fund a new tax policy proposal to incentivize private investment in community development financial institutions.
Small business partner Pacific Community Ventures will receive funding to publish a white paper on promising impact investing policy ideas, aimed at “building back better” from COVID-19, targeting quality jobs and inequality.
PRI Association, a leading proponent of responsible investment, garnered support to develop and advocate for policy recommendations to align financial regulation considerations with impact in investment processes.
The Sorenson Impact Center, a social impact strategies group housed at the University of Utah's David Eccles School of Business, will research a range of potential policy priorities, including the reform of the Community Reinvestment Act and tax incentives that would promote patient capital and unlock catalytic capital in the impact investing market.
Funding for Stockbridge Advisors, which works to align impact and enterprise, to develop the initial chapters of a desktop manual to help policymakers embed principles of impact across initiatives and understand the drivers behind goals.
The Urban Institute will develop a series of white papers focused on explaining impact investing to policymakers, provide context within current critiques of philanthropy, and position impact investing as a component of new wealth strategies.