When we mapped, convened, and grew the Twin Cities Impact Investing Ecosystem in 2016-2018 we identified a substantial gap. Equity investments were not going into social businesses, especially those owned by women and Black, Indigenous, and People of Color (BIPOC) individuals.
Since then foundations and other investors have stepped up to invest in impact funds and nonprofits. A few have even made direct investments in social businesses. Locally headquartered corporations have also joined the party since 2018, including Allina Health, Target, Xcel, Allianz Life and Best Buy. The government is investing likewise, devoting billions to environmentally sustainable development projects. This begs one to question: where in this picture are Minnesota’s high-net-worth individual investors?
We are the 2nd most charitable state in the nation and pay high taxes. Our people care, yet our regular individual investing community is nascent compared to the wealth here. People are somewhat familiar with socially responsible investing, Environmental Social Governance (ESG) investing, divestments, and some forms of impact investing, but impact investing is not the norm here as it is on the coasts.
Why is this so important? Social businesses owned by individuals in marginalized communities need equity investments flowing into their companies versus compounding debt. We launched the Investors for Impact Project in May 2022, with support from local foundations, nonprofits, corporations and government, to investigate the needs of our investors, discover current gaps in capital, and research promising local and national models to address these needs. Our research was informed by talking with 80 investors, analyzing 60 models, and market testing our findings with selected ecosystem leaders.
In short, here’s what we learned about local high-net-worth-investors:
The most surprising finding of our year-plus-of-work is that there are at least 60 models that focus on engaging high-net-worth investors:
To read more about our findings, our Executive Summary is available upon request here.
It is Cogent’s goal to bridge this gap in knowledge and connection by bringing investors, investees, and intermediaries together. We invite you to join us!
How you can get involved:
Susan Hammel Bio: As a philosophy major who went to Wall Street, Susan Hammel translates between passionate social changemakers and expert accountants. In her role as President and Founder of Cogent Consulting PBC., Susan serves as MCF Executive in Residence for impact investing and led the charge to map the Twin Cities impact investing ecosystem. As a native Minnesotan, Susan is dedicated to the entire community and brings professional experience from New York, Washington DC, and Chicago to the region.
Top of my mind these days is investing in line with Diversity, Equity, Inclusion values. Many institutions promised bold moves after George Floyd was murdered. Who is following through and doing this well? Racial justice requires new pathways for capital flows. I’m excited to be part of the McKnight Foundation’s Groundbreak Coalition, aiming to deploy $2b in flexible capital over 10 years to disrupt the status quo. In Minnesota we are a generous state, a charitable state, a hard-working state: we need to try new approaches to create that famous quality of life for all. We are leading a session on Place Based Impact Investing at the Mission Investors Exchange conference in Baltimore. Reach out if you’ll be there so I can include you in the informal MN meet-ups.