Impact Investing Is Hot: Why Am I Worried?

Minnesota Council on Foundations

In this article for Minnesota Council on Foundation’s Giving Form I describe the challenges I see facing the field of impact investing.

After decades crying in the wilderness, I should be happy now that investing for good has hit the mainstream. Right? Mainly, I’m optimistic about the flood of philanthropically minded investors shifting their resources in pursuit of their mission, beyond the 5 percent customary for most foundations.
Perhaps it’s akin to sending your children off to college to live their independent, adult lives. I’m hopeful, but I worry.

As it moves into the mainstream, impact investing faces four threats: impact washing, insufficient diversity, lack of transparency, and risk aversion

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What’s Up With Women and Impact Investing

Minnesota Council on Foundations

In this month’s blog post I reflect on the incredible women driving impact investing innovation.

I was inspired; I was impressed; and I was informed by the High Water Women Foundation’s 5th annual Investing for Impact Symposium in New York City. There’s something thrilling about being in a room full of high powered women working in finance that gave me hope for the world.

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Local Matters: Why Not Invest Where You Live?

Philanthropy Northwest is developing a fund inspired by the Minnesota Impact Investing Initiative which Cogent facilitated for Minnesota Council on Foundations. Visit their website to read more about their process and ours.

Philanthropy Northwest is exploring a bond fund that would give members an easy new way to make investments in the communities they care about. Modeled after a successful effort in Minnesota, we’re excited to explore this opportunity with our members. I’ll be hosting a lunch meeting during the annual conference where members can learn more and share ideas. In the meantime, here’s some background.

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“But For Us?” Is It Still a Useful Impact Investing Question

Minnesota Council on Foundations

This month’s blog post which is takes a hard look at the “but for” test and its role in impact investing.

When I worked for Prudential Financial Impact Investments, we could only invest in projects that met the but for us, this project won’t happen” test. For example, but for Prudential,the first grocery store built in Newark since the 1960s would not have been built.

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In February of 2016, in partnership with Impact Hub MSP and support from the Bush Foundation, Cogent Consulting began a year long project to grow the Minneapolis-St. Paul impact investing ecosystem. We are sharing our process here in hopes that communities around the world will be able to grow their own impact investing ecosystems.

Part I: Understanding Your Ecosystem

Before you can scale your impact investing ecosystem, you have to understand what it looks like. Who are the stakeholders and who isn’t yet at the table? What is working and what isn’t? What are the needs, roadblocks, and easy wins? If you begin your efforts to scale the ecosystem before answering these questions, you won’t have a baseline against which you can compare your progress. Secondly, if you don’t understand how your ecosystem operates, you will waste your time fixing the wrong problems.

In order to understand the Twin Cities impact investing ecosystem, we created a map of the impact investing activity and interviewed a broad selection of stakeholders. We decided a map would be the tool that best allows us to understand the ecosystem because we could easily share it with other stakeholders. Constructing the map took 5 months and included the following steps:

  1. Creating a comprehensive list of impact investors, intermediaries and investees based on our deep local knowledge and with the help of our project advisory team
  2. Contacting all of the potential stakeholders to explain the project and the purpose of the map
  3. Collecting impact investing data from the stakeholders
  4. Vetting the data through research, follow up questions, and 1-on-1 stakeholder interviews
  5. Visually representing data through an online line and interactive map

While the quantitative data that we collected for the map created an objective picture of the local impact investing landscape, speaking to the stakeholders about their experience gave us a deeper understanding of the ecosystem’s mechanics. We interviewed foundations, nonprofits, entrepreneurs, intermediaries, financial advisors, community development financial institutions, land banks, high net worth individuals, banks, and angel investors. In doing so, we learned that the biggest hurdles for our ecosystem were the need for a shared language, matching deal flow with investor appetite, and impact measurement.

As we finished work on the map we invited each of the participants to an impact investing ecosystem convening to build a community identity and unveil the map. Our goal for the convening was to give the attendees a space to peer into each other’s unique perspective on the impact investing ecosystem. We designed the gathering so that stakeholders could contribute equally without the skewed power dynamic of many investor-investee relationships. We assembled the attendees into teams that had a mix of sources of capital (investors), intermediaries, and end users of capital (investees). The teams explored the map by first locating their own organization and then analyzing the ecosystem through the many lenses of their team.

We paid special attention to creating a pitch-free and welcoming experience for everyone. Careful curation of the invitation list, pre-work with several intermediaries prior to the event, and active facilitation during the event created a safe, welcoming space for all, evidenced by many participants staying for the informal lunch following the program.

Part II: Imagining What Could Be

Once we had an understanding of what the ecosystem was, we could begin to imagine what it could be. We surveyed the entire ecosystem for their best ideas for scaling and mainstreaming impact investing in the Twin Cities. The ideas could be half baked, unrealistic, or already in progress—our only requirement was that they were bold.

Once we had collected the ideas, it was up to the project partners—Bush Foundation, Impact Hub MSP, and Cogent Consulting—to choose the most exciting ideas. Through a name blind process, we whittled 46 ideas down to 12 ideas that represented a broad range of topics and addressed the gaps we identified in Part I of the project. These ideas included a method of securitizing impact investments, a vehicle for charitable investments into businesses, and a for-credit student impact lab. We then worked with each ideator individually to develop and refine their idea until it was ready to be presented.

We designed the second convening as a series of short TEDx style Talks. Each of the 12 ideators had 5 minutes to present their bold idea to the ecosystem. Afterwards, attendees roamed the room to share their feedback with the ideators and sign up to support the ideas they believed to be most important.

Part III: Co-Creating the Future

Based on the reactions and feedback during the second convening, we chose the 6 most popular ideas to foster during the last phase of this project. For each of the 6 ideas we held 1 hour workshops with the ideator and those who signed up to support the idea. Since each idea was in a different stage of maturity and involved different stakeholders, each workshop looked different but was tailored to move the idea to its next action step.

While the first and second convenings were educational and program heavy, in the final convening we created more room for informal connecting and celebrating of the community. The ideators who presented at the second convening shared their milestones to a crowd triple the size of the first convening.

We are thrilled at the results of our ecosystem work and are happy to hear your thoughts. Tweet us at @susan_hammel, or email

Cogent Consulting in the Press

This week Cogent Consulting has been featured in several articles for the fixed income bond fund that Susan Hammel and Eric White created for Minnesota Council on Foundations. Check out these articles from Chief Investment Officer, Mission Investors Exchange, and Philanthropy News Digest to learn more about the bond fund.

Minnesota Foundations Collectively Drive Impact at Home

By Chief Investment Officer

Minnesota foundations are joining forces and putting investment dollars to work to help their neighbors. The Minnesota Council on Foundations (MCF), which includes members such as the McKnight Foundation, Bush Foundation and Otto Bremer Trust, has announced a collaborative effort toward impact investing targeting affordable housing and small business lending throughout Minnesota.

Minnesota Philanthropy Leads With $17.1 Million Investment For Social Good And Financial Returns

By Mission Investors Exchange

The Minnesota Council on Foundations (MCF) announced a first-of-its-kind impact investing collaborative in the US. MIE members The McKnight, Bush Foundations and the Otto Bremer Trust are among the lead anchor investors.

MCF Launches Minnesota Impact Investing Collaborative

By Philanthropy News Digest

The Minnesota Council on Foundations, in partnership with three Minnesota foundations, has announced the launch of a statewide impact investing collaborative.

Inspired by a similar initiative established by the Michigan Council on Foundations, the three MCF member foundations — the McKnight and Bush foundations and the Otto Bremer Trust — have agreed to commit more than $17.1 million to an impact investing fund. The pooled funds will be invested in RBC Global Asset Management’s Access Capital Community Investment Fund, a fixed income bond fund focused on affordable housing and small business lending in Minnesota.

Minnesota Foundations Tie $17 Million to Impact

By The NonProfit Times

A group of Minnesota foundations are the latest to announce a commitment to impact investing with their charitable assets.

Led by the Minnesota Council on Foundation (MCF), a consortium of at least a dozen foundations has committed more than $17 million to a fixed income bond fund focused on affordable housing and small lending in the Great Lake State.

Thanks to support from the Bush Foundation, Cogent Consulting has spent the last year partnering with Impact Hub MSP to scale and mainstream the Twin Cities Impact Investing Ecosystem. During the course of the year, engagement in the project scaled from 50 to over 400. Here are the 5 biggest of the project:

Broadcasted the state of the ecosystem internally and externally

In the first phase of this project we created an interactive map of the impact investing ecosystem. We built the map by seeking self reported ecosystem participant data through surveys and interviews of ecosystem members. By adhering to a strict definition of impact investing and including only impact investments made within the last two years, we were able to create a map that accurately represented the current impact investing activity in the Twin Cities. The map proved to be a useful tool in showing stakeholders where they fit within the ecosystem as well as creating a common understanding of the Twin Cities impact investing landscape. In addition, the map has been equally useful in communicating the breadth of our ecosystem to other communities. The map has been viewed thousands of times online. Susan Hammel presented the map at the Impact Capitalism Summit in Chicago, and Matt Onek, CEO of Mission Investors Exchange, included it as a highlight of his summer in the Mission Investors Exchange newsletter. This inspired Mission Investors Exchange member San Diego Grantmakers to replicate the model to map the San Diego impact investing ecosystem. Stephen Rueff, Director of Entrepreneurial Studies at Minneapolis College of Art and Design, presented the map to his students as an example of an effective systems map.

Identified Key Gaps in the Ecosystem

By interviewing stakeholders from all segments of the impact investing ecosystem we were able to understand the problems of the ecosystem from multiple perspectives. Most issues stemmed from opacity and lack of a shared language with which to discuss impact investing. The language of impact investing has been cobbled together from traditional investing and philanthropic jargon and is inconsistent from organization to organization. Furthermore, neither potential investees nor investors knew where to look to find deals or learn more about impact investing.

Built Interpersonal Connections Between Ecosystem Silos

In all stages of this project, we have made a deliberate effort to bring ecosystem members from all types of organizations to work together on common goals. Integral to this process was removing the power dynamic of funder-fundee and investor-investee relationships. In both convenings for this project, stakeholders were brought together discuss the impact investing ecosystem in a context where any dealmaking or brokering was left at the door.

Provided a Platform for the Most Innovative Impact Investing Ideas

In the second phase of this project we surveyed stakeholders for bold ideas that would accelerate the impact investing ecosystem. From the 46 ideas that we received, the project partners—Bush Foundation, Impact Hub MSP, Cogent Consulting—chose the 12 that we thought would be most effective. These ideas included a method of securitizing impact investments, a vehicle for charitable investments into businesses, and a for-credit student impact lab. At the Second Impact Investing Convening on November 10th, each of the ideators was given 5 minutes to present their bold idea to the 79 impact investing ecosystem members in attendance.

Convened Ecosystem Around Ideas With the Most Energy

In the third phase of the project, we organized and facilitated meetings around the ideas that received the greatest response during the convening. In these meetings we are bringing together stakeholders from all segments of the ecosystem to refine the ideas and outline the next action steps. The ideas we are convening are:

  • Mainstream impact investing securities: What if we securitized small business and affordable housing loans in order to build a marketplace for tradable, liquid, impact investments?
  • Wolf Den: What if we had a “Shark Tank” for social purpose companies that built the deal flow pipeline by providing technical assistance to entrepreneurs?
  • Charitable Investments into Business: What if there was a not for profit organization that allowed accredited and unaccredited investors to easily invest in social purpose businesses and nonprofits?
  • Diversity, Equity, and Inclusion in Impact: What if we build the impact investing ecosystem to differ from traditional investing by embedding diversity, equity, and inclusion in all stages of process?
  • Crowdfunding in Impact Investing: What if we used the new MNvest legislation to draw unaccredited investors into impact investing through crowdfunding?
  • Cohesive Communications Platform: What if we attacked the opacity and language issues of the impact investing ecosystem by creating a cohesive communications platform that connected investors, investees, and the public in an intentional and transparent way?

$20 Million Impact Investment for Affordable Housing and Small Business in MN

Minnesota Council on Foundations

I am thrilled to share this month’s blog post which is about a new impact investing fund that Cogent Consulting created for Minnesota Philanthropists.

Minnesota is famous for its Midwestern modesty. Despite all efforts to stay under the radar, our philanthropic community is leading the nation once again. In fact, with $18.6 billion in foundation assets, Minnesota is a powerhouse on the national impact investing scene.

Read on


Event Name: Emerging Impact Investing Strategies for Rural Communities

Sponsor: Mission Investors Exchange

Date: 2/9/17

Location: Webinar

Cogent Attendee: Eric White


Key Takeaways

  • Rural economic development lending and investment ecosystems are much less developed than their urban counterparts in California – this is likely true of much of the US.
  • Investing in less developed ecosystems requires more creativity and patience, particularly through engaging a broader range of partners because each rural organizations’ capacity is less, and projects take longer (3-4 yr projects for Real Estate, for instance).
  • On the positive side, rural projects can have a substantial impact in turning a community around because communities and the number of community assets are smaller, so revitalizing one has a larger community-wide effect than in populated, urban areas.



  • Moderator: Lisa Richter, Principal at Avivar (impact investing consultant)
  • Patrick Cleary, Humboldt Area Foundation
  • Brendan Maher, Director Capital Markets, FB Heron Foundation
  • Terry Supahan, Director, True North Organizing Network
  • Ross Welch, Exec Director, Arcata Economic Development Center


Content Notes

  • Moderator: Overview of Rural Economy in California
    • Urban economic development lending and investment ecosystem is much more developed and well funded
    • Rural Challenges
      • Lack of earned income and philanthropic capital available
      • Decentralized, atomized initiatives and infrastructure
      • Limited number organizations investing repeatedly – most activity is one-off
    • Rural Opportunities
      • Novel, high performing CDFI and other lenders as examples
      • Increasing number of regional, rural-focused players
      • Increasing collaboration and infrastructure building activity
    • Opportunity Finance Network has national map of CDFIs on their website
  • Humboldt Area Foundation (HAF)
    • Impact investing started with a purchase of a local pool from Goodwill Easter Seals through forgivable debt
    • Next was a project too large for regional CDFIs to handle on their own, so got Arcata Econ Dev Center involved  
    • This progressed to HAF using local loans (illiquid, direct to debtor lending in partnership with CDFIs) as part of fixed income allocation in their corpus, representing 3% of $100mm portfolio.  Those loans were best performing portion of the bond portfolio in 2013 (taper tantrum in broad bond market led to negative returns for the yr for listed fixed income)
  • Arcata Economic Development Center
    • Job creation through rural small to micro lending, particularly to entities too small or immature for banks
    • 30 yr history, became 501c3 10-15 yrs ago, became a CDFI more recently, qualified under a number of small business lending govt programs, and expanded to cover 6 counties in northern California, partnering with local technical assistance firms for sourcing
    • Walked through a real estate revitalization project that required a complex capital structure with 9 entities and 11 forms of capital, coordinated over 4 yr process
  • Heron
    • 30 yr history of granting and investing nationally, across both rural and urban areas
    • Lend and invest most often through intermediaries (funds and CDFIs), moving away from asset-based lending
    • Greenline Ventures (one of the funds they work with) does small business lending and technical assistance, working with banks and CDFIs for sourcing; staffed by the New Markets Tax Credit team out of GMAC. They are raising a $20mm fund doing 5-7 yr loans of $250k-$1mm to rural and urban small businesses nationally
  • True North Organizing Network
    • They do not gather broad data, focusing instead on individual stories.
    • Rural investments often require cheap (low financial return expectation, in exchange for social return) equity to be viable, but that is the hardest form of capital to find.

Invest In Your Street, Not Just Wall Street

Minnesota Council on Foundations

This month’s blog post is about rethinking where we put our assets and the power of investing locally.

Giving locally makes a lot of sense. We’re lucky in Minnesota to have one of the most generous communities in the country and world.* We also have innovative and effective not-for-profit organizations that make the most of each philanthropic dollar (click here forsome of my favorites and send me yours!).

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