When I entered consulting in 2001, the intersection of investment and philanthropy was a quiet trail though the forest. Over the next few years, I met fellow pioneers and talked around the campfire about the blended value capital market, mission-related investing, and ultimately, impact investing. We aspired to a utopian capitalism in which markets drove prosperity and social and environmental goals were magically rolled into a double (or triple) bottom line. Impact investing seemed like the perfect way to break open the piñata of capitalism and shower the world with goodies. Our work bemused and irritated serious investors.
A Different World
Tackling the business versus society dichotomy has since become mandatory, and everyone seems to have gotten the memo. We have made much progress as more resources, talent and products pour into the field. Larry Fink of BlackRock was just in Davos calling for corporations to create social purpose.
Cause for celebration, but driving on the Long Island Expressway is different than hiking through the woods
Names Don’t Matter
We have spent too much time on nomenclature. We now need to deploy capital with clear intention and hold ourselves accountable through measurement.
In The Tent
We can't be part of the investment industry while trying to remain outsiders and changemakers. The desire of philanthropy and policy makers to “catalyze” impact and drive change in investment systems is not the right mental frame. We are swimming in the mainstream capital markets - not running a science experiment.
Proprietary No More
Impact investing is not about proprietary products; it's about implementation and process. The complexity of implementing an impact investing process can create an advantage for those who can cut through the thicket.
Data not Diatribes
We pioneers must not just proselytize but also commit resources and build teams that can execute. As data sets and data providers proliferate, new insights and results will emerge that may not be comfortable to us. We need to continue to look for quality impact and not settle for owning the usual suspects. Transparency and intentionality will be key.
Embarrassment of Riches
Asset owners who want to deploy their capital for impact are overwhelmed with the number of options. Asset owners face the daunting challenge that we all face in the world of online shopping: everything is available everywhere, but how do we find what we need and want? Trusted advisors and guides are clearly needed to objectively shift through the industry players and products.
Be Explicit or Be Complicit
Complicit was the Word of Year in 2017, and it applies to our investments as much as to our politics and culture. We are all complicit in climate change, we are all complicit when our portfolios create poison toxins or lead to more inequality. That is the profound change between 2018 and 2001.
There are no more places to hide, so we all must own what we own.
At Godeke Consulting, 2017 was a great opportunity to work with clients ranging from large foundations to amazing individuals – all trying to more efficiently and effectively drive positive change. We also continue to fine tune how we work and collaborate.
Extracurricular Activities
As Board Chair at the Jessie Smith Noyes Foundation, I have also been able to grapple with the challenge of moving Noyes forward while not losing our connection to the communities we are supposed to serve. Working with my fellow board members and staff to make hard decisions in a clear way has been a great learning experience for me.
At NYU Stern, I continue to be amazed and energized by my students and colleagues as we work together to learn and think about impact investing. It was great to speak to the Stern undergrads in the Business and Its Publics course as well as continuing our Impact Investing in Family Offices seminar for a second year. In the summer, I was excited to participate in a meeting of business school faculty from around the world teaching impact investing.
The field keeps getting bigger and broader, and I am pleased to be part of it.
Finally, please take a look at our refreshed Godeke Consulting website with new case studies, videos and our toolkit of services for impact investors and let us know what you think.
I greatly appreciate the chance to work again with my 2017 project partners, Scott Budde, William Burckart, Gaspar Cello, Sarah Cleveland, Christopher Lopez, Gregory Pettit, and look forward to finding more opportunities for all of us to push more good ideas up the hill in 2018.
All the best,
Steve
