Socially conscious investors could make a big impact in Virginia, according to a new report from UVA’s Batten School

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What if you could grow your money by investing in companies whose missions align with your own? Whether that means improving the environment, housing, education or health care, “impact investing” is appealing because it combines the traditional ideas of investing and philanthropy, allowing investors to make social impact as well as financial return.

The Global Impact Investing Network (GIIN) defines impact investments as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” This relatively new industry has proven to be a highly effective way to channel capital into addressing society’s most urgent problems. Government and nonprofit interventions are critical, but private capital markets are key to making positive, measurable change beyond what is possible through philanthropic donations alone.

Virginia has not yet emerged as a leader in this realm, according to the Virginia Impact Investing Forum (VIIF), part of the University of Virginia’s Frank Batten School of Leadership and Public Policy. This is surprising, considering the significant wealth held in the state and its impressive history of philanthropy.

For the past decade, GIIN has been working to build the field, developing rigorous metrics and tools to help socially responsible investors assess which investments will return the greatest good. The GIIN’s 2020 Annual Impact Investor Survey values the impact investment market at a whopping $715 billion. The Global Sustainable Investment Alliance estimates that the ESG market — which stands for environmental, social, and (corporate) governance — is $30 trillion today and will be $50 trillion in the next two decades. This represents an increasingly important way to invest.

But Virginia is falling behind the trend.

In 2020, the VIIF joined forces with Social Entrepreneurship at the University of Virginia (SE@UVA) to significantly scale up Virginia’s support of impact investing. As a first step, we identified, mapped and interviewed leaders at 44 organizations in the  commonwealth that have significant philanthropic endowments that could be invested in a way that is in line with their philanthropic missions, including private foundations, community foundations and community development banks.

Through the Virginia Impact Investing Ecosystem Mapping project, we found that more than $19 billion of this type of capital is available in Virginia. While much of that is being invested worldwide, more than $230 million was deployed within the state in just the last year alone. And most investing organizations have already made plans for at least another $222 million in the coming year. These numbers are a positive sign — with more and more dollars staying here at home.

Still, we have found billions of dollars still sitting on the sidelines. Capital is being held or managed by mission-driven Virginians that is not yet being invested for impact. We can change that by better understanding Virginia’s impact investing trends and how Virginians can invest:

 

  1. Virginians should invest in what matters.

We found that health care, education and housing are receiving the most attention. These are the same issues we must tackle to create a more equitable and thriving commonwealth.

  1. Impact investing is on the rise.

The trend in Virginia is that more actors are making impact investments each year. Why? Because they realize they can have social and environmental impact alongside financial returns.

  1. Look to the role models.

More than a dozen organizations were celebrated by respondents as being leaders in the state. Virginia Community Capital, Richmond Memorial Health Foundation, and the Community Foundation for a Greater Richmond were called out for having remarkable impact in the Richmond area.

  1. We need more networking, training and support.

There are substantial barriers to impact investing, including a lack of opportunity for learning, a dearth of training and resources, limited public examples of success and a tendency to be risk averse.

 

Luckily, these obstacles are also opportunities. Understanding where the gaps are is half the battle.

Next, we need professional development training. We need a place where people can learn best practices from around the country. We need a framework for sharing investment opportunities and working collaboratively to unlock millions of dollars in new capital. With these advancements, we can take important steps to improve the lives of all Virginians.

Read the full study here.