By Cathy Clark, Jed Emerson and Ben Thornley
Last year at SOCAP, we had the privilege of sharing the high-level findings from our Impact Investing 2.0 research project, which included a dozen case studies of outstanding funds and the core elements that enabled them to succeed.
Those elements included the critical role of “Catalytic Capital” (i.e., investors who use their capital to spur others to action), the relatively consistent approach of funds to developing a strong “investment thesis of change” as a top priority before focusing on financial discipline in deployment and tracking impact rigorously throughout (something we called “Mission First and Last”), and the deep engagement of all funds in public policy, which we called “Policy Symbiosis.”
These are all essential ingredients in impact investing; however each and every one of them hinges on our fourth core element – “Multilingual Leadership.” It isn’t enough to deeply understand the needs of people with no access to water in Africa, and it isn’t enough to be a hotshot asset manager with 20 years of Wall Street success, or a connected policymaker who understands how to get things done in Washington. The core practices that lead to success in impact investing are inherently cross-sector and complex. Notwithstanding the many other well-documented barriers to scale in impact investing, like the lack of deal-flow, data, proven performance, intermediation, or market infrastructure, we have come to believe the single biggest barrier to the growth of successful social finance is that we, as people, need to catch up. Our educational systems are siloed and our career paths are as well. To succeed as an impact investor, an innovative entrepreneur or a builder in the new impact economy, you must be a multilingual leader, period.
So, what is Multilingual Leadership and how do you master it?
Multilingual Leadership is the science of concurrently approaching investment (or social entrepreneurship or government for that matter) from a business, non-profit/philanthropic, and public policy perspective at all times, and implementing systems to ensure this is not just an individual but an institutional practice. It is awe-inspiring to witness what is so clearly the way of the future when impact organizations such as Accion Texas, Aavishkaar, Bridges Ventures, Calvert Foundation, Elevar, Microvest, RSF, SEAF and many others seamlessly talk about their work as being unremittingly financially-driven (business speak), but with a clear logic model moving the needle on specific social/environmental challenges (non-profit/philanthropy speak), while addressing systemic market failures (public policy speak).
The individuals who run these funds often have uniquely multilingual experiences. For example, Gil Crawford, the CEO at MicroVest, was trained at Chase Manhattan Bank after working for the Red Cross and the US State Department, founded Seed Capital Development Fund, a US-based nonprofit that created financial instruments and attracted funds to capitalize microfinance institutions, and worked for the Latin American financial markets division at the International Finance Corporation (IFC). These are the four main industry competencies we found again and again in our research: finance; non-profit; government; and international development.
But Multilingual Leadership extends beyond simply individuals to institutions as well. Bridges Ventures in the UK is majority owned by its senior management team, but with the nonprofit Bridges Charitable Trust holding a substantial minority ownership interest, with control over any change to the firm’s founding commitment to raise only funds with both financial and social goals. The Bridges team also donates 10 percent of their own profits to the trust’s philanthropic activities, which are targeted at financial support for social issues that cannot be resolved by market-type investment capital.
It’s one thing to document Multilingual Leadership, however, and another thing entirely to develop and cultivate it – which is the shift in emphasis for the three of us at SOCAP this year.
In our Peer Workshop late Thursday morning, “Becoming a Multilingual Leader,” we will experiment with a live training, with most of our time spent in small group discussions facilitated by a group of expert “coaches”, such as Tina Castro from Avivar Capital (formerly director of mission-related investing at The California Endowment), and Christine Looney, a senior program investment officer from Ford Foundation.
Based on a pre-conference survey of people joining the session, we will assign participants into small groups that illustrate and test the different types of approaches inherent in multilingual leadership, drawing out the need for a reinvigorated emphasis in impact investing on education, stakeholder alignment, communication, and field building. And while our workshop will ask participants to take the point of view of an investor, we are certain that the lessons of Multilingual Leadership will be just as relevant for entrepreneurs, journalists, and others trying to crack the code of impact investing to achieve their ends.
We all have much to learn and should rally to that opportunity if we are to capture the full potential before us—whether we work on the ground, or mobilize and deploy capital, to enable greater impact in the communities and world we each care so much about!