Public-Private Partnership Launched to Boost Impact Investing

Public-Private Partnership Launched to Boost Impact Investing

The White House has launched a public-private partnership to accelerate impact investing globally with $1.5 billion in commitments from more than twenty private-sector investors, including the McKnight, Ford, and MacArthur foundations.

Following a roundtable discussion at the White House on Wednesday, the administration promised to take several steps to encourage investors, foundations, businesses, and entrepreneurs to embrace the impact investing model as a means to generate economic value as well as measurable environmental and social benefits. In conjunction with the initiative, the U.S. National Advisory Board on Impact Investing released a report, Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing — and Why It's Urgent (64 pages, PDF), which argues that impact investing is at an inflection point and, with a more intentional and proactive partnership between government and the private sector, could "unleash new capital, talent, and energy for social, economic, and environmental good."

To that end, the Minneapolis-based McKnight Foundation formally announced at the meeting an initial investment of $200 million in strategies that support regional development and the transition to a low-carbon economy. The amount, which represents about 10 percent of the foundation’s endowment, will be allocated in $50 million tranches to four categories: public-markets mission-related investing; private-markets mission-related investing; mission-driven investing; and program-related investing. While the foundation aims to realize market-rate returns in the first three categories, it will accept below-market-rate returns on the PRIs it makes.

For its part, MacArthur pledged $25 million to help finance energy efficiency improvements in multifamily housing. According to the American Council for an Energy-Efficient Economy and other experts, a 15 percent to 30 percent reduction in the energy used to power the multifamily housing stock in the U.S. would result in $3.4 billion in annual savings for owners and renters while simultaneously cutting carbon emissions by 50 million tons annually.

"The world of impact investing is changing in exciting ways," said McKnight Foundation board chair Ted Staryk. "With the right homework, and emerging research and policies like those announced today, foundations no longer need to choose between financial returns and programmatic returns. Increasingly, there are opportunities to accomplish both at once — aligned with mission and without concessions on returns. Our board feels that these opportunities represent some of our best platforms to maximize McKnight’s resources for the broadest and most lasting impact."