How do I break into impact investing?
Are you currently experiencing disillusionment in your professional life? Imagine a future in which you are living and working closer to your values. It takes guts to admit that you're no longer satisfied with your career choice, and frankly, if you have a lucrative job such as a fund manager, you may feel like you have more to lose than others who are perhaps earning less.
But it's important to remember that you also have so much to gain: fulfillment, passion and that elusive sense of purpose you seem to be missing right now. As you likely know, these can't be bought. In the past few years, many exciting opportunities have opened up in the space of impact investing, giving financial professionals more ways to apply their skills to the social agenda.
Turning that imagined future into reality starts with outlining the steps to take in that direction right away. So, get moving…
Swapping 'more' for 'better'
You may be still motivated by the pace of life in London's financial district, "The City," and enjoy the day-to-day tasks of your job, so think about holding on to your job function and instead switching the focus to something such as impact investing. This type of socially responsible investment earns more than just profit. Impact investing harnesses the power of enterprise to earn additional benefits for people and the planet. As Margot Kane puts it, it brings a different set of calculations to your investment decisions so that social or environmental good is included. For the people lining up the deals, the bonus is feel-good kudos.
Those looking to forge a career in this new and exciting area require financial know-how and savvy business intuition to crunch the hard numbers on the viability of an organization, fund or company, and ensure a financial return like any traditional investment. But impact investors also need a compassionate heart to generate the measurable, beneficial returns on social and environmental impact. You can do this by using your financial skills to provide capital to diverse worldwide initiatives in areas such as sustainable agriculture, affordable housing, accessible healthcare, clean technology and access to financial services, according to the Global Impact Investors Network.
The client pool is diverse and includes passionate individual investors keen to support a cause they believe in and, in some instances, non-accredited investors with as little as $20 to put in. Take the Calvert Foundation's Community Investment Note (PDF), for example, through which people can participate in via online broker Microplace for less than a round of drinks. Ours to Own is another project seeking similarly humble investments to make major changes to the "cities we love." It's a whole different ball game from what you are used to in The City.
Invest in your own impact
So how do you move from the traditional finance sphere into an impact role? And what kind of skills and traits will you need to successfully make that transition? Below I've set out my top tips for landing yourself the kind of dream job that allows you to make a difference while making money.
- Get connected
There are events, mailing lists, webinars, LinkedIn groups and news stories that you should be reading, joining and attending, so first things first - get connected. The GIIN is a good place to start — it has weekly emails and events that bring people from all over the sector together, while organizations such as Acumen Fund, Rockefeller Foundation and ANDE are also worth following and reaching out to through your LinkedIn network to see if you know anyone as first or second connections in any of them.
- Get up to speed
Impact investing is evolving rapidly and becoming increasingly diverse. As a new player in this field you need to appreciate the nuances. This means doing your homework to fully understand the approaches, structure and specialties within the sector. Now more than ever, this understanding is crucial: there are unusual forms of exit and, as FastCo's useful blog on the subject insists, even the "basic definitions of 'returns' and 'capital' can have different meanings among proponents and between different firms." The takeaway? Make sure you're clear on how your fund-management skills could translate for the different approaches or structures.
- Get specific
Given all this newfound, woolly diversity, it's important that you define your niche as much as possible. Are your passions in the developing world or closer to home? In environmental issues such as water, biodiversity and energy or more on the social side of the fence in health, gender or education? Get specific if you want to make maximum impact. Casting your net too wide works against you, especially when making a career change. The hiring manager you may network or speak with will want to know what your specific target is and what audience that you are selling your unique skillset to.
- Get networking, and nurture
A successful career in impact investing will require you to understand clients' financial needs and values and to connect them to impact investment opportunities that make sense. Make sure you're mining the richest seams by building a strong network: hone your personal branding and marketing tools, reach out to the community and strengthen your connections with colleagues, clients and customers. Nurturing them is sure to reap rewards. Julia Matsudaira of Goldman Sachs is certain that organizational and business success rests on the strength of your relationships - "Strong relationships are based on trust," she said. "Personal finance is often a private and intimate matter that requires wealth advisors to not only be skillful in financial management, but also trustworthy, to uphold their fiduciary duty." This applies to impact investing as well.
Dedication is the key to success, but passion is the door
Why work for profit alone when you can work for purpose too? Your Masters career advisor may have thought differently, but pursuing your passions is not frivolous. In fact, it's the only way to ensure a sustainable career — one that satisfies you on every level and one that you can imagine doing for a long, long time. Impact investing holds many opportunities for someone with your financial and investment skillset. Now you’ve got to do your homework, find your niche and reach out to your networks. What are you waiting for?
If seizing your goals and living life with purpose and passion seems like an insurmountable challenge, contact me for some bespoke advice on careers in impact investing and converting your resume into a compelling and translated skills story.
What is impact investing?
Impact investing is the practice of investing in companies, organizations, and funds with the intention of generating positive, measurable social and environmental impact alongside a financial return.
What types of companies or projects are typically considered for impact investing?
Impact investing can encompass a wide range of sectors and industries, including renewable energy, affordable housing, sustainable agriculture, and education.
How do I know if a company or project is truly generating positive impact?
One way to evaluate the impact of an investment is to look for third-party certifications, such as B Corp certification or a rating from a reputable impact rating agency. Additionally, many impact investors also conduct their own due diligence, including site visits and conversations with a company's management team, to assess the impact of an investment.
Are there any specific qualifications or certifications required to break into impact investing?
There is no specific set of qualifications or certifications required to break into impact investing, but many professionals in the field have backgrounds in finance, business, or a related field. Additionally, some organizations offer training and certification programs in impact investing.
What are some ways to get started in impact investing?
Some ways to get started in impact investing include: Educating oneself about the field through books, articles, and events Networking with professionals in the industry Considering internships or entry-level positions at impact investing firms Starting small by incorporating impact considerations into one's personal investment portfolio.