The journey
The Journey to Impact Investing for Faith-Based Organizations consolidates our learnings to take FBOs, on a step-by-step journey through the process of impact investing — from exploration and strategy through monitoring and optimization. This document can also support fiduciary intermediaries in how to best support faith-based organizations on their journey into impact investing.
Along the way, we cite examples from the impact stories of a diverse range of FBOs (see Impact stories) for insight and inspiration. The impact stories are based on our own extensive discussions with these FBOs, most of them frontrunners in the transition to impact investing. The process of moving into impact requires time and varies per organization. Experience tells us that the full journey to an optimized impact investment portfolio can take between 6 months and 10 years, depending on your starting point, the complexity and size of your portfolio and how thoroughly you follow each phase.
FIIND Impact Foundation identifies 8 phases
Phase 1
LEARN & EXPLORE
Learn about and explore the impact investment ecosystem and its nomenclature.
Phase 2
REFLECT & DEFINE
Reflect on your organization’s values and define what you hope to achieve with your investment portfolio.
Phase 3
ASSESS & BENCHMARK
Assess the resources you currently possess, the impact you are having, the value they create in service of your mission and objectives, and the governance structures that manage them.
Phase 4
EVALUATE & STRATEGIZE
Create an executable impact investment strategy – guided by the understanding you’ve gained and the needs and constraints you face.
Phase 5
SOURCE & INVEST
Implement your impact investment strategy by sourcing opportunities and making investments.
Phase 6
MEASURE & MONITOR
Measure, report and monitor your impact. Along with intentionality and additionality important requirements of impact investing.
Phase 7
REVIEW & OPTIMIZE
Review what you have achieved so far and how you can optimize your performance.
Phase 8
SHARE & ADVOCATE
Pay it forward by enabling the journey of others into impact investing and empowering the faith-community to solve global challenges.
1. Learn & Explore
Phase 1 is all about learning and exploring the impact investment ecosystem and its nomenclature.
Objective
To equip you as a ‘champion’ of impact investing within your organization — i.e. understanding what it takes to successfully build a mandate, overcome common objections, identify peers to learn from, and start engaging with your decision makers.
Output:
The purpose of this first, exploratory phase is two- fold. First, it gives you a general understanding of what impact investing means and the discussions surrounding it. Second, it gathers information that you can use, as the champion in your organization, to build a case internally for impact investment and/or a change of the investment policy. The output of this phase may include:
A presentation of your findings at a board meeting
A written recommendation to the board to continue building a mandate
A decision by the board to allocate the necessary resources
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Learn & Explore section
2. Reflect & Define
In this section you will reflect on your organization’s values and define what you hope to achieve with your investment portfolio.
Objective
To identify the mission and faith values to be reflected in your portfolio and guide your impact allocation.
Output
The output at the end of this phase typically includes:
Formal consensus among your board members or decision makers on the values and principles which will guide your investment policy
Prioritization of these values and principles
List of themes you want to focus your impact on
Exclusion list specifying what you won’t invest in
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Reflect & Define section
3. Assess & Benchmark
This section is the first step towards reaching your impact objectives. You’ll assess the resources you currently possess, the impact you are having, the value they create in service of your mission and objectives, and the governance structures that manage them.
Objectives
To determine the specific needs and constraints that govern your asset-owning entities
To consider how these shape your investments
To specify what’s needed to align your investment management practices and portfolio with your impact objectives
Output
Baseline assessment of current situation and portfolio for planning and tracking progress.
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Assess & Benchmark section
4. Evaluate & Strategize
This section is where you create an executable impact investment strategy – guided by the understanding you’ve gained and the needs and constraints you face. Your strategy should be iterative by design, as it will be reviewed periodically and revised incrementally.
Objectives
To formalize sustainability, ESG and impact in your investment strategy
To determine a governance structure/approach
Output
Investment Policy Statement laying out an executable impact investment strategy for your organization
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Evaluate & Strategize section
5. Source & Invest
In this section you will implement your impact investment strategy and Investment Policy Statement by sourcing opportunities and making investments.
Objectives
To create an investable universe by searching and sourcing funds
To compile long and short lists of funds
To understand the questions you need to ask during due diligence
Output
Your first impact investments added to your portfolio
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Source & Invest section
6. Measure & Monitor
This phase consists of measuring, reporting and monitoring impact. Along with intentionality, this is an essential requirement of impact investing.
The discussion around how this should be done is a particularly vibrant one and still ongoing within the impact investing ecosystem. Various industry participants and consolidated efforts are attempting to develop standardized impact metrics and measurement/reporting frameworks that will allow investors to compare performance data across impact themes, sectors, asset classes, vehicles and portfolios. Until this is achieved, there are several different options available.
Objectives
To understand why impact is measured/reported and underline its importance among internal team members and external managers
To define what is to take into account when developing and implementing an impact measurement and reporting framework
To evaluate which tools, frameworks and resources can help you develop an impact measurement and reporting framework
Output
A well-structured, replicable impact management system to measure, report, optimize and manage positive and negative impact on people and planet of your portfolio
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Measure & Monitor section
7. Review & Optimize
The review and optimize phase takes the reporting from Phase 6 and asks: What have we achieved so far and how can we optimize our performance?
Objectives
To reflect on successes, challenges, scale, depth of impact achieved, and lessons learned
To evaluate and optimize your impact framework and strategy
To understand what to do if your portfolio doesn’t meet expectations?
To avoid or alleviate the effects of not meeting expectations
To incorporate changes or optimize your investment strategy going forward
Output
Optimized approach and processes
Potential expansion of allocation to increase impact
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Review & Optimize section
8. Share & Advocate
Phase 8 is where you pay it forward. Enabling
the journey of others into impact investing and empowering the industry to solve challenges is a key characteristic of an impact investor. It is in this can-do and collaborative spirit that your peers have shared their experiences, case studies and lessons learned. Now it’s your turn.
Objectives
To share your knowledge and experience as an impact investor
To understand what knowledge, experiences, and learnings are most helpful
To find the right resources, platforms and networks for sharing
Output
Become an advocate of impact investing beyond your own organization. How? Download the full document to find out!
Request the full Journey to Impact Investing for Faith-Based Organizations for a more in-depth introduction into the Share & Advocate section
Journey into Impact Investing for Faith-Based Organizations
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