Miller Center’s John Kohler (along with others) co-founded six years ago. These experiences provide a unique starting point from which emerged the structure for a second-generation 100% impact investment portfolio: Total Portfolio Activation for Impact.
1.1 THE NEED FOR A NEW INVESTMENT APPROACH The Total Portfolio Activation for Impact strategy is expected to be most attractive to asset owners, family foundations, mission-based institutions (e.g., Catholic institutions, international non-governmental organizations [INGOs]), universities, and corporations interested in achieving social good with their money but who also want reasonable returns on their investments. To date, these investors have allocated a portion of their investment activities to include social and environmental impact, but they have lacked sufficient number of entry points into a broader array of asset classes. The strategy is also relevant to fund managers and investment advisors looking for a more sophisticated response to clients who desire access to a mission-based or diversified portfolio of both direct and indirect impact investment opportunities for at least a portion of their investable assets. Previously, the majority of investment approaches forced interested capital to trade off between social impact and financial returns. Often, impact-interested investors rely on traditional investing for their financial returns and turn to philanthropy to fulfill their desires for social impact—creating separate, parallel pathways for their capital. But while philanthropy plays a critical role in providing social benefit—for example, in response to disasters and other emergencies or to de-risk investments—it alone is not sufficient to enable systemic and long-term social and environmental benefit. The Total Portfolio Activation for Impact strategy provides an attractive alternative for those interested in fueling positive social and environmental change, building on recent work and demonstrating the existence of investment targets able to provide intentional impact within a broad set of asset classes. The strategy also helps manage the risk inherent in investing in concentrated positions by diversifying financial and impact risk across multiple asset classes.
1.2 THE TOTAL PORTFOLIO ACTIVATION FOR IMPACT STRATEGY— KEY PRINCIPLES The notion of investing capital with the intent to generate both financial returns and positive social or environmental impact has captured the imagination of thoughtful investors across the globe.
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