5.3 WHAT DID NOT WORK? Not everything the Initiative undertook worked well: 1)
Aggressive demarcation of the definition: For understandable reasons, the Initiative team
was committed to protecting the integrity of the definition of impact investing against manipulation or dilution. This sometimes led them to take aggressive public stances on this question. In turn, such stances sometimes alienated leaders in other, related fields—socially responsible investment was one example; community development finance was another— who, with justification, felt their contributions were undervalued in the impact investing discourse. This led to unnecessary distance and lack of cooperation between the Initiative and some individuals and groups. A more diplomatic and nuanced approach to related fields, as was taken in the case of microfinance, could, and should, have been employed with all such constituencies. 2)
North-South asymmetries: More serious, though, from a global perspective, was the Initiative’s
preference for Northern-based grantees and partners. It is true that impact investing is most fully developed in the United States and the Global North generally. It is also true that the North was an efficient place to start. However, in today’s G-20 world, and where the targets of much impact investing are and must be developing regions, it makes little sense to limit the role of the South in the impact investing field to recipients of capital and adjuncts. It is also true that traditionally the “money centers” of international capitalism have primarily been New York and London (and Zurich, perhaps) but that situation, too, is changing rapidly. Among others, Shanghai, Mumbai, Dubai and Sao Paolo are all already important finance centers. A full-fledged strategy to build a sustainable impact investing movement must move beyond these North-South asymmetries. Southern leaders and organizations must form and direct their own collective platforms in Southern countries and regions, and participate as equals in the governance of the global network and systems. 3)
Persistent North-South asymmetries in the governance of the Initiative’s grantees and partners favored Northern-based grantees and partners, thus limiting recognition and contributions of the South.
Limitations on impact investing by the Foundation: The Impact Investing Initiative triggered
an internal debate within the Rockefeller Foundation on the extent to which the Foundation should itself engage in direct impact investing with its endowment capital, as distinct from making grants to build the sector as a whole. The outcome of this debate was to limit the Foundation’s own direct impact investing to four targeted PRIs in the Initiative’s portfolio. The Foundation also administers PRIs in other program areas, and is active in the PRI Makers network. Moreover, the Foundation is diligent and rigorous in its administration of these investments. Still, the decision to forego additional mission-based impact investing was viewed by a minority of leaders in the impact investing field as diminishing somewhat the credibility of the Foundation to lead the field in its next phase of development. However, for the majority of leaders whom we interviewed, including those in the Global South, this decision was not viewed as a serious impediment to the Initiative’s leadership role. Broadly speaking, the leaders understand that field building requires both investments per se and grants, especially for public-goods infrastructure. Nonetheless, as some leaders observed, having the Foundation play an active impact investing role beyond the PRI mode could have energized efforts to create new investment funds and products for investment banks, and investment advisors, on behalf of their high net worth clients, and perhaps also for some institutional investors. 4)
Coming late to policy: A final area in which the Initiative’s performance was not optimum involves its support to grantees for policy work. At the beginning of the period, in 2007, amid the exuberant discourse of the financial markets, the Initiative adopted a laser-like focus on supporting grantees engaged in field-building processes and tools. This was an appropriate
Final Report of the Strategic Assessment of The Rockefeller Foundation’s Impact Investing Initiative
| 31