There is a new energy in Los Angeles around impact investing – with young wealth creators leading the charge and engaging in creative approaches to improve the quality of life in the city of Angels.
The dynamic energy of these change-makers has not gone unnoticed nationally and globally, and cutting-edge global philanthropic organizations have recently established a toehold in the second largest and most diverse city in the United States.
Hard-core for-profit capitalists and idealistic social entrepreneurs are coming together in a shared belief that a healthy, thriving economy/community requires a mixed provision of care, ranging from high-impact commercial companies to innovative social enterprise to public sector services and traditional government aid. For them, the boundaries between solutions and models of creating social good/social capital/social welfare are shifting. For this community of investors and philanthropists, there is a need to develop new models for solving social problems, and also to discern a potential to create opportunity where there has been failure of the free market. The impact investing sector, operating at the edge of for-profit and non-profit, can play a role in creating change.
On the ground here at home, the impact investing movement is led by a combination of forward-thinking business leaders, innovative non-profits, the traditional philanthropic community and professional advisers interested in accelerating growth along multiple dimensions.
This cross-sector leadership and commitment is required to create an ecosystem in Los Angeles that will allow social entrepreneurship to sprout and sustain. These new social good models require patient capital in the seed stage of funding and some eco-system support. Wealth creators in the form of entrepreneurs and big-box business leaders alike are needed to engage with these new enterprising models and evaluate “return on investment” in financial and social terms.
Those who control the capital in Los Angeles have an opportunity to accelerate this new thinking and market behavior. Non-profit leaders need to embrace new models of doing good that can be tracked and measured in ways that reflect business thinking. Finally, advisers such as attorneys, accountants and wealth managers are needed to promote these new opportunities to their clients on both sides of the table: potential investors and non-profits alike.
Needs to accelerate
Marquee global organizations have been drawn to our community and are establishing outposts in Los Angeles in recognition of the importance of our local market and the potential of impact investing to create real change in our community. These global organizations are here at the behest and the urging of engaged natives interested in impacting Los Angeles.
Mohammad Yunus’ well-known Grameen foundation has found a foothold in Los Angeles, and the Grameen America L.A. branch is in full swing, making microloans to women in Boyle Heights. The nationally known Acumen fund established its LA+Acumen group last spring. Harnessing the power of Angelenos who wish to make a difference, Acumen formed its local group to share the principles of patient capital, and capital used in businesses that provide profit plus social good.
Los Angeles needs to accelerate this area, and more than that, become a leader – as a community, our need for social change is certainly competitive with other cities, yet our access to resources less. According to study by Jim Ferris’ Center on Philanthropy and Public Policy, we’re a “net exporter” in terms of private foundation grants, and as reported by the California Community Foundation, only five of our top 100 companies headquartered here in Los Angeles are involved in formal philanthropy. We need to encourage and consciously grow new ways of investing in our communal life.
What will impact investing mean to the Los Angeles community? Will the traditional funders and the largest investors get involved? Will professional advisers allocate a portion of assets under management to profit plus business models? Will the business community support building the eco-system to support social entrepreneurs who are interested in creating social good plus profit in Los Angeles?
Darya Allen-Attar is a financial adviser with Morgan Stanley Wealth Management in Santa Monica. Laura Ferretti is the founder of Impact Philanthropy. They are co-presidents of the Los Angeles Chapter of Advisors in Philanthropy.
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