Impact Investing: Putting Endowment Funds to Work for Good

The following post is part of TriplePundit's coverage of the 2011 Net Impact Conference in Portland Oregon.  To read the rest of our coverage, click here.

by Kathryne Auerback

From 1977 to 1986, student activism on campuses across the United States drove anti-apartheid divestment that eventually pressured the South African government to begin negotiations that led to the end of the apartheid system.

With the power to effect change of this magnitude, imagine what else can be accomplished by an impact investment approach to endowment fund management.

A new program of the Sustainable Endowments Institute, in partnership with 16 other organizations including AASHE, The Clinton Climate Initiative and Net Impact, is helping academic institutions and other non-profits to do just that. The Billion Dollar Green Challenge will help drive transformational change by encouraging and supporting the investment of a portion of institutional endowment funds into self-managed revolving funds to capitalize energy efficiency improvements. The goal of the program is to secure commitments totalling one billion dollars.

Mark Orlowski, executive director of the Sustainable Endowments Institute, explained to a packed session at the Net Impact 2011 conference that, in addition to providing an average return of 32 percent, these funds offer a hedge against future energy costs and the opportunity to disaggregate investments from market performance.  In tough economic times, these are considerable advantages for cash strapped public and private institutions.

In addition, by shifting operational expenses to investment opportunities, the program ignites campus stakeholder engagement and unlimited real-world learning that professors across disciplines can build into their courses. Students can plug in by participating in initial energy audits, proposing energy saving projects, tracking progress, or analyzing financial results.

Orlowski whittled a list of 900 institutions down to 32 Founding Circle participants -- from Boston University, Harvard and Stanford, to small schools like my own, Edgewood College in Madison, Wisconsin.  Participation is open to non-profits who want to join the growing community of organizations making this public commitment to putting our money where our mouths are.

The potential collective impact is significant. At the average ROI, we’re talking about $1.32 billion in energy savings. That’s the equivalent of the cost to power all the households in the City of Chicago.

We’re all stakeholders. Social, environmental and economic injustice affects us all. The Billion Dollar Green Challenge presents an incredible opportunity for individual action that can lead to high impact positive change. Get involved and encourage the students in your community to lobby their institutions to step forward and sign on.

Kathryne Auerback helped develop and launch the Edgewood College Sustainability Leadership Graduate Program. She is an instructor in that program as well as in the School of Business, where she serves as the Director of Program Development. In this role, she supports program and curriculum quality, growth and retention, and community building among students and alumni. Kathryne has over 20 years of strategy, corporate responsibility, sustainability, marketing and public relations experience, most recently as principal at Generation Strategy LLC and previously as vice president at Madison Environmental Group, Inc. She serves as vice chair on the Board of Directors of REAP Food Group. Kathryne earned her MA and MBA degrees
from UW-Madison.