Impact Investing
Impact investing — also referred to as “socially responsible investing,” “sustainable investing,” or “investing in social good”— is about investing money to support social change while potentially generating financial return. Ultimately, impact investing is a way to align your investments with the positive changes you want to see in the world.
The historically separate fields of traditional investing and philanthropic giving have become increasingly intertwined, evolving into a new investment choice — impact investing. Research shows that the demand for impact investing has grown exponentially over the last decade. Typically, investors who choose this heartfelt approach are driven more by the emotional and moral aspects of contributing to the greater social good than by a quantifiable, monetary return.
Why Does Impact Investing Matter?
Simply put, impact investing connects your money to your values. It is a way to advance social change in an innovative and effective way — within a suite of seemingly endless options for supporting the causes we most care about.
Think of impact investing like a social good toolbox — full of many different tools for various uses and purposes. All you need is someone to show you how to most effectively use these tools, so you can amplify the impact of your investment choices.
Why Tides?
For more than 45 years, Tides has empowered smart financial risk-taking in pursuit of progressive change and meaningful social impact. As stewards of charitable capital, we recognize that our responsibility includes the traditional finance goals of maximizing return, minimizing risk, and diversifying portfolios, while also driving measurable social returns that support our vision for a world of shared prosperity and social justice.
Over the years, Tides has grown into a central player in the investing-for-impact sector, demonstrated by both recent and historical milestones. Our organizational history speaks to our leadership using values-aligned donor advised funds as a tool for change. Since the 1980s — long before the term “impact investment” originated — we’ve partnered with the pioneering socially responsible investment funds of Walden Asset Management and Calvert. More recently, we’ve produced the resource Moving Money for Impact: A Guide to Gender Lens Investing as well as our Choose Your Own Impact Adventure Guide.
After decades of creating innovative ways to invest in social impact, a common theme has emerged: customization and personalization. Not every impact investing toolbox is the same, and the tools within each depend on a wide variety of factors that are different for everyone, such as area of interest, success indicators, and risk tolerance, among others. We pride ourselves on our ability to tailor creative solutions for our clients, bridge gaps, and inspire our network of partners and clients to increase the amount of social change we can effect together.
For example, some investors prefer portfolios that blend capital from various sources, such as grantmaking, investments and donor advised funds, while others prefer to have a portfolio focused on a single issue that’s important to them or to invest large amounts in individual initiatives doing work they admire. Some donors may have fossil fuel-free portfolios, while others may prefer portfolios focused on gender equity, education, sustainable agriculture, or environmental preservation. It all depends on what matters to you.
What Does Successful Impact Investing Look Like?
Ultimately, success means something different to every one of us — there is no one size fits all when it comes to measuring impact. With our core values at the heart of every partnership, the following stories showcase what impact investing partnerships at Tides can look like.
Investing in Black-founded Businesses in Partnership with Fifth Star Funds
White-led businesses have access to 37 times more startup financing than Black founders, according to a Stanford report. To help fuel investment in the Black business community, Fifth Star Funds, a group of Chicago entrepreneurs and industry leaders, is providing access to funding and support services to Black founders. Co-founder Stella Ashaolu says “Working with Tides has been critical, to say the least. In the middle of a pandemic and we’re trying to start this nonprofit organization or this philanthropic fund — we didn’t really know where or how we were going to get this off the ground. Tides has been very instrumental and supportive in just helping us think about the way we’re structuring this.” Since its launch at Tides in early 2021, it has funded more than a dozen exciting startups (including CRTSIDE, Cyber Pop Up, ExpandHR, Staj) by reducing bias in the deal sourcing process, equalizing access to opportunity, allocating early-stage capital, providing network access, and delivering thoughtful support services that meet the needs of their founders.
Stella Ashaolu, co-founder of Fifth Star Funds: “We wanted to really focus our efforts there where we feel like we can create the most impact to hopefully fill the funnel with more Black founders even just having the opportunity.”
Unlocking Access to Free Knowledge in Partnership with Wikimedia
Wikimedia strives to bring about a world in which every single human being can freely share in the sum of all knowledge. Tides houses Wikimedia Foundation’s Endowment in a collective action fund structure to enable future support of Wikimedia’s various projects, including Wikipedia. Tides has supported the Wikimedia Endowment in its investment strategy, asset allocation analysis, and the development and execution of its Investment Policy. Tides also assists in processing Wikimedia’s donations throughout the year.
Jennifer’s Farm-To-Table, Sustainability-Focused Donor Advised Fund
Jennifer Kline is a long-time client of Tides who developed a custom donor advised fund that specifically supports her passion for sustainable and ethical farm-to-table initiatives. Today, her fund has invested millions of dollars in organizations, including EFM, One Acre Fund, Iroquois Valley Farms, CNote, and more, which foster opportunities for farmers and protect the environment.
Like Jennifer Kline, Other Tides Impact Investing Partners have Strengthened These Grassroots Organizations through their Donor Advised Funds:
- Oweesta | Impact area: Native community development
- Sunwealth | Impact area: Clean energy, energy efficiency, green jobs
- First Children’s Finance | Impact area: Women/BIPOC communities, child care businesses
- Foodshed | Impact area: Women/BIPOC communities, equitable food systems
- Seed Commons | Impact area: Non-extractive loan funds supporting local/community-owned businesses
Is Impact Investing Right For You?
When you’re considering how to most effectively support the causes you care about, the options and details can be overwhelming. To understand if impact investing is right for you, consider the following questions:
- Do you want to use your money to have an impact on the issues you are passionate about?
- Do you find comfort knowing that your money is going to values-aligned and expertly vetted organizations and social enterprises?
- Do you want to avoid the limitations of one traditional avenue of investing?
- Do you prefer to rely on someone else to responsibly manage the details of your investments?
→ View Tides’ Investment policy.
Where Will You Go Next?
Tides is committed to supporting your impact investing journey. We’re here to help you evaluate key factors — such as risk tolerance, investment goals, and social causes — that will shape how you invest in social change and what success looks like to you. More than anything, we remain committed to evolving with the ever-growing field of impact investing and creating promising new opportunities for mission-driven investors who want to build a world of shared prosperity and social justice with us.
→ If this sounds like a step you’re ready to take, we invite you to fill out our Partner With Us form.