By: Sanjana Seth, Jacqulyn Washington, Tom Woelfel, and Brenna McCallick
Pacific Community Ventures (PCV) is excited to announce the release of Meeting the Moment: U.S. Impact Investing Policy, Inequality and COVID-19 Recovery. This discussion paper examines how impact investing policy can be leveraged at the federal level to support the impact investing ecosystem in harnessing private capital to address inequality and catalyze COVID-19 recovery in the U.S.
With support from the Tipping Point Fund on Impact Investing (TPF), PCV’s research team conducted a detailed scan of current and proposed impact investing policies at the state, local, and federal levels in the U.S., as well as internationally that could be adapted to the federal level to address inequality and support COVID-19 recovery. The goal of the research was to propose policy ideas that would drive greater and more targeted investment toward the sectors and communities most adversely affected by the COVID-19 pandemic and that have experienced the decades-long effects of inequality in the U.S.
This paper is intended to stimulate dialogue and elicit feedback from the impact investing field, policymakers, and civil society that will support renewed discussions on public policy and impact investing. As such, we invite readers to share feedback on the policy ideas presented in the discussion paper by filling out our survey. We also plan to host listening sessions in the weeks ahead to continue the dialogue. If you’re interested in attending a session, please let us know here.
Understanding the role of policy in impact investing and the opportunity to use it in this moment of crisis is critical to growing the market and ensuring impact investing delivers meaningful benefits for U.S. communities and can serve as a model for a more equitable recovery.
Which policy ideas are highlighted in the paper?
The PCV research team utilized a framework first presented in Impact Investing: A Policy Framework for Policy Design and Analysis (2011) to illustrate the different ways policy can advance impact investing in the U.S. This framework divides impact investing policies into three distinct categories:
- Sector targets, types of policies that focus on advancing specific goals and achieving targeted outcomes in particular impact sectors or themes through impact investing.
- Market infrastructure, types of policies that shape market conditions by boosting the supply of private capital for impact investment, directing existing investment capital toward more socially beneficial investments, or supporting the development of investable opportunities
- Public sector leadership and coordination, types of policy infrastructure, institutional knowledge, and capacity among high-level public leaders to convene stakeholders, collaborate with impact investors, and educate and disseminate information among other policymakers and the broader public
In Meeting the Moment, sector targets are further categorized according to key impact themes that represent high priority areas for collective action in COVID-19 recovery: a) health and housing, b) small business, c) quality jobs and workforce development, and d) sustainable communities. See below for a list of policy ideas described in the research:
The events of 2020 have produced undeniable anguish: as over two-hundred thousand Americans perished from COVID-19, millions lost their jobs in the wake of business shutdowns and communities across the country became the backdrop for mass protests against racial injustice and calls for criminal justice reform. Low-income communities and communities of color have borne the brunt of the pandemic and these realities have compounded the devastating effects of existing economic inequality that already plagued these communities. Despite the momentum in responding to present crises, the effects of COVID-19 are likely to be felt for many years to come. Like the 2008 global financial crisis, the economic shock caused by the pandemic will only exacerbate existing inequality in the U.S.
Given this reality, impact investors must meet this moment by deploying private capital in support of positive outcomes for those most in need. This is not business as usual; and impact investors can no longer afford to treat public policy as separate from the field’s work. The impact investing community must engage policymakers and civil society in conversation about smart, new federal impact investing policy that is intentionally designed to address inequality and support COVID-19 recovery.
By pushing for new ways to unlock untapped private capital through sound federal policy, the impact investing community can help build back a stronger, more equitable economy, identifying opportunities that will meaningfully transform industries and communities while centering historically marginalized groups. Through a more active partnership with government, impact investors can support long-term housing affordability; innovative healthcare delivery oriented around the social determinants of health; small business initiatives that prioritize investment in entrepreneurs of color; workforce and quality job opportunities that strengthen worker protections, increase skills, and promote employee ownership and wealth-building; and renewable energy and broadband infrastructure projects that benefit vulnerable and historically excluded communities.
To support the conversation on impact investing policy, in the weeks ahead, PCV will hold listening sessions and interviews to solicit feedback on the ideas highlighted in the discussion paper and to hear from others on promising policy ideas and recommendations. Based on this feedback, PCV will identify a shortlist of promising impact investing policy ideas for additional research in a subsequent white paper.
We hope that Meeting the Moment sparks renewed interest and discussion in impact investing policy and that this research can serve as a helpful resource as the U.S. Impact Investing Alliance develops a comprehensive impact investing policy agenda for consideration by the Federal Government. While the months ahead are sure to continue to test our collective resilience, we are hopeful that we can come together as a field and utilize impact investing to its fullest potential in the push for a stronger and more equitable America.