Impact Investing 2.0

July 15, 2024

By Jamie Schloegel, Chief Executive Officer

Creating Positive Change and Financial Return

The word ‘investment’ has evolved to mean much more than just financial success. One prime example of this new understanding is impact investing. It suggests our investment choices today should work towards a better, more equitable and sustainable future. In this future, an ‘investor’ is someone who not only has money, but also cares about society and the environment.

Impact investing elevates community change, and it goes beyond just putting a Corporate Social Responsibility badge on your webpage or adding an environmental, social, and governance lens to your investment portfolio. Instead, it’s at the heart of financial choices, bringing real, lasting results that affect many generations to come.

What is Impact Investing Really About?

At its core, impact investing is a strategy that aims for more than just financial returns. It’s also about making a real, positive difference in society and the environment.

This goes much further than what we’ve seen before. It’s about using financial power to support projects that truly matter, and not just through charitable giving. Impact investors look at their portfolios and think about more than just profitability. They consider the planet, its people, and the future we’re creating.

La Crosse Area Community Foundation Committed to Local Impact Investing

At La Crosse Area Community Foundation, we work for positive change. We hope it’s obvious that we exercise that commitment in our grantmaking decisions. One particularly successful initiative connected sustainability and education. An LACF grant helped install renewable energy sources in schools, which then became a practical tool for teaching students about the importance of their actions on the environment. The impact of this grant is not just in its yearly statistics but in the understanding of each student who leaves the classroom with a newfound respect for nature.

Impact investing is an additional approach to tackle challenges in our community that granting alone can’t fix. When impact investing by foundations happens, we can tackle challenges differently than providing a one-time grant. And with the adoption of our latest strategic plan, we’ve been investigating local impact investing opportunities and seeking to understand how other community foundations have successfully done this work.

Our first impact investment is now underway with Coulee Cap’s Haven on Main development, a project to build affordable housing for adults with disabilities, the local workforce, seniors, and families in downtown La Crosse. The city of La Crosse has already approved the $22 million project, and the Wisconsin Housing and Economic Development Authority, or WHEDA, recently announced an allocation of tax credits to the project, resulting in more than $12 million. La Crosse Area Community Foundation is also investing $508,000 in the project, which is expected to bring a 5.44% return over the next 15 years.

In the future, you’ll also see the option for donors to direct their fund’s assets to LACF’s local impact investment pool. LACF’s board of directors will use this pool to advance the Foundation’s commitment to community leadership and will seek local investment opportunities that:

• Advance wealth-building efforts for La Crosse Area residents.
• Equip residents with the opportunity to contribute to the region’s economic performance.
• Intentionally address capital access and deployment challenges for under-resourced communities and nonprofit organizations.

Local impact investments are another way LACF can demonstrate its commitment to diversity, equity, inclusion and belonging in La Crosse County. When our investments help disadvantaged communities in our region, they elevate those helped, creating a cycle of growth that returns to the investor in lucrative, surprising, and often positive ways. Impact investments fuel innovation and growth, giving it purpose and a clear path to a better future.

The Challenge for Investors

It’s not easy to switch to impact investing. The old investment models, which focus purely on financial gains, persist. However, new investors and changes in society and government are pushing for a more holistic approach.

Balancing profits with ethical actions takes skill, but it’s getting easier. And the number of experts to help is growing. Today, there’s more (and growing) room for investments with a purpose, for opportunities to invest with our hearts as well as our minds. At LACF, we’re grateful to learn from other community foundations across the country who have demonstrated how impact investing can significantly increase the impact of their mission.

Combining Purpose and Profit

In this view of Impact Investing 2.0, it’s clear that purpose and profit are not in conflict. Both are achievable. Investing is about financial gain, of course, but it’s also about trusting businesses and financial markets, leaving a legacy for our children, and balancing purpose with prosperity.

Impact investing is a call to action for those who care. It’s a step toward a future where investing means caring for our world and making money. It’s about rewriting the definition of investment. And it’s a hopeful narrative that speaks to investors who want to make money and make a difference.