New York City has emerged as a global hub for impact investing in recent years. With its dense concentration of financial institutions, major foundations, nonprofits, and social enterprises, the city provides fertile ground for deploying capital towards positive social and environmental change. This article will explore how New York City became the epicenter of impact investing and provide an overview of the key players driving the movement.
Impact investing seeks to generate financial returns alongside positive social and environmental impact. The sector has experienced explosive growth, with over $715 billion in impact investing assets now under management globally. New York City is home to many of the pioneering foundations, financial institutions, family offices, and angel networks at the forefront of impact investing’s growth.
philanthropic foundations planted early seeds
Many of the early pioneers in impact investing emerged from New York City’s robust philanthropic sector. Foundations like Rockefeller, Ford, and MacArthur were early adopters, using program-related investments from their endowments to fund solutions to social issues aligned with their missions. This built a proof point that impact investments could generate returns while creating social good.
Other New York foundations followed suit, like the Robin Hood Foundation, which fights poverty in NYC. Robin Hood made program-related investments to scale poverty-fighting nonprofits and socially-driven businesses. The Rockefeller Foundation also founded the Global Impact Investing Network in New York, which connected global impact investors to strengthen the practice.
Wall Street Adds Momentum
Wall Street powerhouses have added significant momentum to New York’s rise as an impact investing epicenter. Major firms like Blackrock, Goldman Sachs, Morgan Stanley, and JPMorgan Chase have launched multi-billion dollar impact investing funds and incubated new mechanisms like social impact bonds. The presence of these major mainstream financial institutions has brought increased credibility.
Smaller, specialized impact investing firms and funds have also proliferated in New York City, like Leapfrog Investments and Blue like an Orange Sustainable Capital. Incubators like Echoing Green support emerging social entrepreneurs in developing impact investing strategies.
Nonprofits embrace revenue-generating models
New York City’s nonprofits have also embraced impact investing as a way to generate sustainable revenue without relying solely on donations. Organizations like Rubicon Programs have launched social enterprises to employ and provide job training to their beneficiaries. Others, like Nest, leverage funding from impact investors to provide affordable housing. This enables nonprofits to scale and increase their positive impact.
Additionally, many nonprofits have added impact investing to their endowment management strategy. By aligning endowment investments with their social mission, nonprofits multiply their impact.
Government lays groundwork for growth
New York City government has also helped catalyze impact investing’s rise. Initiatives like the NYC Impact Investment Fund provide critical seed capital for socially-focused small businesses. And partnerships between city agencies and impact investing firms help develop impactful programs in areas like affordable housing and worker cooperatives.
Meanwhile, New York State government boosted impact investing by passing benefit corporation legislation in 2011. This legal structure makes it easier for businesses to embed a social mission into their corporate charter.
With its dense network of major foundations, Wall Street firms, nonprofits, and government support, New York City has become the global epicenter of impact investing. The sector will continue to grow as more mainstream investors wake up to the power of aligning capital with social good.