The Impact Investing Boom On Business School Campuses

Jacob Gray, Senior Director of the Wharton Social Impact Initiative. Photo courtesy of The Wharton School

Jacob Gray, senior director of the Wharton Social Impact Initiative. Photo courtesy of The Wharton School

MBA IMPACT FUNDS POPPING UP IN DROVES

At Pennsylvania’s Wharton School, the Wharton Impact Investing Partners, a $500,000 student-run fund, was created six years ago. Currently more than 60 students are on the team, which Jacob Gray says has grown into the most “popular and selective” club on Wharton’s campus. Each year about a third of the class shows up to Gray’s introductory meeting for the Wharton Social Impact Initiative, he says, and while many gravitate back to traditional finance, at least a significant portion are “curious enough to take some kind of content.”

Students at the University of Michigan Ross School of Business also have the opportunity to make impact investments through the Michigan Ross Social Venture Fund. The are two funds at Columbia: Microlumbia, co-founded by MBA students David del Ser Bartolome and Katie Leonberger in 2008, gives MBAs the opportunity to consult and make investments in companies’ existing “under-banked” populations; the Impact Investing Initiative is a multi-disciplinary fund made up of four schools within Columbia, including the business school and the Earth Institute.

BERKELEY DOING BERKELEY THINGS

Back at Berkeley, Finance Professor Adair Morse sits in her office, which backs to eucalyptus stands and construction of Haas’ newest building. Here, she says, impact investing is just Berkeley doing Berkeley things. “We get a lot of MBAs who come to Berkeley because it’s Berkeley,” she points out. “And Berkeley is about not just concern with financial health, but also social agenda and improving the world — the kind of things that make Berkeley, Berkeley.”

While the school hasn’t built any specific impact investment-related curriculum, Morse says she and other professors in traditional business disciplines bake a side of social impact into their courses. “Although we could easily fill a class for impact investing, we look at it like ethics,” she says. “Do you want to teach a class on ethics on its own? Or do you want to weave it into the other areas?” Case in point is her New Venture Finance course. Any Haas MBA keen on entrepreneurship takes it. They also receive a hefty dose of impact investing content, which Morse says takes up a third of the course. And that’s totally fine with most students, she says. “The millennials are much more interested in having dual returns, and the MBAs are moving that way strongly, from what we’ve seen,” she says. “A few years ago, that wasn’t mainstream MBA, and now it’s completely mainstream MBA.”

Most popular for impact investing-minded Haas MBAs is the Haas Socially Responsible Investment Fund, which the school says is the first and most robust of its kind. Each year, 16 students are selected from an applicant pool to manage the fund, which currently is worth more than $2.6 million. Seren Pendleton-Knoll, the program director of the Haas Center for Responsible Business, is quick to rattle off key points about the fund’s success — most notably, she says, that it has “realized a total return of 0.1721%” in the past year, outperforming the “iShares Russell 3000 ETF’s total return of -0.36% by 53.5 basis points.”

IS IT IMPACT INVESTING? SRI? ESG? SOMETHING ELSE?!

Adair Morse is an award-winning finance professor at Berkeley's Haas School of Business. Photos courtesy of Berkeley-Haas

Adair Morse is an award-winning finance professor at Berkeley’s Haas School of Business. Photos courtesy of Berkeley-Haas

If all this seems like a hodgepodge of do-gooder-ness pouring in from all directions, that’s because, in a way, it is.

“The struggle we have with impact investing is meshing too many things under one term,” Morse says. “For us, the goal at the end of all of this is to get more private capital going to investments that have some sort of externality that brings social good to something, whether it’s jobs, environment, or poverty.”

If there is a guiding force for impact investing at the MBA level, it’s the MBA Impact Investing Network and Training (MIINT). Founded in 2011 by Bridges Ventures and the Wharton Social Impact Initiative, the program now has a network of more than 25 of the world’s strongest business schools. Each year, students or teams pick a startup and develop an investment pitch. Judges include Bridges Ventures partners and higher-ups from Bank of America, Merrill Lynch, and Goldman Sachs. Last year, more than 600 students from around the globe competed.

“There’s a huge interest among students in sustainable business, social entrepreneurship, and impact investing,” Bridges Ventures partner Brian Trelstad told We See Genius in April after the conclusion of this year’s competition. “But there are almost no courses in this. And it’s sort of channeling this impetus or impulse of the students into an experiential opportunity. To learn how to be an impact investor, you have to make investment decisions. And to make investment decisions, you have to evaluate a company.”