The emerging field of impact investing — deploying money to gain a financial and social or environmental return — continues to grow and mature. Last year alone, $35 billion was invested in the space globally, according to data from the Global Impact Investing Network’s annual survey of worldwide impact investing firms. This year, respondents of the survey plan on increasing that amount by 8% to more than $38 billion.
Unsurprisingly, business schools are trying to keep pace with the student and academic interest surrounding the space. The latest major curricular change to happen at an elite business school recently came from the University of California-Berkeley Haas School of Business. The Northern California university launched an Impact Investing Practicum to complement its New Venture Finance course that has been offered for a few years now. The practicum, which ran for eight weeks during the latter half of the semester and is run through the schools Center for Responsible Business, matched eight full-time MBA students with four companies including Patagonia’s Tin Shed Ventures, Cambridge Associates, The SF Foundation, and Community Investment Management.
“This practicum that is a piece of a class and marrying a specific issue within a course is an interesting option that I have not seen done before,” says Nora Silver, the faculty director and an adjunct professor at the Center for Social Sector Leadership at Haas. Silver co-taught the practicum with Adair Morse, who is an associate professor in finance at Haas and teaches the New Venture Finance course.
WORKING CLOSELY WITH THE C-SUITE
After whittling down the applications of more than 30 to the final eight selected to take the course and teamed them up based on their backgrounds and interests. Each team had one person with a finance-heavy background and one with more experience in the social sector, Silver explains. The goal? Solve a serious and real question for their matched company. At Patagonia’s Tin Shed Ventures, which is the outdoor clothing and gear company’s investment arm, the goal was to offset Patagonia’s global footprint by developing additional sources of renewable energy in “core Patagonia markets,” the school says. Students identified the best opportunity based on geography, the financing structure, and renewable energy structure.
For Cambridge Associates, an investment services company, the student team conducted research and identified the most attractive near-term investments for the financial inclusion sector, which including suggesting sever sample investments. Students teamed with The San Francisco Foundation proposed a mission-aligned investment to advance racial and economic equity within the five Bay Area counties. Lastly, students working with San Francisco-based Community Investment Management focused on a plan for deploying capital, developing a framework and measuring impact within the education and healthcare sectors.
“I had the opportunity to work directly with the foundation’s CFO each week and have meaningful discussions about how to craft an impact investing strategy that would capture the potential of the foundation’s unique position and meet the critical needs of the community it is serving,” Elizabeth Foster, who graduated from Haas with her MBA last month, said in a prepared statement from the school. “The significance and impact of my recommendations never escaped me.”
SOLVING ‘A REAL PUZZLE’
For Silver, the practicum came down to one general thing: help make Haas graduates more competitive in a still small, and highly competitive industry. Students interested in the impact investing space come from two camps, Silver reasons. They are generally either from finance or the social sector. “Both of those groups needed something more in order to qualify them in impact investing,” Silver points out. The students coming from the social sector needed some more finance chops and the finance group needed some social sector experience. “We felt the more hands-on experience students had, along with the instruction, the better able they’d be to show their work as they interviewed in the field,” Silver says. “In this case, we paired students with one heavy on finance and one heavy on social impact to be able to answer the questions.”
It’s similar to Silver and Morse. Silver, for example, has a background in social impact and creating similar experiential programs. Meanwhile, Morse has a traditional finance lecturer background. “We wanted to pair it with the best of our teaching in the finance field and immediately have people go out and work with clients on challenging problems,” Silver says of the creation of the program.
Not to mention, it’s still a challenging and intriguing field, Silver says.
“The financial metrics are much clearer and better-understood than the social metrics,” she says. “Marrying the two is frankly a real puzzle. And we wanted to bring our best thinking to the puzzle.”
PRACTICUM COULD GROW INTO A FULL-FLEDGED COURSE
Next year, Silver says, they might expand the teams to three members each. They might also “spread the wealth” and match with different clients, but for now, Silver plans to keep it around the same amount of clients. But she can envision it growing into Social Sector Solutions, a similar experiential model that is a semester-long course with around 70 students and teams of five or six students each. “This felt very similar to that,” Silver said of the creation of both courses. That course was created with just one client and then slowly grew. “If we grow, we’ll grow incrementally rather than explode it. We want to get this right,” Silver says.
Either way, students and companies alike reported enjoying and benefitting from the experience.
“Working with our client gave me true insight into the current challenges and opportunities in the impact investing sector,” Rebecca Rowe, a first-year MBA said in a prepared statement from the school. “The class was a unique opportunity to test learnings from the classroom in the “real-world,” and the work we accomplished with our client meaningfully informed their longer-term strategy and has already led to tangible impact.”