Katherine Fulton opened her address by stating, “I’m not sure I can give the same talk today that I might have given two weeks ago,” a reference to the economic uncertainty that currently exists.  Having spent the last year working with a number of major U.S. foundations, she has a unique perspective on the “complexities of the moment” as they relate to social capital markets.  Fulton and her colleagues are working on a blueprint on how to accelerate this space.  She noted that a convergence of forces—money seeking diversification, openings for policy change, growing inequity and environmental crisis, values drive investors and consumers, etc.—has created a situation in which investing for impact is now “locked into the system.”  But Fulton questioned, “Can it take off? What is required? Will this remain a small, disorganized, under-leveraged niche [or will it in fact take off?]”

Fulton stated that, in order for investing for impact to succeed, we need to confront risk head-on.  One risk is that investing for impact will be too hard to do.  She said we need to take a number of steps to make it easier.  The second risk is that it will be too easy to do.  There is a major pull toward what she calls “greenwashing,” i.e. to things that claim to be “good” investments but are not.

From a philanthropic perspective, I appreciated Fulton’s reference to “Yin Yang Deals,” which she described as a mix of philanthropic and “Financial First” investments.  Together, the two can result in “Impact First” investments, an area in which SoCap08 attendees are clearly most interested and engaged.

Fulton argued that the social investing field needs to become more coordinated.  She made a number of recommendations, including industry defining investment funds, a mezzanine financing structure, policy/regulatory change, and industry standard metrics.

She said that metrics are especially important to the future of the field.  “Financial First” investors might need one type of metrics, while “Impact First” investors might need another.  Fulton argues that there needs to be “collective structures to pull this off.”  (She referenced the LEED Green Building Rating System as an example of how industry-wide standards can be beneficial.)

Fulton clarified that this kind of investing is not a substitute for philanthropy or government, but rather a viable, alternative to existing approaches.