This blog post has been written by the Ti Group, Access’s learning partner. It is based on interviews with 12 witnesses who were or are directly involved in the process as well as a review of all of the internal documentation as well as what is public. Where an opinion is expressed, this is the TI Group’s interpretation of these sources unless otherwise stated. The TI Group would like to thank all of those who gave up their time for interviews and provided full access to documents.

Previously in the story of Total Impact… we learned that there might be potential for others to adapt elements of Total Impact and apply it in their contexts. In the world after Access, The TI Group wonder why impact and investment were separated in the first place. What might this new normal look like?

If Total Impact is to be more than a footnote in the history of investing a foundation’s money, it has to mean something to lots of foundations. One opportunity for Access would be to find some allies and friends to do some wider testing with more voices and more money; some fundamental shifts in the asset management market; adapting the bullseye model for wider use; and maybe even a change in the law to oblige charities to invest their money for good.

Strength in Numbers

Scaling-up with allies and friends would perhaps provide a new pool of money, which might attract some more asset managers into the conversation. Maybe a coalition of foundations might even be matched with a network of asset managers, each of whom could bring their own specialist talents to the team? This feels like a better long-term way to grow Total Impact literacy in the market than the likely alternative where a few asset managers compete for market share and scale. Disadvantages with the latter scenario are that, in trying to appeal to everyone, the small number of asset managers that are left in the race might well end up diluting the concept of Total Impact to capture as many clients as possible, or one manager founders and clients are left with little choice, inhibiting the adoption of Total Impact.

Perhaps other foundations would find it helpful to have a Total Impact specialist join their investment committee(s)? One interviewee pointed out that “if we’re really going to have an impact on financial services we need the right people on committees, holding fund managers to account, guiding and supporting… Maybe a pot of Access’ money could potentially go to paying for an impact specialist investment advisor to sit on an investment committee?” Perhaps Access could aim some of its money at this, as part of its mandate to ‘champion the market’ and for capacity-building? Could Access offer its Endowment Investment Committee members to advise other foundations if they’d find it helpful? Or maybe support the changemakers inside asset managers or foundations who want to develop their ideas for Total Impact investing? Maybe there’s something in the idea of curating a learning tour for aspiring foundation teams or asset managers to hear from those who have tried a version of total impact; on a seeing-is-believing basis?

Building a movement for Total Impact could include all of these things.

Bullseye Sight

As we’ve seen in this story of Total Impact, a bullseye model is not so much an answer for impact as a platform for debate. One interviewee observed that “Access doesn’t want other foundations to copy their investment choices, but to learn how to navigate the process and improve the levels of literacy in this space.” Access’ version fits its mission to serve the impact of UK charities and social enterprises; Others’ versions may be tilted more towards impact intensity for example, whilst being less specific about the types of organisation included. How could a bullseye be adapted to other foundations and trusts so it aligns with their own missions? And how does a bullseye change over time? Access might help figure that out as part of its learning and sharing mandate.

Furthermore, what does it look like if you’re not spending down your endowment? Foundations with a permanent endowment applying the bullseye model would likely open up the choice of investments and maybe increase the level of impact at the same time. Several interviewees observed that equity investments could be higher and the appetite for risk could potentially increase. There are some other unanswered questions Access is working on too: for example, how Access’s investments and programmes could become even closer? One interviewee wanted to see an integrated report of Access’ impact across the endowment and the programmes, using the same criteria for both. Moving from reporting to governance, maybe some of the endowment investment team might be part of the decision-making process for programmes and vice versa?

Total Impact v2.0

What might the next iteration of Total Impact investing look like?

Although it couldn’t perhaps be described as Total Impact (yet), is there a case for more foundations to experiment with impact investing through carving-out some of their endowment? This might help with the natural cautiousness of trustees when it comes to new directions in finance and, at the same time, increase the impact literacy of asset managers and internal teams.

One interviewee hoped that what is sometimes “25% [of a portfolio] in ESG becomes 25% into pure impact”. Similarly, another commented that “If everyone moved all of their portfolio to the outer ring [of the bullseye], that would have a huge impact on investment managers and therefore on underlying businesses. And then it’s just step by step towards doing something better than before.”

A Total Impact approach could certainly be taken to the measurement of impact, which would at least begin to give trustees visibility of the impact balance sheet to put alongside the financial balance sheet.

This might open up ideas like, for example, investing in a company that mitigates its own environmental, social and governance (ESG) risks, so the investing foundation has fewer problems to fix using its grant spending. The Total Impact view of this could be the equivalent of the NHS spending money on public health and prevention of illnesses, so that it doesn’t have to spend multiple times that amount on fixing the consequences of ill health.

Maybe there’s something about the language that needs to change too? Instead of the binary separation of grant-making for impact, from investing for financial returns, Total Impact might become the common denominator. It could be the aligning force that allows all of those things to be thought of on a spectrum: from a return of -100% to perhaps 5% in today’s financial climate. That would change the debate.

But maybe it’s not just the debate that needs to change, maybe it’s the law…

(Not) in my name?

At the moment the incentive for acting on Total Impact is quite low for most charities, including many foundations, because they are not asked to invest in line with their charitable objects. Some interviewees alluded to a wider sense of inertia in the investment of endowments that pursues the norms of financial markets rather than connecting with the impact of what they invest in.

However, things are changing. In January 2020, the Charity Commission launched a consultation into responsible investment and how charities can align their investments with their aims. In addition, Access is part of a coalition of organisations currently calling for a change in charity law and guidance about investing for impact. The Association of Charitable Foundations has also convened an Intentional Investing Group (of which Access is a part) and included investment (aligning programmes and investments on purpose) as one of its pillars for a stronger Foundation.

This brings our story full circle: back to the crisis at Comic Relief (they weren’t the only ones) investing in alcohol and weapons. They were acting in line with Charity Commission guidelines and the law, but not in line with their own values or the public view of how charities should behave when investing their money.

The story of Total Impact is just beginning.

If you’d like to be a part of it, or if you’re feeling quizzical or critical of anything in the story so far, please feel free to get in touch info@access-si.org.uk. Or read our latest impact report here. We’d love to hear from you.