APPROACH

Broader Set of Tools for Impact

Conventional impact investors usually use two kinds of capital – investment capital and philanthropic capital. Policy-Enhanced Impact Investing, however, uses a broader range of capital types to create more social impact, such as giving advocacy-focused investments via 501(c)(4) social welfare organizations and making direct political donations. Both are not tax-deductible, but the 501(c)(4) funds have more leeway in how they can be used, such as for direct lobbying activities. This expanded toolkit includes: 

  • Market Rate: Fund Investment, Direct Investment (Equity, Debt, etc.) 

  • Catalytic Capital: Seeding, Sustaining, Scaling 

  • Philanthropy: Movement-Building (c3), Advocacy-Related (c4) 

  • Power-Building: Direct Political Spend 

  • Collaborative: Donor Collaboratives, Professional Associations (c6), Shareholder Engagement 

But, capital deployment of capital is only part of the equation. Helping shape policy and strategically using investor voices add to efforts to achieve policy change are important parts of the approach. Key to this is developing an engagement plan in partnership with other allies.

Two-Phased Approach

For Policy-Enhanced Impact Investors, we suggest taking a two-phase approach to the work. The first is an opportunity assessment phase to help inform whether it makes sense to engage in policy work. The second is active engagement.

Phase 1: Assessing Opportunities

  • Impact Assessment

    Analyze the relationship between investments and current and future policy landscapes, including the regulatory environment, potential policy barriers, and advocacy opportunities. This includes identifying policy-related risks and developing strategies to mitigate them. Alongside risks, identifying unique opportunities achievable through proactive policy engagement.

  • Stakeholder Analysis

    Evaluate the stakeholders involved, such as policymakers, advocacy groups, community organizations, and other influential entities that may impact the investment’s success. Understanding the ecosystem surrounding an investment helps identify key allies for collaboration and potential opposition to navigate, ensuring a strategic approach to engagement and implementation.

  • Alignment with Social Goals

    Ensure that the investment not only aligns with broader social and environmental goals but also actively supports initiatives that drive meaningful and sustainable progress. This alignment enhances the potential of the investment to contribute to systemic change, creating lasting benefits for both society and the environment.

Phase 2: Engagement

  • Policy Advocacy

    Lobbying, building coalitions, and supporting public campaigns to influence policy changes that benefit an issue area and its broader goals.

  • Public Engagement

    Utilizing media and public relations strategies to raise awareness and build support for the investment’s objectives.

  • Partnerships

    Joining with other investors, corporations, nonprofits, advocacy groups, and stakeholders to create a united front for policy change.

  • Ongoing Evaluation

    Continuously monitor the policy landscape and adjust strategies to ensure the investment aligns with its advocacy goals.