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IMPACT INVESTING

What is impact investing?


Impact investing uses return-seeking investments to accomplish social and environmental goals.
Impact investments have a few core characteristics:
o The investor intends to use their investment to generate social and/or environmental
impact
o The investor expects the investment to generate financial returns, or at least return of
their principal investment
o Impact investments can range from below market rate to risk-adjusted market rate
returns. Investments can also be made across asset classes
o The investor is committed to measurement. Investors and investees track social and
environmental performance of investments.
What role does Arabella play in this space?
We help investors look beyond traditional philanthropy and investing approaches to use impact
investing to generate social, environmental, and financial benefits. Specifically, Arabella
supports our clients by providing education, strategy development, opportunity identification,
deal structuring and evaluation.
Our staff members have extensive experience in both the philanthropic and impact investing
communities. We will apply that knowledge to help you and your other advisors build a
comprehensive grant-making and impact investing plan or to expand your existing impact
investing portfolio.
o Educating stakeholders: We will help you build the capacity you need to take advantage of
impact investing opportunities by facilitating a variety of customized education sessions for
individuals at all levels of expertise.
o Developing strategies: We will help you develop the strategies necessary to accomplish
your social and environmental goals by drawing on a broad range of experience helping
clients allocate resources across issues.
o Identifying opportunities: We will help you identify unique investment opportunities from
the pipeline we have built through our work across geographies and sectors, as well as
through specific landscape analyses.
o Analyzing and structuring investments: Our understanding of the context in which
nonprofits and social enterprises operate, coupled with our extensive knowledge of social
and environmental issues, make us ideally suited to partner with you and your other
advisors to structure investments that align with your goals.
o Evaluating investments: We will help you and your advisors measure and understand the
social and financial performance of your impact investments. We will use quantitative and
qualitative methods to study portfolio-wide metrics across asset classes and issue areas to
give you a complete picture
of the impact of your investments.
Also note, that were focused on transaction level work and not thought leadership. We want to
support the growth of the impact investing space through solid transactions.
Why should I pursue impact investing?
The scale of need outstrips grant resources and this is a way to increase your impact.
It allows foundations, families and individuals to align their investing and philanthropic goals.

It allows for the opportunity to respond to market conditions


It increases the availability of appropriate capital for nonprofits and other social enterprises
Leverage of vast government and capital markets assets
Allows investors the opportunity to recycle capital for the future unlike a grant.

What are the ways in which one might pursue impact investing?
Investments can be made in organizations, funds or companies along a continuum of asset
classes. Impact investing, if carried out thoughtfully, can increase the scale of social and
environmental impact, promote the preservation of capital and support the stability and growth
of innovative enterprises.
The following charts highlight the assets classes on the impact investing continuum.

Do I give up returns if I pursue impact investing?


Not necessarily.
As indicated by the graphic above, there are a range of investment opportunities that offer both
below market and market rate returns and the extent of the returns on an investment depend
on the financial and social goals of the investor. However, identifying opportunities that fit their
goals from both a financial and societal perspective can be challenging (and thats where AA
comes in).
Impact Investing opportunities vary widely in terms of strategy, risk, and return potential, with
some products offering a concessionary return and others targeting competitive financial
returns. AA helps investors to focus on understanding the financial integrity, return potential,
and impact philosophy for each potential investment opportunity and to ensure that these are
aligned with their individual goals.
What is your process for identifying deals?
We identify potential opportunities through two key areas
o Networks- we use our deep networks in social enterprise, community development
finance, and philanthropy to keep track on new developments and players in the sector.
We have over 70 professionals that are constantly interacting with potential investees
and we have a structured process for collecting and tracking this information that
positions us to be able
o Fund tracking- we are regularly meeting with funds and intermediaries active in the
impact investing space and we track their activities through an internal database of over
60 funds. Additionally, we track investment opportunities through third party platforms
such as Impact Base, Mission Markets and others.
How do you price your impact investing work is it % of assets deployed or fee based?
Currently, our impact services are fee based.

How do you engage reluctant trustees, staff, etc to accept an impact investing strategy?
Exploring an impact investing strategy can be a daunting effort and Arabella seeks to offers a
strategic facilitation process that seeks to engage all philanthropic stakeholders. By employing a
participatory decision making process we allow all your stakeholders the opportunity to identify
their concerns and, as a group, help you to find solutions that take your stakeholders interests
and concerns into account in the development of your program. This process can be tailor
based on topic area, size of the group and the degree of reluctance by your key stakeholders.