Pope Francis has shown support for impact investing as one component of a blended finance approach in which public, philanthropic, and private investment capital are brought together to address key development needs. To date, the Vatican has held three conferences on impact investing, highlighting how faith-based finance can aid refugees, mitigate climate change, and expand access to health care, among other goals.
Despite this high-level endorsement, many Catholic organizations are new to impact investing and still seek guidance in aligning their portfolios with their faith. The Catholic Impact Investing Collaborative (CIIC) was founded in 2014 to help fill this gap. Through its mission of sharing impact investing knowledge and experiences, CIIC brings these organizations together so they can learn from and collaborate with each other.
CIIC steering committee member Pat Dinneen describes her work as an opportunity to integrate her faith and investing expertise to serve the poor. In addition to her service with CIIC, Dinneen has experience in private equity and is a board member of humanitarian agency Catholic Relief Services. “It’s just a dream come true for me to be able to work with other Catholic investors who share common values,” she says.
Sharing Experiences and Knowledge
To build a community of Catholic impact investors, CIIC holds regional gatherings where participants can meet and talk shop. “We deliberately keep them small,” Dinneen says of the gatherings. “They’re usually only about 30 people or less. It’s a sharing of a meal, but also a sharing of stories with the objective of collaboration.”
By connecting experienced impact investors with those who are new to the industry, CIIC allows Catholic organizations to gain wisdom from their peers who have successfully tackled challenges. “It’s a serious and candid discussion about issues that have been encountered and overcome,” Dinneen explains.
CIIC gatherings are what Dinneen calls a “neutral” space, free from marketing. She believes that a focus on professionalism is essential because impact investing is meant to benefit vulnerable communities. “When you’re talking about serving the poor, only the best is good enough,” Dinneen says. “You really have to make sure that your business models, your cost models, your due diligence are rigorous and high quality.”
In addition to holding meetings and facilitating peer-to-peer networking, CIIC spreads the word about impact investing through newsletters, webinars, and speaking engagements.
Ranging from Catholic hospitals and universities to religious orders, humanitarian aid agencies, and financial advisers, CIIC’s membership is diverse. Despite this variety, however, many Catholic organizations share some central issues they strive to address. According to Dinneen, these include reducing poverty in emerging markets—”especially fragile and conflict-afflicted countries where institutional capital fears to tread”—and climate change mitigation and adaptation. The latter has been emphasized by Pope Francis and was a focus of his 2015 encyclical Laudato si’. Other areas of concern common among CIIC members include healthcare, sustainable agriculture, nutrition, and affordable housing.
Still, challenges in getting Catholic organizations to embrace impact investing persist. Some are used to approaching these issues through the lens of philanthropy, for example. “For organizations whose entire mode of operation since inception has been to give away money, it’s really difficult to transform into an organization that invests the money,” Dinneen says. Other Catholics worry that investing may exploit the people they wish to help. Dinneen cites obstacles that surface in broader conversations, too, including the belief that investing for impact cannot generate market-rate returns.
Driving Sustainable Solutions
Dinneen believes it’s possible to overcome these challenges by encouraging mentorship and spreading information about impact investing. When organizations see examples of impact investing in action, they realize that it can benefit both investors and the communities they invest in.
As success stories, Dinneen points to social enterprises that Catholic Relief Services has worked with. “We announced two of them at the Vatican conference last June. One of them was for upgrading infrastructure of water service providers in El Salvador. Another one was for smallholder farmers in Madagascar producing pure vanilla.”
While conventional philanthropy would provide grants to these kinds of initiatives, Dinneen notes that impact investing offers the advantages of scale and sustainability. “When the grant runs out or the charitable donations decrease, the recipient charity may struggle,” she says. Impact investing enables social enterprises to become self-sustaining. “Other advantages are local empowerment of entrepreneurs and communities serving poor and vulnerable populations,” Dinneen adds.
In particular, the initiative to help smallholder farmers in Madagascar illustrates how impact investing can offer sustainable aid. “The grant was running out, and so that was what really spurred Catholic Relief Services on to find a solution to help the smallholder farmers continue with their quest to increase yields and to integrate into the global supply chain. And we did that through a loan instead of a grant,” Dinneen says.
Impact investing is increasing in popularity among faith-based investors, Knowledge @ Wharton reports. Dinneen welcomes the growing interest and encourages Catholic organizations—as well as investors from other faiths—to use impact investing to advance their values.
“The mission is really to build a grassroots movement,” she says. Dinneen’s hope for the Catholic Impact Investing Collaborative is to “motivate people, whether they’re Catholic, whether they’re Jewish or Muslim or Mormon, to start thinking about creative ways to serve the poor and solve some of the root causes of injustice—and to join in the dialogue.”