Meet PhilaImpact Fund, Philadelphia's new place-based impact investment fund - Generocity Philly

Funding

Apr. 27, 2018 1:17 pm

Meet PhilaImpact Fund, Philadelphia’s new place-based impact investment fund

The joint initiative from Reinvestment Fund and The Philadelphia Foundation will finance neighborhood development projects in low-income communities.
There’s a new funding jawn joining Philly’s ever-growing impact investing ecosystem.

At SOCAP’s Total Impact Conference today, community foundation The Philadelphia Foundation and asset manager and community development loan-maker Reinvestment Fund are announcing their joint initiative called the PhilaImpact Fund.

The impact investing vehicle will allow each org’s investors to fund development projects in Philadelphia and the counties surrounding it: Chester, Montgomery, Bucks, Delaware, Camden and Burlington.

The partners aim to raise $30 million. Here’s how it will work:

  • Individual and institutional investors can choose to invest via either Reinvestment Fund’s promissory note program …
  • … or a tax-deductible donor-advised fund at The Philadelphia Foundation, both of which will generate interest.
  • Reinvestment Fund will manage the fund and decide how investments will be allocated.
  • All investments will finance local community projects such as health centers, supermarkets and early education facilities in low-income neighborhoods. (One example of a likeminded project previously funded by Reinvestment Fund: the construction of the Grays Ferry Education and Wellness Center in South Philadelphia.)
  • When the investment matures through both channels, the principle will be repaid to the investors.

The Philadelphia Foundation is committing an initial $5 million from its existing endowment while trying to raise additional capital investments via donor-advised funds they manage. Reinvestment Fund wants to match that and is allowing its current investing clients to decide whether they want this asset to be a part of their portfolios.

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The Philadelphia Foundation has made impact investments before, though this will be its largest, wrote President and CEO Pedro Ramos in an email, citing its earlier work with the Harry R. Halloran, Jr. Charitable Trust in funding job creation, education and other impact projects.

Reinvestment Fund, on the other hand, has been making impact investments for three decades, both locally and along the East Coast to Atlanta; for instance, in the past year, it’s launched a $12.5 million clean energy fund and a $10 million pooled pay-for-success fund.

“We have worked with and around The Philadelphia Foundation our entire existence, and Pedro as their new leader has taken up the mantle of affecting some substantial change there,” said Reinvestment Fund President and CEO Don Hinkle-Brown in an interview on Thursday. “They had a desire to create a local investment vehicle. We started a conversation of how we could help.”

“We’re both testing the market,” Hinkle-Brown said. “For us, this is work we do anyway, so this is a low-risk experiment.”

"What it shows is that Philadelphia is becoming a more sophisticated place for affecting change."
Don Hinkle-Brown

Generocity has reported often on impact investing and mission-aligned investing as the future of philanthropy. Ramos said he’s seen the same excitement amongst The Philadelphia Foundation’s individual funders: “We’ve already had interest expressed before we’ve even announced,” he said.

“This is truly a response to initial inquiries, and truly a response to The Philadelphia Foundation taking a really big step in innovation and impact investing,” confirmed Hinkle-Brown.

Why should the average Philadelphian — the non-investors — care about this place-specific fund? The obvious answer is that more money is being funneled to solving Philly problems by those who understand it more intimately.

But on a systems level, Hinkle-Brown said, “what it shows is that Philadelphia is becoming a more sophisticated place for affecting change, and that capital is becoming even more targeted and tailored and aimed for impact.”

And that’s good for the region as a whole.

“Philadelphia is not always known as a place that is ‘together,'” he said. But now, “Philadelphia is ever becoming more organized and effective at organizing people for change.”

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