September 28, 2015
Interviewed by: David Snow
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The Hard Sell of Impact Capital

While he is striving for social outcomes with his Turner Impact Capital, Bobby Turner says that there are investors who are comfortable with the risks that go along with those kinds of investments. And by investing in social causes with revenue streams, like infrastructure and education, the firm’s investments tend to avoid butting heads with philanthropists.

While he is striving for social outcomes with his Turner Impact Capital, Bobby Turner says that there are investors who are comfortable with the risks that go along with those kinds of investments. And by investing in social causes with revenue streams, like infrastructure and education, the firm’s investments tend to avoid butting heads with philanthropists.

The Hard Sell of Impact Capital
With Bobby Turner of Turner Impact Capital

David Snow, Privcap: We’re joined today by Bobby Turner of Turner Impact Capital. Bobby, welcome to Privcap today. Thanks for being here.

Bobby Turner, Turner Impact Capital: Thanks for having me.

Snow: Let’s talk a bit about needing to get investors comfortable with not only the returns they’re going to get and the risk they take on to get those returns, but with the social outcomes you’re seeking. Do they get that? What have the conversations been like with the investors you’ve approached to get involved in your funds?

Turner: I’m encouraged. When you typically put in front of an institutional investor an ERISA fund whose sole responsibility is maximizing a fiduciary responsibility to maximize returns for their investors, the immediate pushback is, “If you’re going to superimpose a social mission, it’s going to come at a sacrifice in yield.” I absolutely disagree with that. What we’re doing is taking advantage of an opportunity where there’s a huge mismatch between supply and demand and where the traditional investor in the space has been the government and/or philanthropy.

Snow: That said, there’s also a growing pool of investor capital that is earmarked for what many call impact capital, correct?

Turner: The reality is [that] most impact capital, SRI or ESG, is targeting more passive investments. These are exchange-traded funds or mutual funds where, first and foremost, they’re doing negative screening, they’re doing divestiture of fossil fuel, weapons of mass destruction. But to be truly proactive in the space you need to morph or migrate over to the private equity side, the private real estate side, where you can really make meaningful, deep-seated, sustainable solutions that are scalable.

Snow: If you sometimes get pushback, or at least questions, from the investor community about how they can get both returns and the social outcomes, as a long-time philanthropist, have you had some conversations with those in the philanthropic world who question whether this sort of for-profit model of effecting change isn’t some perverted form of giving?

Turner: The conversation comes up all the time. I think the reality is [that] most sophisticated philanthropists recognize that most not-for-profits are not necessarily held accountable for their mission.

Now, no one is kidding ourselves. Not every issue facing society is treatable with a sustainable and scalable solution. We’re focused on infrastructure, education, housing and healthcare, where there are revenue streams. There’s insurance for healthcare, there’s Medicaid and MediCal. In housing, there are rents; in education, there are appropriations at the state level. But when we start addressing issues like childhood obesity or teenage pregnancy or recidivism, there’s not necessarily a revenue stream. So, social impact is not going to put philanthropy out of business.

Snow: How scalable is your business—the business of impact capital? Can you see with success your funds growing in size and number?

Turner: I do. I’m excited and I’m encouraged. I wouldn’t have—myself and my colleagues, all 25 of us, wouldn’t have taken this big leap and change in trajectory in our lives.

We recognize that we’re very fortunate in the industry that we’re in and we do have an obligation to give back and to help right the wrongs in society. Also, I believe that making money and making societal change need not be exclusive.

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