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'Impact' fund aims to doing good while making money

The Community Foundation for Greater Buffalo has teamed up with a group of corporate, private and philanthropic investors in a new venture to do good in the region, while still making money.

The Western New York Impact Investment Fund, a new for-profit entity launched in August but unveiled this week, is designed to bring together motivated investors to pool their capital for both financial and "social" returns. It will focus on opportunities throughout the eight-county region, not just Erie and Niagara counties.

Specifically, officials will target initiatives in education and workforce development, diversity, neighborhood revitalization, health and environment, and job creation in "more economically challenged neighborhoods and communities," according to a news release announcing the project.

The goal of such "impact investing" is to support businesses and organizations that benefit the community, encouraging those that receive funding to continue their work, while prodding others to join in.

But it's not charity. Unlike a foundation's donations, the fund will still seek market-rate returns through debt and equity investments, as well as other financial tools, the release said. So the investments must still pay off.

Besides the Community Foundation, the founders include the Health Foundation for Western & Central New York, individual investors Thomas Hunt and Andrew J. Rudnick, the John R. Oishei Foundation, the Seymour H. Knox Foundation and R&P Oak Hill. Organizers also hope to attract national foundation investors by offering new investment opportunities in Western New York that fit with those foundations' missions.

The fund's new board hired Thomas P. Quinn, a Western New York native and entrepreneurial veteran, to lead the entity as its first CEO. Quinn was formerly president of a high-growth specialty pharmaceutical company, and previously CEO of a health information-technology firm focused on infection prevention protocol.

“This is a tremendous opportunity to create a new source of flexible capital that will fuel a wide range of opportunities to encourage long-term, sustainable growth in our region,” Quinn said. “What makes this unique is that the funding will incentivize socially minded organizations and businesses to increase their positive impact in our community.”

Impact investing has become a major focus of the Community Foundation, which wants to bring more resources to bear on solving regional problems and improving the community. Experts say such investments are a valuable and increasingly popular way to satisfy both financial and societal goals at the same time, by luring the big dollars normally associated with traditional Wall Street investments.

A study by Global Impact Investing Network and J.P. Morgan Chase & Co., cited by Community Foundation, reported that $77 billion was committed to impact investing nationwide in 2015. That's expected to grow to $650 billion by 2020.

“Recognizing that impact investing is a rapidly growing segment of the investment market across the country, the Community Foundation for Greater Buffalo brought together a group of potential investors to create an entity that could attract a broad range of impact investors from within and beyond our region,” said Community Foundation President and CEO Clotilde Perez-Bode Dedecker.

Foundation leaders commissioned a feasibility study in 2015, which found significant interest in the idea, along with both a ready supply of capital and a demand. A group of investors was then brought together to figure out how to structure the fund, which will be chaired by William Joyce. Andrew J. Rudnick will serve as vice chairman for social impact, while Northrup R. Knox Jr. will be vice chairman for financial impact.

“It wasn’t hard to convince this initial group of investors that Buffalo needed to capitalize on this significant opportunity to generate impact investment capital in our region,” Joyce said. “The need for this specific funding is great and we believe these investments will accelerate the local economic resurgence by supporting organizations and businesses that are providing a financial and social return.”

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