Place-Based Impact Investing

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Place-based impact investing refers to the local deployment of impact capital – that is, investments made with the intent to yield both financial and social and/or environmental returns—to address the needs of marginalized communities. Foundations, CDFIs, private investors, and others can affect beneficial changes in their city, state, or region through their direct impact investments as well as by influencing larger systemic changes through influencing other forms of capital and empowering local entrepreneurs and community stakeholders.

The Urban Institute, in collaboration with the John D. and Catherine T. MacArthur Foundation and Mission Investors Exchange, is developing an evidence-based toolkit to advance the concept and inform the practice of place-based impact investing. This project focuses on understanding the roles of foundations and collaborative models in nurturing the development of place-based impact investing efforts. Read more about this effort in the project fact sheet.

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Seeking ways to maximize the social and economic returns of their place-based impact investments, foundations, CDFIs, private investors, and others are turning to collaboration. To support these efforts and facilitate lesson sharing, the Urban Institute and Mission Investors Exchange have produced a set of three practitioner briefs designed to focus on elements of place-based impact investing that research and conversations with practitioners have identified as opportunities for knowledge exchange. Each brief presents a concept, highlights practitioner examples, and elevates lessons from the field.

The briefs are:

Place-Based Impact Investing Practitioner Briefs

This report is intended as a practical tool for those seeking to understand how capital does and does not flow to communities, businesses, and households. This can inform efforts by community developers to identify projects in need of financing, raise capital, and design and market new financial products and services. We provide a concise how-to guide across five approaches to assessing community need, a four-step process to study capital flows, and eleven approaches to determining capital gaps. To help ground this, we provide examples drawing from original data about the Twin Cities of Minneapolis and St. Paul, Minnesota.

Measuring Community Needs, Capital Flows, and Capital Gaps

Collaborative placed-based impact investing, an emergent phenomenon in philanthropy, is a product of collective impact, place-based philanthropy, and impact investing. Through these collective efforts, foundations, other organizations, and individuals form partnerships as a component of their local impact investing activities.

Although collaborative place-based impact investing can create more inclusive local economies, this work involves complicated trade-offs and considerations. In this report, we identify and classify collaborative efforts that are taking shape, to understand the complexities of this burgeoning field.

We shine a light on this practice so others can learn from the different forms, experiences, and considerations of their philanthropy peers. This report provides a baseline to reflect upon as philanthropy continues to tweak and develop these practices.

Investing Together: Emerging Approaches in Collaborative Place-Based Impact Investing