New LP Advisory Council Established to Advance Impact Investing in the Private Market

Initiative of Impact Capital Managers brings together twelve leading allocators to focus on best practices, effective regulation, and scale with integrity

New York, New York - July 6, 2023 Impact Capital Managers (ICM), an association of market-rate private capital funds seeking to advance members’ performance and to scale the marketplace with integrity and authenticity, today announced the launch of a new high level LP Advisory Council (“Council”) to accelerate progress toward shared objectives in private capital impact investing. The new body is intentionally non-transactional to encourage candid sharing of key challenges and opportunities between GP and limited partner stakeholder groups.

The Council’s founding members includes twelve impact investing leaders who advise or manage significant assets, have established track records deploying capital into market-rate impact strategies, and who represent a variety of allocator types – from family offices, to foundations, to registered investment advisors. Inaugural Council members include Mark Berryman, Caprock; Anna Snider, Bank of America; Jessica Matthews, J.P. Morgan Private Bank; Tom Mitchell, Cambridge Associates; Andrew Lee, UBS; Jennifer Kenning, Align Impact; Christine Looney, Ford Foundation; Cynthia Muller, W. K. Kellogg Foundation; Jonathan Hirschtritt, GCM Grosvenor; Ron Albahary, Laird Norton; Sanjeev Krishnan, of S2G Ventures and Builders Vision; and Emily Thomas, Morgan Stanley.

The ICM Spring Convening in Philadelphia in 2023 served as a preliminary launch for the Council. Three Council members addressed the results of a recent survey of ICM members at the meeting on May 4 in order to pinpoint problems as well as chances for collaboration and advancement. Four immediate ways the Council can be useful to fund managers were discussed during the discussion: improving the efficiency of the capital raising process for quality impact funds; exchanging best practices; adopting standardized frameworks; and promoting ethical market scaling through advocacy and public thought leadership. According to one survey respondent, “The fund due diligence process can be opaque...The more the Council can help standardize this and all reporting aspects, the more efficient our impact investing community can become, and the more energy flows into making and supporting great impact investments and entrepreneurs.”

The formation of the Council comes on the heels of ICM Institute and Morrison Foerster’s new research, Strengthening Outcomes: Impact and Financial Value at Exit. The study underscores the size of the private capital impact market – estimated to be north of $322 billion as of last year – and the growing track record of funds that invest with an impact objective to drive superior financial returns for investors. Across a dataset of ~230 member exits, 65% met or exceeded financial return expectations, and 81% met or exceeded impact expectations. The study also suggests that to move even more capital off the sidelines and into credible impact strategies, transparency and standards are key as LPs are increasingly demanding evidence that funds are meeting impact obligations. Because allocators may co-invest with fund managers, LPs and GPs are further incentivized to develop effective standards together.

“Whether it’s impact-linked compensation, the effect of anti-ESG rhetoric on impact investing strategies, or the do’s and don’ts of a successful pitch, there are myriad instances where private capital impact funds can benefit from an honest take from limited partners,” said Marieke Spence, ICM Executive Director. “On the flipside, at ICM we field similar queries from limited partners who want to know: what do our members really think about co-investing with their LPs? Do managers want complete freedom to report their fund’s impact, or would they welcome common guidelines? On these and other questions our hope is that this new LP Advisory Council and ICM members can deliver collective insights, informed by actual experience, for the benefit of entire field.”

Mark Berryman, Managing Director of Impact Investments at Caprock and inaugural chair of the Council, said: “On behalf of the Council members, I can say we are truly excited to be part of this important ICM initiative. Together, we will actively promote communication and knowledge sharing among ICM members, seek to standardize impact reporting, advocate on behalf of ICM members, and strive to mobilize more capital to private impact investing.”

The Council’s early emphasis, given the current challenging fundraising environment and rapidly evolving reporting landscape, may be a set of recommendations on efficient impact capital formation and best practices for both LPs and GPs on the content and cadence of impact reporting. Memos on both topics are expected by end of 2023.

In the future, ICM may partner with the Council to develop practical tools or frameworks to support other shared priority areas or publish joint research. For now, ICM and the Council are working to pair their GP survey results with a deeper understanding of what LPs hope to gain from this closer partnership. Results will inform a slate of discrete projects in the year ahead.

About Impact Capital Managers and the ICM Institute

The Impact Capital Managers mission is to accelerate the performance of its members and to scale the private capital impact investing marketplace with integrity and authenticity. The organization accomplishes this through its membership association, which includes 100+ funds representing more than $70B in impact-focused capital deployed across more than 1500 portfolio companies, and through collaborating on field-building initiatives, partnerships, and research with its affiliated organization, the ICM Institute. As part of its commitment to grow the marketplace with integrity, association members must meet certain criteria including standards on impact measurement and management. The ICM Institute is a proud organizer of the Mosaic Fellowship and with Achieve Partners, producer of the Better Money, Better World podcast. For more information visit www.impactcapitalmanagers.com.