"Impact investing" grows to advance affordable housing, other causes

"Impact Investing" is a growing trend among individual and institutional investors.

And the managers of private capital, mutual funds, private equity and foundations are building hundreds of new funds that invest money in solutions that range from affordable housing to alternative energy and environmental solutions.

Impact investing differs from what long has been known as socially responsible investing; funds that avoid outfits that peddle booze or firearms, for example. Impact investing, which transcends traditional tax-deductible philanthropy, links the social interests of small-and-large investors with investments in their concerns, whether low-cost housing or water recycling.

"I firmly believe… that government and philanthropy alone cannot solve the pressing issues that are increasingly a challenge, such as social and environmental issues," said Jonathan Firestein, head of impact investing in the Ascent wealth management business at U.S. Bancorp. "The only way we get out of some of these messes, the only way we change human behavior and make life better … is market-based solutions."

Firestein will address a USB-client conference next week, including financial advisors, lawyers, accountants as well as presentations by foundations, institutional investors and organizations that put the money to use building housing and renovating blighted commercial intersections.

Impact investors usually expect at least a modest return on their capital over the long term.

Meanwhile, housing nonprofits such as CommonBond and Aeon, among the largest developers and managers of affordable housing in the Twin Cities, are holding a December conference to explain to how interested investors are needed, beyond charitable contributions, t a time of workforce-housing shortages and spiraling rents.

Similarly, Habitat for Humanity in the Twin Cities is starting a multi-million dollar fund to help it house more working-poor families through new and remodeled units. And the Minneapolis Foundation has a fund that provides seed capital for small minority subcontractors.

How big is this trend nationally? The Global Impact Investment Network, which tracks the industry, said last year that its survey of 147 asset managers found about $60 billion in dedicated funds. And fast growth. And that was not an exhaustive survey.