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Making Impact Investing Even Stronger With Toniic

Steve Prostano, August 10, 2017

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Toniic, a global action community that says it gives impact investors access to global deal flow, talks to this news service about its work and the shape of the future.

Imagine a global community of impact investors working together to make a positive social and ecological impact across the globe. That dream is a reality with Toniic, a global action community that says it gives impact investors access to global deal flow and by co-creating best practice tools.

Together, Toniic’s members in more than 26 countries learn how to align their financial assets with their personal values. Steve Prostano, head of Family Wealth Advisors for Bank of the West’s Wealth Management Group, recently had the opportunity to sit down with Toniic members, Charly and Lisa Kleissner of the KL Felicitas Foundation, about their views on impact investing, Toniic’s revolutionary T100 Project, and ways that the wealth management sector can engage clients in the new philanthropy conversation focusing on purpose-built/driven philanthropy. (Prostano is also a judge for the Family Wealth Report awards program and has been interviewed by this publication.) The editors of FWR are grateful to Steve for this interview. Those who wish to respond with comments can email tom.burroughes@wealthbriefing.com)


For the Kleissners, their story of Toniic begins with their own efforts to find the “meaning of wealth” and their embracement of impact investing. (Impact investing seeks to achieve both philanthropic impact and a competitive financial return, whereas typical philanthropic investments tend to prioritize philanthropic impact over financial return.) “Ultimately, there is not enough philanthropic capital to solve our global challenges.

Therefore, we must learn how to coordinate capital with different return expectations if we are to effect change at a systemic level,” Lisa Kleissner said. Eager to create this systemic change, the Kleissners shared both their story and their investment portfolio with the world.

“Through that sharing, families and individuals from around the world contacted us wanting to learn more about our work. It was this global emergence that led to the creation of Toniic,” Lisa remembered.

“When you are bucking against the headwinds of the financial industry, there is power in numbers. Toniic exists because it serves a need for individuals, families and foundations to have candid and often emotional conversations about what really matters. Together, Toniic members and the Toniic team have shared inspiring stories, built tools, and shared data. That body of knowledge is helping to inspire a new generation of impact investors, intermediaries and investees,” she continued.
Hard proof
A crucial component of this body of knowledge is the awareness that impact investments can financially benefit investors just as traditional return-seeking investments can. Indeed, the KL Felicitas Foundation recently has demonstrated that impact investors can construct a 100% Impact Portfolio and achieve competitive financial returns in all asset classes, all while improving the world. From KL Felicitas’ example, the Kleissners hope others will decide to take more innovative approaches with their foundation capital and, as Lisa explains, view “their foundations as research and innovation labs for improving impact outcomes”.

Toniic is itself playing a major role in research through its T100 Project, a multi-year study of the portfolios of over 50 Toniic 100% Impact Network members.

“One of the main reasons why investors are not moving more aggressively into impact portfolio investing is a lack of impact and financial return data, transparent and inspiring impact investor stories, impact portfolio construction tools, searchable impact directories and a lack of sample impact portfolios,” Charly notes.

The T100 Project is addressing this lack by providing tools, directories, and data to Toniic’s members and also by collaborating with the research community on multi-year studies of more than 100 impact portfolios, leveraging the project’s anonymized data-sets, he explains As soon as investors and advisors realize what impact investments can achieve – both philanthropically and financially – they, too, gravitate towards a 100 per cent-impact portfolio, the Kleissners have observed. For instance, about half of new Toniic members transition to the 100% Impact Network within one year of joining.

"What we see is that when an investor or advisor has an opportunity to deeply consider the impact of their capital choices, they cannot go back to ‘business as usual,’” Lisa explains. “And now that more and more evidence is being published on the performance of investments screened for impact, the return question has been answered. Failure to address resource constraints, climate change, gender parity and more are now seen as reputational and financial risks for portfolio investors.” 

However, bettering the world through impact investments is not just up to investors; the financial services industry has to play its part too. “We believe that the financial sector has the responsibility and obligation to be an active change agent,” the Kleissners state. “As the next generation of investors is coming of age, intermediaries who understand that the future of investing is values- and impact-based will thrive. The corollary of this is true as well: Intermediaries who do not actively shape this transition will be disintermediated. The financial sector would be well advised to co-lead this transition with their clients,” they said.

To help investors and philanthropists move forward in achieving their financial and philanthropic goals, as Bank of the West is striving to do through its “Purpose Built Philanthropy” Program, wealth managers can take the following steps, according to Lisa:

1. Start with the investment policy. This involves setting impact targets, even modest ones, in the policy. “Perhaps something as simple as asking your advisor to provide impact alternatives for every investment recommendation. By placing attention on your impact intentions within this document, you will begin the conversation,” she says.

2. Understand that impact investing is best done as an “experiential exercise.” “Doing an impact investment with a group from due diligence through to impact management is the best teacher,” Lisa says. To do this teaching exercise, it is best to start with a mature investment that publishes its impact annually and to use financial inclusion as a theme, she adds.

3. Join an impact network like Toniic to learn from your peers.

Finally, as wealth managers work to encourage investors towards values- and impact-based investing, firms must avoid falling into a one-size-fits-all approach, as every impact investor has a different starting point and journey.

As the Kleissners said, “We have learned that everyone, no matter the size of his or her assets or personal economic circumstance, can participate in the transformation of finance. And that everyone must take their own journey into impact, at their own pace.” 

Wealth comes with responsibility; and we believe it is the responsibility of wealth to invest for a healthy and prosperous people and planet,” they added.

Disclosures
All content is informational. It is not financial, investment or tax advice. If you need financial, investment or tax advice, you should contact a qualified professional.Connect with us Member FDIC. Equal Housing Lender 2017 Bank of the West Deposit and loan products offered by Bank of the West, Member FDIC. 

Securities and variable annuities are offered through BancWest Investment Services, a registered broker/dealer, Member FINRA/SIPC, and SEC Registered Investment Advisor. Financial Advisors are Registered Representatives of BancWest Investment Services. Fixed annuities/insurance products are offered through BancWest Insurance Agency in California, (License #0C52321), through BancWest Insurance Agency in Utah and through BancWest Investment Services, Inc. in AZ, CO, IA, ID, KS, MN, MO, ND, NE, NM, NV, OK, OR, SD, WA, WI, WY, HI, GUAM and CNMI.

Bank of the West and its various affiliates and subsidiaries are not tax or legal advisors.  BancWest Investment Services is a wholly owned subsidiary of Bank of the West and a part of the Wealth Management Group. BancWest Corporation is the holding company for Bank of the West. BancWest Corporation is a wholly owned subsidiary of BNP Paribas. 

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