Genuinely involving local people in impact investment can open up new investment pipelines and make for better outcomes for investors and communities, says Kelly Ryan from the US-based Incourage Community Foundation, in a recent article in the Stanford Social Innovation Review.
Incourage is a “place-based philanthropy, community developer, and impact investor” which has been working in a rural area of Central Wisconsin for over a decade. They are regenerating a local economy that was severely impacted by the sale of paper manufacturer Consolidated Papers in 2000. This led to a 40% loss of area jobs within three years.
We are forging a new operating model as true community steward; advancing a long-term vision of inclusive community where residents and institutions are equipped with the skills, tools, and agency to shape the communities they want.
Impact investment can be much more than a top-down injection of cash into a community. Focusing on community involvement can diversify the benefits, creating a bigger bang for each invested buck.
Ways of working
Kelly mentions three ways that Incourage apply this model within the community:
- Strengthening residents’ sense of ownership over the future of their region. Building community capacity by involving them directly in investment projects.
- Redefining people’s understanding of what has value in communities. Moving away from a purely financial capital mindset. Recognising and building on the social and intellectual capital of residents.
- Modelling values-aligned behaviour in their organisation. Discussions are then initiated on how this can be carried through in impact investments.
We have learned that an infusion of financial capital by itself does not yield behavior change and inclusive, sustainable economic growth. Change requires that we connect and leverage different kinds of capital ~ including moral, human, social, intellectual, reputational, and natural capital.
Local and Global
In order to have greater control over the way the wider economy impacts the community, Incourage also invest in and engage with companies who operate in their area to encourage business practices which have local benefits. They also take care to ensure that success is measured in terms of outcomes defined by the community itself as well as by global financial measures.
Click here for a list of Impact Investment organisations within Australia.