Space on the impact investing bandwagon just got tighter.
Goldman Sachs launched a $250 million Social Impact Fund (SIF) to invest in projects that improve the conditions of disadvantaged communities across the US.
It joins a number of investment banks that have launched similar initiatives, including Morgan Stanley’s Investing with Impact Platform targeting $10 billion in client assets and a $50 million fund by UBS to help small- and medium-sized enterprises in emerging markets.
For Goldman, this will be a significant next step in their journey of profit plus social change, as it previously tested the waters with a $9.6 million loan to keep youth out of jail.
According to Goldman, the SIF will provide clients with access to “double bottom line” investments, addressing social challenges while seeking a “risk-adjusted financial return”.
Those investments will be aimed at the development of neighbourhood spaces (affordable housing, healthcare facilities, and schools), job creation, and the delivery of social, financial, and educational services through new funding models, including social impact bonds.
When UBS announced its fund in September, its head of wealth management said frankly that this kind of investment presented an opportunity for the banking industry to rebuild their reputation. Now with Goldman’s launch, its head of the Urban Investment Group told The Financial Times that they would love to see more competition in the field, adding that it would be great to see capital deployed for early childhood education or reducing recidivism.
So brace yourself. It’s going to be a squishy ride.
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