Impact investing, which offers returns and an opportunity to make a difference, is gaining ground in Arkansas as younger people, businesses and academics embrace the concept that money can do more than just make more money.
The University of Arkansas, which has formed the Arkansas Impact Investing Capital Formation Working Group, plans to launch an education center or institute devoted to the concept this semester.
“It’s been around, gone by different buzzwords, but it’s really becoming more and more on the radar,” said Ramsay Ball, a founding member of the working group and president of Cannon Capital, an early-stage private equity firm.
Ball said one example of impact investing is investors providing an organization with the capital it needs to make low-interest loans and getting their money back plus up to 4% interest. Other strategies appeal directly to young people.
“We have a new crew of leadership coming up from our 20- and 30-somethings that have different focuses,” he said. “Investing to make a difference in the world is a pretty good thing. And I think we see a lot of people that get that.”
Another working group member, Jensyn Hallett, is director of impact capital at Heifer International of Little Rock, the global nonprofit poverty and hunger fighter. Hallett said millennials “want to work in organizations that are doing good. We want to feel connected to our purpose. We want our money to do good.
“It’s being led by these generations, but I think a lot of other folks are catching on.”
Hallett said nonprofits like Heifer are drawn to impact investments because their fruits can be reinvested again and again, with investors keeping their return; grant money can be spent only once. Nonprofits need both types of support, she said.
An impact investment makes more sense when the farmers Heifer helps need closer, more efficient processing facility to help them prosper and reach a global market, Hallett said.
An impact investment can also be used to make loans or microloans, which have the added benefit of building the farmers’ financial acumen, she said.
Hallett, an impact investing advocate since 2015, is working to launch an impact investing fund to increase access to capital for women in the South. Hallet has also been leading the Arkansas chapter of Invest for Better, a national initiative educating women on how to shift their money to align with their values.
Nonprofits including Heifer and the Arkansas Community Foundation, where Ball is on the board, are working to attract impact investing. And Hallett said businesses have begun to integrate their impact goals into their business plans, leading investors to take notice.
Ball has a slightly different approach in that his impact investments are made in scalable companies that make a difference but can also deliver above-market returns. Ball’s Cannon Capital has invested in companies that include Namida Lab of Fayetteville, which is working on a way to detect breast cancer proteins in tears, and SFC Fluidics Inc., also of Fayetteville, which is working to produce an artificial pancreas.
The UA working group is an initiative of the Finance Department in the Sam M. Walton College of Business.
The center’s goal is to better prepare students for careers in finance, according to Cash Acrey, managing director of the Master of Science in Finance program and a finance professor.
Acrey said he couldn’t provide specifics about the university’s planned center, which is in its early stages and requires final approval from the board of trustees. But he said there’s been “broad enthusiasm” about impact investing education, from students — especially women and students of color — and professionals alike. The group hosted its first event, a panel discussion, last week.
The new center will provide impact investing classes and workshops, some of which could address how impact investing can improve access to capital for rural communities as well as improve capital access for women and minority business owners, he said.