A team of professors, practitioners, designers, and developers partnered to develop the IFI Tool as an interactive, open-source, online tool, with the goal of illustrating the potential effects of impact-first investments on a portfolio of philanthropic assets.
The IFI Tool is not designed to be a portfolio allocation tool that prescribes a specific asset allocation, but rather an illustrative model that guides users to see the financial and social impact implications of testing different assumptions about impact-first investment opportunities using their philanthropic assets. In particular, the IFI Tool aims to help users understand the compounding impact of impact-first investing—the power of recycling capital—as another option in one’s toolbelt, allowing them to make better-informed decisions about their philanthropic assets. We believe that this will lead many to incorporate impact-first investing as part of their philanthropic strategy.
Ultimately, for many users, we think the model will demonstrate that even modest allocations to impact-first investing—with plausible assumptions about expected return and impact—can substantially increase the overall social impact of philanthropic assets over any time horizon. To some who are already in the space of impact-first investing, this might seem clear. But if this were generally considered true, every allocator of philanthropic capital—including those whose vehicles are structured to exist in perpetuity—would allocate significant funding towards impact-first investing, knowing they could more effectively advance their missions over any time frame.
The team’s hope is that using the IFI Tool will lead allocators of philanthropic capital to be more open to investment opportunities that may sometimes sacrifice returns for impact—and more open to program initiatives that provide the possibility of a financial return.