“Impact investing” is a growing trend among individual and institutional investors.
And the managers of private capital, mutual funds, private equity and foundations are building hundreds of new funds that invest money in solutions that range from affordable housing to alternative energy and environmental solutions.
Impact investing differs from what long has been known as socially responsible investing, such as funds that avoid outfits that peddle booze or firearms. Impact investing, which transcends traditional tax-deductible philanthropy, links the social interests of small-and-large investors with investments in their concerns, whether low-cost housing or water recycling.
“I firmly believe … that government and philanthropy alone cannot solve the pressing issues that are increasingly a challenge, such as social and environmental issues,” said Jonathan Firestein, head of impact investing in the Ascent wealth management business at U.S. Bancorp. “The only way we get out of some of these messes, the only way we change human behavior and make life better … is market-based solutions.”
Firestein will address a U.S. Bancorp conference this week of clients, financial advisers, lawyers, accountants and others. There also will be presentations by foundations, institutional investors and organizations that put the money to use building housing and renovating blighted commercial corridors.
Impact investors usually expect at least a modest return on their capital over the long term.
Meanwhile, housing nonprofits such as CommonBond and Aeon, among the largest developers and managers of affordable housing in the Twin Cities, are holding a December conference to explain how interested investors are needed, beyond charitable contributions, at a time of workforce-housing shortages and spiraling rents.
Similarly, Habitat for Humanity in the Twin Cities is starting a multimillion dollar fund to help it house more lower-income families through new and remodeled units. And the Minneapolis Foundation has a fund that provides seed capital for small minority subcontractors.
How big is this trend nationally?
The Global Impact Investment Network, which tracks the industry, reported last year that its survey of 147 asset managers found about $60 billion in dedicated funds. Firestein said U.S. Bancorp has found about 900 impact funds of varying stripe.
Neal St. Anthony
Swan Machine expands Grand Rapids plant
Perham, Minn.-based Swan Machine Inc. is building a $1.9 million addition at its Grand Rapids factory, state officials announced Wednesday.
The precision machine components manufacturer plans to add 13,000 square feet and hire another 30 employees over three years. The expansion, which is expected to include some equipment upgrades, will allow Swan to fill orders more quickly. The company makes gun parts, paint-spray equipment, electronic housings, semitrailers and agricultural equipment.
The state is helping Swan expand by providing a $191,479 rebate grant from the Minnesota Job Creation Fund.
The Minnesota Department of Employment and Economic Development oversees the job creation grant. The grant will be issued after Swan has completed its investment and hiring commitments, state officials said. The new jobs are expected to pay an average of $16 an hour.
Swan and its sister company, Kit Masters, currently employ more than 150 people in Perham and Grand Rapids.
CEO Darrin Swanson was named Minnesota Small Business Person of the Year by the U.S. Small Business Administration in 2012.
Oberst to oversee national banking group
Laura Oberst, a career Wells Fargo banker who began as a management trainee at the old Norwest Corp. in 1985, has taken over as head of the business banking group of 4,700 employees who work with 100,000-plus small businesses of $5 million to $20 million in sales.
Oberst, who will oversee the national business line from Minneapolis, succeeds the retiring Hugh Long, who is based in Atlanta.
Oberst now reports directly to the head of Wells Fargo commercial banking. She has advanced from branch manager through the community and commercial banking ranks. She most recently oversaw a several-state region of 350 employees in middle-market banking.
Monica Cole, another career Wells Fargo lender, succeeds Oberst as head of middle-market banking for the North Region.
Cole, who is based in Chicago, had led the southern division of middle-market banking since 2014. Middle-market banking serves privately held, family-owned businesses of $20 million or more in sales.
Neal St. Anthony