MBA Programs Turn to “Impact Investing”
as “Social Consciousness” Loses Cachet

An Irish Impact contributor recently reviewed several MBA Impact Funds and a recent trend for top MBA schools to start their own impact investing groups.  John Henry is a first-year Notre Dame MBA.  Read below to learn more about how schools are adopting these socially-conscious initiatives.

MBA programs have been increasingly interested in socially-conscious business for the past decade and a half.  In 1999, the Aspen Institute first published "Beyond Grey Pinstripes," the most prestigious, socially-conscious ranking of MBA programs.  The Notre Dame MBA was regularly in the top-five, but the field has become so popular that "Beyond Grey Pinstripes" is no longer published.  Laurie Ginsberg, senior program manager at the Aspen Institute, explains that “the ranking has lost its relevancy and lacks the meaning it held back when few people were living sustainable lifestyles and schools were not jam-packed with sustainability classes, cases, and clubs."[1]  If the field has become popular and the coursework is ubiquitous, what ways can schools distinguish themselves in this area?

Impact Investing may be the latest trend.  Investing in companies based on social or environmental values has been around since the 1980s and funds are currently estimated at $50 billion.[2]  In 2007, this investing practice began to be called "impact investing,” though organizations like Acumen Fund had been investing in social entrepreneurship ventures since 2001.  As the Google Trends graph illustrates, “impact investing” is a search term that has been growing in popularity, with its first significant peak when USAID began supporting public/private impact investments in 2010 (Point I).  MBA programs then followed the market, and one of the highest points (Point C) refers to a Kellogg impact investing case competition hosted in 2012.

There are a variety of ways that schools have incorporated impact investing into their MBA programs.  Duke has created a Center for the Advancement of Social Entrepreneurship (CASE), founded by Greg Dees who many consider the “Father of Social Entrepreneurship as an academic subject.” CASE offers curriculum, hosts events, and provides experiential learning opportunities related to impact investing.  Similarly, Wharton has created its own program entirely centered on impact investing, called the Wharton Social Impact Initiative that offers similar services.  Many of the other top schools now have similar offerings. [3]

One of the most recent developments in this still-nascent academic area is the formation of student-managed impact investing funds.  The University of Michigan created the first of these MBA funds in 2011, called the Social Venture Fund. Lauren Miller helped found the fund while she was a student, and she attributes its genesis in part to her corporate outreach experiences she had at Google.  The fund is currently managed by 28 students, has an advisory board, and awards up to $200,000 annually in equity investments.[4]  Over the last three years, other top-10 schools have followed suit, and there are currently student-managed impact investing funds at Duke, Berkeley, and Wharton.

These funds may be recruiting tools for the university, but they are intended to propel students out of school as much as to attract them in.  Lauren Miller stated that one of the goals of her fund is to create a career pipeline.[5]  Currently, this field is highly competitive, with careers being built from within existing investing firms rather than direct MBA hires.  But some projections see massive growth in impact investing over the coming decade, growing from $50 billion in 2009 to $500 billion by 2019.[6]  As the field grows, so too may these student funds.  Perhaps in another ten years schools will need to distinguish themselves again by co-opting another novel facet of the social enterprise movement.

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[1] Francesca Di Meglio, “Beyond Grey Pinstripes Ranking: RIP,” October 1, 2012, Bloomberg Businessweek, http://www.businessweek.com/articles/2012-10-01/beyond-grey-pinstripes-ranking-r-dot-i-dot-p-dot

[2] Monitor Group, “Investing for Social and Environmental Impact,” 2009

[3] John A. Byrne, “Social Entrepreneurship: The Best Schools & Programs”, August 13, 2010, http://poetsandquants.com/2010/08/13/social-entrepreneurship-the-best-schools-programs/8/

[4] Andrea Carter, “My Story: From Google to Michigan for an MBA” February 17, 2011, http://poetsandquants.com/2011/02/17/my-story-from-google-to-michigan-for-an-mba/2/

[5] Ibid

[6] Monitor Group, “Investing for Social and Environmental Impact,” 2009