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Interview: ImpactAssets' Deb Parsons on Donor-Advised Funds

The US$3bn AUM impact investor is putting donors' money to work for adaptation, resilience, and mitigation

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TL;DR

  • Concessional capital from charitable donations makes up a hefty chunk of adaptation and resilience (A&R) finance flows

  • Donor-advised funds (DAFs) are popular investment vehicles for corporates, financial institutions, and individuals to put philanthropic cash and assets to work in climate solutions

  • ImpactAssets, a US$3bn AUM fund and investment platform, has millions invested in climate solutions, including A&R projects

  • Deb Parsons, managing director, business development and client engagement at ImpactAssets, spoke to Climate Proof on how her organization works to bring concessional capital to those on the frontlines of climate change

Philanthropic investing is a major pillar of adaptation and resilience (A&R) finance. The Climate Policy Initiative determined that around US$465mn of private adaptation finance flows for 2021-2022 came in the form of charitable grants, more than that issued by corporations and close to the amount invested by commercial financial institutions.

Moreover, this so-called “concessional capital” often has a greater reach — and appetite for risk — than commercial capital, for the simple reason that providers are generally indifferent to the kinds of financial return, if any, that their investments produce. What matters far more is the real-world impact of their capital. Unconstrained by the need to achieve a certain hurdle rate, philanthropic investors can put their money to work in the riskiest and potentially most innovative corners of the A&R economy.

Overview of Tracked Private Adaptation Finance Flows (USD million, 2021–2022)

Big budget philanthropies, like the Rockefeller Foundation and Bezos Earth Fund, have the heft and expertise to identify A&R investment targets themselves. For most everyone else, there are donor-advised funds (DAFs). These investment vehicles aggregate private donations, handle the admin, and do the hard work of identifying projects that align with their donors’ goals. DAFs also offer donors certain tax benefits, and often accept non-cash assets, making them a flexible option for small- (and big-) time philanthropists.

The popularity of DAFs is soaring. These funds managed a combined US$229bn in 2022, and issued US$52bn in grants. Many DAF dollars are going toward impact investments, too. ImpactAssets, a DAF and investment platform focused on environmental and social causes, today boasts US$3bn in assets under management.

As of end-2022, ImpactAssets had invested in 282 organizations committed to climate solutions. Within this vertical, it allocates capital across four topic areas: energy transition, deep decarbonization, nature-based solutions, and climate justice.

ImpactAssets has also attracted some notable partners. Earlier this year, insurance group QBE North America teamed up with the organization to create the QBE Possibilities Fund, with a mandate to “accelerate the development and adoption of climate solutions with the potential to have a significant impact on future climate resilience and stability.”

To learn more about how DAFs support A&R, Climate Proof interviewed Deb Parsons, managing director, business development and client engagement at ImpactAssets. Her answers have been lightly edited for clarity.

Climate Proof (CP): Could you elaborate on how your donor-advised fund supports investors in achieving A&R goals?

Deb Parsons (DP): ImpactAssets is dedicated to modern philanthropy, using both granting and impact investing to achieve A&R goals. We do that by offering our clients a variety of tools. Through the ImpactAssets Donor Advised Fund, clients can recommend grants to non-profits and charities, including those pursuing A&R solutions. 

Additionally, ImpactAssets offers a dedicated Impact Investment Platform through the ImpactAssets DAF. The ImpactAssets Impact Investment Platform offers a range of investment opportunities, several of which are focused on A&R goals. Our platform largely offers private investment opportunities focused on funds and companies that are either scaling existing solutions or driving innovation when it comes to A&R. These opportunities are sourced and diligenced by our investment team.

Additionally, we offer our DAF clients a unique service enabling them to recommend their own impact investments in funds and companies. This service is also an important tool for clients to achieve their goals. 

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