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Investors and Philanthropists Can Partner to Finance Conservation

Carl Palmer
This photo of Carl Palmer was taken at the LegacyWorks
Group office in Santa Barbara, California.
(Credit: Turner & Fitch Photography)

LegacyWorks Group was founded to help donors and investors who are interested in achieving community and conservation goals to mobilize their capital in highly collaborative, impactful ways. In this interview, LegacyWorks Group’s founder, Carl Palmer, discusses the mindsets that allow philanthropic giving and impact investing to expand their horizons, accelerate their results, and reach broader goals.

CFN: What mindsets do you think philanthropists and investors need to maximize their impact?

Palmer: First, we have to approach things from a systems perspective. It makes no sense to think about things in isolation.

Second, we need to bring all kinds of capital and approaches to bear. We can’t approach the big challenges we’re facing with just philanthropy or investment. It isn’t one or the other; we need both.

Third, we need to collaborate far more. People talk about collaborating, but we’re not doing it at the level we need to across all sectors – government, philanthropy, investing. The innovation is happening at the intersection of sectors where people are starting to come together.

It’s important to remember that this collaborative approach is countercultural. It defies the dominant narratives of capitalism and individualism. We’re not very good at collaboration and we don’t reward it, but, at the end of the day, collaborative efforts have much greater potential for impact.

Fourth, we have to be bold, dream big, and reach for what we actually want. We have to reinvent our expectations for communities, landscapes and economies. We don’t have the language to describe the relationships we want to have with each other and the natural world. We need to create that.

Finally, one of most important things is to approach this work with humility. We have a tremendous amount to learn from each other, and we can’t do it alone. It’s pioneering work – and we need to blaze the trail together with our community partners and capital partners.

CFN: What do you see as LegacyWorks’ role in this work?

Palmer: At LegacyWorks, we’re helping people come together in new ways to collaboratively address their needs and achieve their hopes and dreams for their communities.

All of our work is place-based because we believe that’s the scale at which we can make a real difference and collectively create a new way forward.

In community initiatives, we serve as a third-party facilitator, helping bring all parties together in a way that moves things forward, builds trust and relationships, and makes it easy to change how we approach impact.

When we work with investors or funders, we serve as their team, helping to find opportunities, develop strategies, and implement initiatives. We’re here to serve and support an array of remarkable people who want to have far greater impact in the places they love.

CFN: What motivated you to found LegacyWorks Group?

Palmer: Out of college, I worked in conservation. There were real impacts to my work, but not at the pace or scale that was needed.

I went to business school looking for ways to have more impact. I developed an investment model to get more capital flowing into high-impact projects. We had real impact around the West, but our model only applied to a very small number of the hundreds of opportunities that communities brought us. So I still wasn’t able to create the kind of transformative change our communities and landscapes need.

Over time, I realized that impact-driven work is really pigeonholed. On one side of the spectrum is philanthropy. Investment capital is on the other side. But our environmental and social needs don’t fit those categories.

We founded LegacyWorks to create transformative change by helping donors, investors and communities use all kinds of capital and tools from all sectors to address their most important needs.

CFN: With whom does LegacyWorks work?

Palmer: We work with people who want to use their investment capital and philanthropic dollars to achieve their impact goals. We also work closely with community organizations on the ground that understand community needs. [They know] how to get things done.

A big part of our ability to have outsized impact comes from bringing the people with the resources together with local leaders to create community-driven change.

CFN: What have you observed to be the underlying motivations of philanthropists vs. impact investors?

Palmer: There’s a bit of a false distinction between the two. Almost all impact investors are also philanthropists. It’s often an evolutionary path.

Typically, people’s impact journeys start with volunteering and giving money to nonprofits. From there it can evolve to include other kinds of capital, from low-interest loans to equity investments.

While philanthropists give money away, most are not yet thinking about how to invest all of their money in impactful ways.

People who consider themselves impact investors realize that all of their investments have both financial returns and impacts in the world – both positive and negative – and they look for ways to have positive impact with all their resources.

Making grants and gifts is an important way to have impact. And we hope the impact is really high, since a gift has no financial return. My friend Stephanie Gripne describes the ROI on a gift as -100 percent because the donor doesn’t get any of that money back.

If we limit ourselves to just gifts when we want to have impact, we’re missing out on all kinds of opportunities.

By putting on one hat or another, you limit the scope of possibilities. Instead, we can think about deploying all kinds of capital to have impact depending on the context and opportunity.

CFN: Could you describe any differences you’ve observed in how impact investors vs. philanthropists select specific geographies in which to work?

Palmer: This is fascinating. If you think about traditional investing, people invest based on a variety of criteria related to risk and reward without much consideration of where they’re investing.

We might know if it’s domestic or international, but that coarse scale is about all. So plain vanilla traditional investing is almost entirely place-agnostic. We don’t know where our money is going.

On the other hand, when foundations make grants, they often have strict geographic constraints. When they begin impact investing, they often apply the same programmatic lens as they do for their grant-making. This limits their investing to certain mission and geographic areas. It creates issues because there aren’t often readily available, financially sound investment opportunities that address foundations’ impact goals.

Since you need lots of options to find quality opportunities, this approach often ends in failure. People who approach impact investing with narrow programmatic and geographic constraints often end up believing there aren’t enough impact-investment opportunities.

So traditional investing pays no attention to place. And impact investors sometimes constrain their options too much by sticking to the same programmatic focus as their grantmaking.

Nonetheless, I believe that using a place-based or community lens to guide impact investing can be quite effective if done right. Investing in place requires taking a systems approach and looking for a variety of ways to deploy capital – whether philanthropic or impact capital – to address needs.

We believe that deploying philanthropic and impact capital together in a given geography creates the greatest impact potential. Philanthropy can help build the local capacity required to bring impact-investment opportunities together and de-risk them, since impact investments often require a blend of capital to move forward.

CFN: Have you observed any other differences between philanthropists and impact investors?

Palmer: Most impact investors I know are looking at things from a systems perspective. They tend to be very conscious. Their eyes are open. They’re curious and committed to learning.

They assume they don’t have all the answers. They’re open-minded and looking for approaches and solutions that show promise. I would argue that approaching things this way is the only way we can address the challenges we’re facing.

Overall, I see more openness to experimenting in the impact-investing community. Most philanthropists want to make this transition as well, but it’s not easy when you have established program areas and approaches.

They need guides to help them and easy ways to take the first steps toward a more systems-oriented approach. In partnership with community groups and other impact-investing leaders like Impact Finance Center, we’re working to create stepping stone opportunities that help donors make their first impact investments and begin using all their capital to achieve their goals.

Note: Carl Palmer is a member of Conservation Finance Network's advisory board.

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