Investment banking firm Goldman Sachs has announced the launch of a $250 million social impact fund.
One of the first domestic impact investing vehicles to be sponsored by a major financial institution, the GS Social Impact Fund will pursue an investment strategy that addresses social challenges, provides investors with risk-adjusted financial returns, and mobilizes new sources of private capital for social impact investing. To be administered by the firm's Urban Investment Group (UIG), which has invested more than $3 billion in "double bottom line" programs since 2001, the new fund will be the first to enable wealthy individuals and companies to invest directly in projects that provide quality affordable housing, healthcare facilities, schools, and retail space; businesses and social enterprises that catalyze job creation and economic growth; and the delivery of social and educational services for low- and moderate-income communities.
UIG's previous investments in New York City include a mixed-income apartment building in Harlem and a social impact bond underwriting a project designed to lower recidivism rates among young inmates at the city's Riker's Island facility. "Although there's no hard data on recidivism yet — kids go to jail and you have to track them after they leave in order to see the impact on reincarceration — a lot of the qualitative feedback is positive," Andrea Phillips, a UIG banker, told the Financial Times.
Other Wall Street firms also are seeking opportunities to invest in projects that address persistent social problems in cities nationwide. Last week, for example, Morgan Stanley announced the launch of its Institute for Sustainable Investing, with the goal of attracting $10 billion in client funds over five years for investments that deliver social and environmental benefits as well as financial returns.
"We'd love more competition in this field," said Goldman's Alicia Glen. "It would be great if more capital was deployed to helping figure out how to provide more access to early childhood education and keeping kids out of jail."