As an entrepreneur, I made my living generating, testing and collaborating on good ideas. As an investor and philanthropist, I now spend my days seeking, evaluating and collaborating with others on ventures, and I have been surprised at finding great ideas in unexpected places — outside Silicon Valley, outside Wall Street, and even outside the private sector.
{mosads}In the past several months, a notable and unexpected area of collaboration has brought two remarkable legislative ideas to fruition — ones that are poised to spark collaboration between public, private, and nonprofit players alike. It is the bipartisan Investing in Opportunity Act (IIOA, part of the Tax Cuts and Jobs Act of 2017) and the Social Impact Partnership to Pay for Results Act (SIPPRA, part of the Bipartisan Budget Act of 2018).
The IIOA incentivizes investors to invest in “Opportunity Zones” (distressed areas) identified by state governors that may not have been on investors’ radar. It asks states to evaluate their local economies and mine for diamonds in their own backyards: great, local opportunities where equity investment in businesses could help to create jobs, income growth, revitalization of neighborhoods and low-income housing.
SIPPRA enables the federal government to participate with state and local governments as payers to investors who take the risk on evidence-based interventions. Those interventions will produce measured outcomes to improve the lives of at-risk children, adults and families. The legislation pushes state and local governments to identify their issue areas — be it homelessness, early childhood education, workforce development or recidivism, just to name a few — and fund evidence-based interventions in their communities that might not otherwise receive funding without the help of investor financing.
With these two initiatives, both Republican and Democratic parties recognized important needs of their constituencies and came together to address them in new and innovative ways during a time of unprecedented political gridlock. Congress has proven that it can find common ground in bold ideas that direct resources to communities and people in our country who need it most, and now it is our job as investors and innovators to carry that task over the finish line, by improving people’s opportunities and lives, or what many investors are calling “making an impact.”
The government alone cannot solve our society’s problems, nor can investors. Both of these pieces of legislation are encouraging collaboration of impact investors, nonprofits, philanthropists and government agencies in innovative public-private partnerships that direct resources to communities and people in need. After all, it’s not just one group that improves the world: investors need businesses in which to invest, businesses need government to encourage innovation and social entrepreneurs, and nonprofits need resources to solve important social issues that businesses and government cannot solve alone.
Values-driven investors like me, who want their legacy to go beyond achieved returns on investment, and who want to have had a positive impact on the world, now have fewer excuses to sit on the sidelines and avoid or ignore some of our country’s most glaring needs. We have a deep, vested interest in helping alleviate societal challenges.
Growing the economy and solving social problems in any part of the country makes the entire nation stronger. Investors would be wise not to overlook the chance to invest in these new opportunities that can make a real difference, not only for the people who live there, but for the country at large. Sometimes a nudge can motivate an action, and enough actions can start a movement. Now it’s up to us to seek and invest in good ideas that not only strengthen the threads of our communities but create a movement of investing for good throughout the entire country.
The opportunity lies before us, and success will be determined by our collective and innovative spirit.
Jim Sorenson is an entrepreneur and investor. He is the founder of the Sorenson Impact Center at the David Eccles School of Business at the University of Utah and the founder of the Sorenson Impact Foundation. Follow him on Twitter. @sorenson_impact.