This week we spoke with Jonathan Tower, founder and managing partner, and Benjamin Bornstein, managing director, of Arctaris Impact Investors, during our Opportunity Zones webinar on February 12th about the importance of social impact.
Jonathan and Benjamin also presented a case study on a fund that sets a high-bar social impact reporting.
Prior to the webinar, we asked Jonathan and Benjamin about Arctaris’ dedication to social impact.
Q: Why is social impact important to Arctaris?
Arctaris’ philosophy is “we can do good” for the community at large while “doing well” by our investors. For Arctaris, investing in low-income communities to drive job creation and economic development is both our mission and our business model, as demonstrated by our investments for 10+ years.
Arctaris is focused across a wide array of investments in our OZ portfolio, including:
- Growth-oriented PE with a focus on job creation
- Manufacturers: Growth capital for middle market operating businesses, platform acquisition strategies
- Solar Developers: Companies with long-term offtake agreements
- Telecom: Companies working to expand broadband, 5G wireless
- Real Estate / Infrastructure:
- Broadband Fiber
- Wireless towers for 5G Infrastructure
- Solar Farms
- Academic & Municipal buildings
Arctaris funds have all been exclusively focused on low-to-moderate income zip codes and focused on creating positive outcomes for residents of those communities who are underserved or face displacement. Arctaris builds geographically specific programs with defined target populations (e.g., minority or female entrepreneurs, job preservation or creation for at-risk populations) and often invests in impact thematic industries such as renewable energy.
In addition to traditional underwriting and investment analysis, Arctaris utilizes a comprehensive impact methodology that considers many variables in making investment decisions and measuring impact. Our impact investing strategy reflects our strong belief that generating financial returns and creating long-lasting social and environmental impact are not only complementary, but also mutually reinforcing objectives. In our experience, integrating social and environmental performance factors into investment decision-making reduces investment risk, allowing our borrowers to achieve sustainable returns, while aligning with their core values. We focus on both the outputs (e.g., jobs created, wages increased) and the outcomes (e.g., community growth/revitalization) that our investments provide.
Arctaris has reported census tract, income, jobs data and other KPIs for more than five years to the U.S. Treasury Department’s SSBCI program, State of Michigan, and numerous banks. Arctaris currently tracks its own KPIs to measure performance: FTEs created; FTEs saved; living wage; census tract income level where company is located; census tract income level where employees reside; additionality (defined by deal); minority CEO/owner; and minority employees.
Missed our Opportunity Zones webinar with Arctaris and Global Impact’s Howard W. Buffett on Feb. 12th? Watch our recording today!