Bobby Turner, CEO of Turner Impact Capital, sat down for a recent interview with Wharton Vice Dean for Social Impact Katherine Klein on his efforts to harness market forces to address needs typically left to government and philanthropy. A self-described "evolving capitalist," Turner's endeavors focus on creating economic ecosystems in which improvements in education, safety and health create virtuous cycles for communities—and allow returns on that value created to pay back investors and fund future ventures. Turner echoes what many in the impact investing field have been reiterating for years: it is possible to satisfy stakeholders, positively impact communities, and turn a profit.
Bobby Turner: We like to focus on markets that are defined by the four Ds of urban revitalization. It’s got to be a densely populated community. It’s got to be a diversely populated community because that’s where the mismatch is. There’s got to be demand. We’re not interested in building charter schools in a high-performing public school district. We’re not interested in preserving affordable housing where there is no need for it. So again, density, diversity and demand — and also disruptive. We’re not interested in investing in marketplaces where we can only invest $1 million or $10 million. We want a scale where we’re building ten schools, we’re buying 5,000 units of affordable housing, so it’s sustainable and it’s scalable and, more importantly, so we can lift and right the listing ship for tens of thousands of families that don’t have great options.
Katherine Klein: What are the success indicators that tell you that this model is working?
Bobby Turner: I have to focus primarily on my financial indicators because how I define social impact is not by what it is, but rather by what it’s not. Social impact is not philanthropy. It’s not government, and it’s not a business model that believes one should sacrifice yields in return for a social metric. For me to raise money, to truly scale the impact I want to have, I’ve got to generate consistent risk-adjusted returns without sacrificing yields. No. 1, every day I go to the battle line making sure I’m making money for my investors. No. 2 is, I’m having a meaningful impact on the communities in which I’m investing. In many instances, it’s easy to define. We know that our impact is the number of school seats that we build, because the number of school seats that we build, we fill with a child, and that for many kids we’re changing the trajectory for their lives. When you buy and preserve and enrich workforce housing, and the kids that we’re teaching during the day in our schools, as they go home to these communities and they get better sleep, it’s a safer environment, we know that we’re complementing and tackling the whole solution. When we see that by enriching the communities with health care, education and security, when we see that the average duration of a lease goes from 24 months to 36 months, we know for a fact that we’ve created one. When we see the number of incidences, transgressions, 911 calls drop from 75 to 80 a month down to 75 a year, that’s when you know you’re have an impact on the community. And the culture of the community, where again, you’re enriching and providing hope, and re-instilling hope into the community.
Turner makes a case for the synergies of an ecosystem approach, in which the impact of each investment also increases the impact of the others:
When you buy and preserve and enrich workforce housing, and the kids that we’re teaching during the day in our schools, as they go home to these communities and they get better sleep, it’s a safer environment, we know that we’re complementing and tackling the whole solution. When we see that by enriching the communities with health care, education and security, when we see that the average duration of a lease goes from 24 months to 36 months, we know for a fact that we’ve created [an impact]. When we see the number of incidences, transgressions, 911 calls drop from 75 to 80 a month down to 75 a year, that’s when you know you’re having an impact on the community.
The full transcript is available on Knowledge@Wharton.