“When I started out as an impact investor more than 25 years ago, the term ‘impact investing’ wasn’t even in common use,” says Bobby Turner W84. Since that time, the Wharton graduate formed Turner Impact Capital, a real estate investment firm that has made headlines for its focus on underserved communities and its partnerships with well-known names including Eva Longoria, Andre Agassi, and Chris Paul.
The wider market for impact investing has also made great gains over those years, echoing broader interest in the view that businesses can both do well and do good. In that vein, Wharton last year launched the ESG Initiative to bring together resources from across the School focused on environmental, social, and governance issues. With Turner’s support, Wharton has continued to foster a range of opportunities for students in the field. The Lauren and Bobby Turner Executive Speaker Series, for example, hosts discussions with leaders and celebrities who are tackling important social issues. The Turner Environmental, Social, and Governance (ESG) Fellows program enables undergraduates to explore the industry with like-minded peers. And resources like financial scholarships and summer internships help make ESG education possible for more students.
As for initiatives specific to impact investing, the Turner Impact Portfolio Challenge (TIPC) and Turner MBA Impact Investing Network and Training (MIINT) programs provide chances for students at business and graduate schools all over to hone key skills through annual competitions. This year’s TIPC finals will bring participants together at Wharton on March 31, followed by the Turner MIINT global finals on campus on April 1. Wharton Magazine connected with Turner ahead of the finals to discuss the evolution of impact investing, the monumental issues his firm is addressing, and why the future is filled with “unprecedented opportunities” for up-and-coming investors.
Wharton Magazine: What first convinced you that impact investing can be both a force for good and a good business opportunity?
Bobby Turner: I began my career looking for real estate opportunities that others had overlooked, discounted, or misperceived. I realized that many fantastic investment opportunities were located in urban areas that traditional capital had completely ignored. Not only were they financially successful, but these investments helped create jobs and revitalize neighborhoods. They had a profoundly positive impact on residents, neighbors, and communities. That was an epiphany for me, to realize that you can do well and do good as an investor at the same time if you have the skill and know where to look. I was hooked on the idea of combining profits and purpose in a single, cohesive approach.
Since those early days, my team and I have designed investment models to tackle three of our most daunting challenges — housing, health care, and education — in ways that are sustainable, scalable, and durable. We measure the impact of our work very carefully, not just in financial terms, but in human terms as well. Impact investing has become very popular — even trendy — but there are relatively few people out there practicing what I would call “real” impact investing in underserved communities that directly address the core challenges in people’s lives.
WM: What would you say to someone who subscribes to Milton Friedman’s philosophy that a business’s only responsibility is to its shareholders?
BT: There’s no question that businesses have a responsibility to shareholders — or, in my case, to investors. That’s fundamental to capitalism. But we also live together in a society, and we have obligations to one another, to our environment, and to future generations. We have a particular responsibility to those who have been traditionally overlooked and left behind.
Now, while most investors are skeptical that profits and purpose can play nicely in the proverbial sandbox, for over 25 years we have continuously proven that when done correctly, impact investing can actually generate higher risk-adjusted returns than more traditional investment strategies. This is because impact investing is not based on speculation. Our business model does not try to create demand. Rather, it focuses on opportunities where demand for basic needs is large, growing, and unmet, and on underserved communities that have traditionally had to rely on government or philanthropic support.
Think about K-12 public education, where only one in three students is proficient in reading and math at grade level; workforce housing, where half of all households are severely rent-burdened; and health care, where we spend nearly 20 percent of our GDP, yet our health outcomes rank in the bottom quartile of industrialized nations. These are all daunting social challenges and, from our perspective, all generational investment opportunities.
WM: As a longtime supporter of opportunities to learn about impact investing at Wharton, how have you witnessed student interest in this area evolve over the years?
BT: It has absolutely exploded, and I couldn’t be happier about it. I’ve met many Wharton students through our various social impact programs, and their caliber, capability, and commitment are inspiring. They also recognize that business for good is simply good business.
That wasn’t a popular approach when I graduated in the ’80s, when we believed we had to choose between profits and purpose. Today, students recognize that making money and making social change don’t need to be mutually exclusive. And, in fact, based on consumer trends, businesses that incorporate socially and environmentally responsible practices will outperform those that don’t.
My time at Wharton changed my life. It has been extraordinarily rewarding to try to create similar experiences for students at Wharton and other schools through programs such as our ESG Fellows program, our Executive Speaker Series, the Turner MIINT, and the Turner Impact Portfolio Challenge.
WM: What do you see as the biggest opportunities for the industry’s next generation of investors?
BT: I think the future is filled with unprecedented opportunities for them. That’s true for many reasons, some more positive than others.
On the hopeful side, we’ve made incredible advances in technology and education that are promising to unlock brand-new solutions to our biggest challenges. Just think of the strides we’re making in climate tech, renewable energy, and biotechnology. And now we’re on the cusp of a new revolution in AI. These are future trillion-dollar industries waiting to take shape in the hands of millennials, Gen Z, and future generations.
At the same time, we continue to face a long list of entrenched societal challenges that don’t have easy answers. These include the challenges we address at Turner Impact Capital: the shortage of affordable workforce housing near job centers, the failure of too many schools to serve our students, and the difficulty of accessing high-quality, affordable health care for millions of Americans. Neither the government nor philanthropy has developed the silver bullet to solve these problems. All of this creates enormous opportunity for the investors of tomorrow, who can serve as generational problem-solvers by directing resources and expertise to support the most promising solutions.
WM: It’s been nearly 10 years since you founded Turner Impact Capital. What do you view as your firm’s biggest accomplishments since its launch in 2014?
BT: It’s hard to believe it’s been nearly 10 years! The time has flown. Today, we have almost $5 billion in investment potential and have completed nearly 200 total transactions in dozens of states in our focus areas of education, housing, and health care. We have delivered 125 high-performing public charter schools with Andre Agassi, serving more than 70,000 deserving students. We have acquired more than 13,000 units of workforce housing, preserving affordability for thousands of working families. And we have developed 36 health-care facilities in historically underserved areas. And from day one, we’ve earned superior risk-adjusted returns for our investors.
In total, we’ve had a direct impact on more than 225,000 lives — a number that’s still growing. The opportunity to meet many of these people across the country has been profoundly rewarding, including many students of the charter schools we’ve developed, along with their parents and grandparents. I’m incredibly proud of our team of passionate professionals who make it all possible — now more than 200 strong. They include investment professionals as well as former educators, health-care specialists, facilities experts, and even a former member of the Drug Enforcement Administration, on staff to promote safety at all of our properties.
And finally, I consider it a major achievement just to prove that impact investing truly works. Even through the pandemic and turbulent economic conditions, our track record undeniably proves that it’s possible to make a measurable, positive difference for communities without sacrificing yield. Despite the skeptics and naysayers, profits and purpose can fit together perfectly.
