The diffuse state of impact investing in the foundation world was evident again in sessions at day two of the Council of Foundations’ annual conference in San Francisco (and outside of them). The main impact investing session of the day was a panel of foundations that began some form of impact investing more than ten years ago. Unsurprisingly the level of conversation moved up a notch in many ways. Some observations:

• Warnings, Part I: one particularly interesting topic was Social Impact Bonds and their potential to set the field back. The story there is not something currently wrong with SIBs but the feeling that SIBs are still very untested but already being marketed broadly to foundations and individuals who may be unaware or unprepared for the risks inherent in such a new structure. If things don’t go well with these first SIBs, it could be a very public black eye for the nascent sector.

• Warnings, Part II: another consistent theme was encouraging newcomers to impact investing to be wary and careful. For those in the US, the advice is to start with investments in Community Development Finance Institutions (CDFIs), a peculiar set of entities that are chartered to provide finance and investment in poor neighbourhoods or communities. The idea is that these institutions have the knowledge and experience to judge investments that foundations new to the space don’t have. For those investing outside the US, the advice was to seek out existing intermediaries like microfinance investment vehicles (MIVs) and the like. Oddly this advice was never squared with repeated warnings about the possibility of a bubble in impact investing and the lack of investable opportunities. I was left wondering what would happen if there was a flood of impact investing funds headed to CDFIs and international intermediaries. Those organizations would end up having to increase their overall level of risk to get that money out the door – and they would therefore no longer be safe places to dip toes in the water. Indeed, the large flow of money into MIVs ten years ago is frequently cited as a contributor to crises in the microfinance world.

• There is something new under the sun: the Kresge and Robert Wood Johnson Foundations are teaming up with Goldman Sachs and Key Bank to launch what was described as one of the largest (and most complex) efforts to pair impact investing with pay-for-performance schemes yet. What is called the Strong Families Fund (this is the only link I could find about it at this point), said to be launching some time in the next few weeks, will definitely be something to watch.

• Who’s not here? While checking my Twitter feed in the midst of one session I was surprised to find a series of tweets about an impact investing session that clearly wasn’t what I was watching in front of me. It turns out that there was a session on impact investing happening at the Milken Institute Global Conference where the truly heavy hitters from the investment world are gathering. There panellists included very large pension funds and asset management firms, organizations that are allocating far, far more capital than most of the people in the session that I was at combined.

• Where is the corpus being managed? Which leads to a final thought from today’s sessions. Perhaps the most significant question that will dictate what a foundation will do in impact investing is one I hadn’t considered: is the foundation’s fund being managed in-house or by professional asset managers outside the foundation? It is the organizations that are still managing their corpus in-house, and therefore have a real chance of looking at their grantmaking, impact investing and fund management holistically, who are going to do the more interesting things and will push the field forward. Those foundations that are outsourcing their asset management to the types of organizations at the Milken Institute conference are unlikely to do anything that truly pushes boundaries.

Timothy Ogden is executive partner of Sona Partners and a contributing editor to Alliance. Email timothy.ogden@sonapartners.com