Impact Investing

Investing in Impact

As entrepreneurs create more for-profit businesses with strong social missions, the opportunity for socially minded investors to invest in them grows.

One of the most important trends in social innovation is the burgeoning field of impact investing. Until recently, the principal sources of money for advancing social change were government funding and philanthropic donations. Finding ways to bring investment capital into the mix offers the potential to greatly expand the amount of money that is available for the social sector. That is why we are excited to bring you a collection of interesting and varied articles on impact investing in the current issue of the Stanford Social Innovation Review.

One of the principal reasons impact investing is growing in popularity is the parallel rise in the number of social businesses that are being started. As entrepreneurs create more for-profit businesses that have strong social missions—such as Numi Organic Tea, Method Products, and New Leaf Paper (all certified B Corporations)—the opportunity for socially minded investors to invest in those businesses grows right along with it.

Not all impact investments are in for-profit companies, however. Many nonprofits also need access to investment capital, sometimes as standard loans, and other times in the form of creative financial products. The Nonprofit Finance Fund, for one, has played an important role in helping US nonprofits access this type of investment capital. Under its new CEO, former Rockefeller Foundation executive Antony Bugg-Levine, NFF is likely to push into new areas of impact investing. Bugg-Levine has been a prominent advocate of impact investing and is the co-author (along with Jed Emerson) of the new book Impact Investing: Transforming How We Make Money While Making a Difference. To read a provocative review of his book, see “Shifting the Market.”

Impact investing is not just a US trend. It is growing in popularity around the world as well. For an interesting look at the first Brazilian social capital fund, read “Journey into Brazil’s Social Sector.” Leonardo Letelier, the founder and CEO of Sitawi, recounts his experiences creating and operating the fund. Sitawi has provided more than $1 million in loans to a range of Brazilian social enterprises, including a community bank, a handicraft collective, and a poverty alleviation agency.

For an extensive look at impact investing, read “Roundtable on Impact Investing.” In this discussion, impact investing leaders from around the world discuss their experiences and the trends that they think are important. The participants include Jacqueline Novogratz, founder and CEO of Acumen Fund; Álvaro Rodríguez Arregui, chairman of the Mexican microfinance bank Compartamos Banco and managing partner at the impact investing firm Ignia Partners; Asad Mahmood, managing director of Global Social Investment Funds at Deutsche Bank; and Iftekhar Enayetullah, co-founder and director of the Bangladesh social business Waste Concern.

And finally, for an account by a pioneer impact investor about his two decades of experience, be sure to read Roger Frank’s “Impact Investing: What Exactly Is New?” Frank provides an honest and often humorous look at the difficulties he has had getting investors to consider impact investing.

Read more stories by Eric Nee.

Tracker Pixel for Entry
 
 

COMMENTS

  • BY Auren Kaplan

    ON November 19, 2011 04:50 PM

    The surge of impact investing in recent years is really thrilling! Thanks for this article.

  • For those in seeing how impact investing is evolving in other parts of the world, the Social Enterprise World Forum (SEWF) - Forum Mundial de Negócios Sociais 2012, hosted by NESsT next October 16-18, 2012, in Rio de Janeiro, Brazil, will focus on the overall theme of impact investing, on attracting and leveraging new investment capital for social enterprise from public and private sources and, particularly, on enabling promising social enterprises to become investment ready. For more information, visit http://www.sewf2012.org.

Leave a Comment

 
 
 
 
 

Please enter the word you see in the image below:

 

SSIR reserves the right to remove comments it deems offensive or inappropriate.