I think here is where it is very important to have good data and metrics to measure the success of impact investing. Those numbers provide the evidence to the case-based stories we hear about impact investing successes, and affirm the long term viability of this movement.
Community power provides a great opportunity to generate economic, social and environmental returns. Renewable energy co-ops like WindShare and SolarShare have made significant progress in Ontario. To learn more visit http://www.solarbonds.ca
In moving the concept and practice of impact investing to the level of smaller jurisdictions, e.g., counties and cities of lesser sizes, I wonder whether and to what extent this has applicability. What has, or is being looked from this perspective? As communities are getting better at conducting useful needs assessments and in so-doing can now highlight significant gaps/shortfalls and disparities down to the level of ZC, does the idea of impact investing find a place in the “tool kit” of potential solutions?
Auren, you have raised a critically important issue…not only do we need good data and metrics for measuring impact, we need standards of practice to ensure consistency in measurement. Overclaiming impact will be detrimental to the robust development of impact investing.
As a funder of social services, we have been exploring the use of social return on investment analysis and following the work of the SROI Network. You can see some SROI cases we sponsored with social service agencies we fund at:
There are legions of investors who are looking for a different way to engage their resources. They want their dollars to make a difference, but also want to (or need to) protect financial assets for the future. It’s OK if their contributions don’t net ‘investment-grade’ returns, but they must have the confidence that their resources are effectively allocated and managed to net the greatest social impact. Ensuring a seamless exit strategy that returns all or most of the investor’s principal (or re-engages their principal), rounds out a truly virtuous-loop.
Currently, if asking about impact investing at one of the mainstream financial and investment institutions (where a majority of investors go), you are directed to someone like an SRI Fund Manager. This very knowledgeable individual shares the virtues of negative screening, or defines the metrics used to ensure positive social outcome and financial return. While certainly valuable, the primary focus is clearly on financial return, fund size and the resulting fees. Makes sense…..that’s their business.
But perhaps there’s an opportunity to be more demonstrative in defining Impact Investing. Be real about what it is, and what it isn’t. Is it possible to just come out and create the ‘product’? Set the parameters for investors, define and manage the expectations of investees, and then promote it to institutions and individuals as the foremost contribution/investment hybrid.
I know there are a few intermediaries working in this space, but it’s still fragmented. There needs to be a central, unifying entity that provides credibility, scale and objective oversight. Certainly the mainstream financial and investment community can play a role, but not the lead role, as profit will always be their ultimate mandate. In turn, there is a significant opportunity cost to allowing the idea of Impact Investing to just evolve over time, or distill throughout the social, non-profit and government communities.
Perhaps we have a unique opportunity at this time to ‘define the space’. Who can step up to be the driving force? There’s a significant, largely-untapped world of supporters waiting for us to figure it out.
Excellent roundtable discussion. I particularly enjoyed the focus on the role aid agencies and how they can help impact investors bridge the gap while an organization is still scaling up. I’d love to hear more on this particular aspect of social impact investing from SSIR in the future.
This is a great post. I was going to pick out a point or two to agree with you, but as I read down the list I saw so many of the maskites I had made in my own investing. Investing on market rumors, checking portfolio multiple times a day, emotional attachment - guilty of all and all should be avoided - unless you would like to quickly lose your investments 😉
2.5 years after this article was written, what are the biggest successes within the impact investing space inside and outside of microfinance? What are the companies that were purchased by large entities, allowing the investors to get paid out?
COMMENTS
BY Auren Kaplan
ON November 22, 2011 05:58 PM
I think here is where it is very important to have good data and metrics to measure the success of impact investing. Those numbers provide the evidence to the case-based stories we hear about impact investing successes, and affirm the long term viability of this movement.
BY Julie Leach, TREC SolarShare Co-operative
ON November 27, 2011 04:37 PM
Community power provides a great opportunity to generate economic, social and environmental returns. Renewable energy co-ops like WindShare and SolarShare have made significant progress in Ontario. To learn more visit http://www.solarbonds.ca
BY Ron Carlson - Institute for Community Health
ON December 1, 2011 12:45 PM
In moving the concept and practice of impact investing to the level of smaller jurisdictions, e.g., counties and cities of lesser sizes, I wonder whether and to what extent this has applicability. What has, or is being looked from this perspective? As communities are getting better at conducting useful needs assessments and in so-doing can now highlight significant gaps/shortfalls and disparities down to the level of ZC, does the idea of impact investing find a place in the “tool kit” of potential solutions?
BY Heather White, City of Calgary
ON December 1, 2011 03:09 PM
Auren, you have raised a critically important issue…not only do we need good data and metrics for measuring impact, we need standards of practice to ensure consistency in measurement. Overclaiming impact will be detrimental to the robust development of impact investing.
As a funder of social services, we have been exploring the use of social return on investment analysis and following the work of the SROI Network. You can see some SROI cases we sponsored with social service agencies we fund at:
http://www.calgary.ca/CSPS/CNS/Pages/FCSS/Social-Return-on-Investment-(SROI).aspx
BY StephaineG
ON December 5, 2011 02:04 PM
On behalf of Mark Knowlden - Verde Group:
Great discussion - Thank you.
There are legions of investors who are looking for a different way to engage their resources. They want their dollars to make a difference, but also want to (or need to) protect financial assets for the future. It’s OK if their contributions don’t net ‘investment-grade’ returns, but they must have the confidence that their resources are effectively allocated and managed to net the greatest social impact. Ensuring a seamless exit strategy that returns all or most of the investor’s principal (or re-engages their principal), rounds out a truly virtuous-loop.
Currently, if asking about impact investing at one of the mainstream financial and investment institutions (where a majority of investors go), you are directed to someone like an SRI Fund Manager. This very knowledgeable individual shares the virtues of negative screening, or defines the metrics used to ensure positive social outcome and financial return. While certainly valuable, the primary focus is clearly on financial return, fund size and the resulting fees. Makes sense…..that’s their business.
But perhaps there’s an opportunity to be more demonstrative in defining Impact Investing. Be real about what it is, and what it isn’t. Is it possible to just come out and create the ‘product’? Set the parameters for investors, define and manage the expectations of investees, and then promote it to institutions and individuals as the foremost contribution/investment hybrid.
I know there are a few intermediaries working in this space, but it’s still fragmented. There needs to be a central, unifying entity that provides credibility, scale and objective oversight. Certainly the mainstream financial and investment community can play a role, but not the lead role, as profit will always be their ultimate mandate. In turn, there is a significant opportunity cost to allowing the idea of Impact Investing to just evolve over time, or distill throughout the social, non-profit and government communities.
Perhaps we have a unique opportunity at this time to ‘define the space’. Who can step up to be the driving force? There’s a significant, largely-untapped world of supporters waiting for us to figure it out.
BY RPF ICU
ON December 14, 2011 07:39 AM
Excellent roundtable discussion. I particularly enjoyed the focus on the role aid agencies and how they can help impact investors bridge the gap while an organization is still scaling up. I’d love to hear more on this particular aspect of social impact investing from SSIR in the future.
BY Alexdulce
ON February 27, 2012 02:45 PM
This is a great post. I was going to pick out a point or two to agree with you, but as I read down the list I saw so many of the maskites I had made in my own investing. Investing on market rumors, checking portfolio multiple times a day, emotional attachment - guilty of all and all should be avoided - unless you would like to quickly lose your investments 😉
BY Jeff B
ON July 9, 2014 11:38 AM
2.5 years after this article was written, what are the biggest successes within the impact investing space inside and outside of microfinance? What are the companies that were purchased by large entities, allowing the investors to get paid out?