This is great. Only comment - I’m not sure impact investing is going towards a for-profit model for the investor (as opposed to the recipient) as your article seems to suggest. The circles I’m in see it as a break-even and maybe-do-a-little better or a little worse model. This is because simply recouping the investment or only losing a little, is still a “profit” in social impact speak, because you can reinvest it immediately in social impact work once again and get 2 times, 3 times, x times the social impact value of having simply given the funds (note: not all non-profit work is pure “granting”). Asking the recipient to pay-it-forward, is another mechanism. The whole point is that you’re investing in impact, not profit, so the discussion of generating IPOs and generating new commercial tools etc is not really as relevant here as you are making it to those truly working on maximizing impact with limited funds and thereby taking more of a business savvy approach. For-profit microfinance, for example, is definitely *not* impact investing, nor is exposing poor people to interesting financial tools and taking a share of the profit on their money from investing in those tools. Both are for-profit models targeting the poor, but that is not necessarily wrong and can be quite beneficial to all. But its not investing in impact, nor is it really impact investing or social “enterprise” investing.
This a fantastic piece! My only wish and/or suggestion would have been that the authors comment on the legal, history and/or role of cooperatives in the mix of this developing environment. Perhaps this could be a topic for a future post/article.
What we are really talking about is that business sector has a skill non profits often lack - an ability to scale up. Too many good projects whither because they wont take advantage of what business side can offer.
@AD - lots of examples of returns, just not at the speed as regular investing. But there are anomalies on both sides. More investment required to know.
@ Erik - what do you mean by cooperatives? You mean Public Private Partnerships?
@ John - agreed. We should be leveraging all models available to scale better results for social ills!
Enterprise Toronto has great workshops on start ups and entrepreneurial skills, some targeted at non profit sector. Getting non profits to see themselves as entrepreneurial is important and the network could create new things.
@Erik - to follow up on your cooperative comment, there is a long thread to pursue here, from investor coops (such as Oikocredit) to bank coops (like Rabobank) to major regional, national and local producer, enterprise, farmer and financial coops.
Vancity, a credit union (close cousin of a coop), is noted in the article, and is one of the leaders of the Global Alliance for Banking on Values (http://www.gabv.org/), which includes at least three cooperative banks among their global members committed to investing in sustainable, real economy enterprises.
Thanks for reading and commenting, look forward to continuing the discussion!
@Mary Kopczynski - My apologies on the slow reply, by cooperatives I mean COOP’s . @Jesse Fripp comment on Vancity - a Canadian banking sector COOP - is a great example. Another being Mountain Equipement COOP (MEC) - http://www.mec.ca - would be a retail example.
But all, in all - this article is fantastic and I really appreciated the effort it is trying to articulate.
Not sure if you are aware, or following, but Provincially Canada is undergoing a massive policy review and hopefully reform in this area. The nonprofit & charitable sector has finally come to terms that its incorporation process is limiting its capacity to perform and scale to some of civil society’s growing demands/needs. Social enterprise is being thrown around as a possible alternative - yet it has failed to fully take root & have a significant impact.
Interesting times - hope this tread continues. Great work!
Great article! It seems that solving problems of financial and social sustainability in underserved markets requires a combination of public, private and non-profit engagement. Each have their unique capabilities and shortcomings. Having worked for a couple years at a non-profit providing medical assistance in Morocco and having spent some time in Sub-Saharan/East Africa, I can attest to the dangers of developing dependency on altruistic non-profits. In my experience such engagement, while at times effective in meeting short term needs, can leave a people worse off in the mid to long term. Purely for-profit ventures may be indifferent to the social impact of their dealings; non-profits may care little about creating a model that can function without the inject of fresh captial. I think as we look for solutions to extreme poverty in the 21st century, the dialogue must include the space in-between those two extremes.
Erik you may be interested in this repeat of free course Coursera How to Change the World , it is excellent and explores the issues in your comments . 30,000 of us from around the world took it this summer https://www.coursera.org/course/changetheworld
COMMENTS
BY A D
ON September 18, 2014 02:07 PM
This is great. Only comment - I’m not sure impact investing is going towards a for-profit model for the investor (as opposed to the recipient) as your article seems to suggest. The circles I’m in see it as a break-even and maybe-do-a-little better or a little worse model. This is because simply recouping the investment or only losing a little, is still a “profit” in social impact speak, because you can reinvest it immediately in social impact work once again and get 2 times, 3 times, x times the social impact value of having simply given the funds (note: not all non-profit work is pure “granting”). Asking the recipient to pay-it-forward, is another mechanism. The whole point is that you’re investing in impact, not profit, so the discussion of generating IPOs and generating new commercial tools etc is not really as relevant here as you are making it to those truly working on maximizing impact with limited funds and thereby taking more of a business savvy approach. For-profit microfinance, for example, is definitely *not* impact investing, nor is exposing poor people to interesting financial tools and taking a share of the profit on their money from investing in those tools. Both are for-profit models targeting the poor, but that is not necessarily wrong and can be quite beneficial to all. But its not investing in impact, nor is it really impact investing or social “enterprise” investing.
BY Erik Haines
ON September 19, 2014 10:21 AM
This a fantastic piece! My only wish and/or suggestion would have been that the authors comment on the legal, history and/or role of cooperatives in the mix of this developing environment. Perhaps this could be a topic for a future post/article.
BY john ryerson
ON September 21, 2014 08:44 AM
What we are really talking about is that business sector has a skill non profits often lack - an ability to scale up. Too many good projects whither because they wont take advantage of what business side can offer.
BY Mary Kopczynski
ON September 22, 2014 04:59 PM
@AD - lots of examples of returns, just not at the speed as regular investing. But there are anomalies on both sides. More investment required to know.
@ Erik - what do you mean by cooperatives? You mean Public Private Partnerships?
@ John - agreed. We should be leveraging all models available to scale better results for social ills!
BY Regina Starr Ridley
ON September 23, 2014 08:52 AM
Thanks for this thorough piece that lays out the oft-heated debate. It would be great to see follow-up as the discussion continues.
BY john ryerson
ON September 23, 2014 09:01 AM
Enterprise Toronto has great workshops on start ups and entrepreneurial skills, some targeted at non profit sector. Getting non profits to see themselves as entrepreneurial is important and the network could create new things.
BY Jesse Fripp
ON September 25, 2014 02:40 PM
@Erik - to follow up on your cooperative comment, there is a long thread to pursue here, from investor coops (such as Oikocredit) to bank coops (like Rabobank) to major regional, national and local producer, enterprise, farmer and financial coops.
Vancity, a credit union (close cousin of a coop), is noted in the article, and is one of the leaders of the Global Alliance for Banking on Values (http://www.gabv.org/), which includes at least three cooperative banks among their global members committed to investing in sustainable, real economy enterprises.
Thanks for reading and commenting, look forward to continuing the discussion!
BY Erik Haines
ON September 26, 2014 12:16 PM
@Mary Kopczynski - My apologies on the slow reply, by cooperatives I mean COOP’s . @Jesse Fripp comment on Vancity - a Canadian banking sector COOP - is a great example. Another being Mountain Equipement COOP (MEC) - http://www.mec.ca - would be a retail example.
But all, in all - this article is fantastic and I really appreciated the effort it is trying to articulate.
Not sure if you are aware, or following, but Provincially Canada is undergoing a massive policy review and hopefully reform in this area. The nonprofit & charitable sector has finally come to terms that its incorporation process is limiting its capacity to perform and scale to some of civil society’s growing demands/needs. Social enterprise is being thrown around as a possible alternative - yet it has failed to fully take root & have a significant impact.
Interesting times - hope this tread continues. Great work!
BY Erik Mirandette
ON October 2, 2014 06:08 AM
Great article! It seems that solving problems of financial and social sustainability in underserved markets requires a combination of public, private and non-profit engagement. Each have their unique capabilities and shortcomings. Having worked for a couple years at a non-profit providing medical assistance in Morocco and having spent some time in Sub-Saharan/East Africa, I can attest to the dangers of developing dependency on altruistic non-profits. In my experience such engagement, while at times effective in meeting short term needs, can leave a people worse off in the mid to long term. Purely for-profit ventures may be indifferent to the social impact of their dealings; non-profits may care little about creating a model that can function without the inject of fresh captial. I think as we look for solutions to extreme poverty in the 21st century, the dialogue must include the space in-between those two extremes.
BY john ryerson
ON October 2, 2014 06:30 AM
Erik you may be interested in this repeat of free course Coursera How to Change the World , it is excellent and explores the issues in your comments . 30,000 of us from around the world took it this summer https://www.coursera.org/course/changetheworld