• Summary

    Just as foundations were instrumental in the development of microfinance, they play an important role in the broader impact investing industry. In this article from the Wall Street Journal, eight philanthropists tell how they would spend $10 billion dollars. Rockefeller Foundation President Judith Rodin and Apax Partners Founder Sir Ronald Cohen both discuss ways to use philanthropic capital to encourage private capital to address global challenges.

    From Dr. Judith Rodin's essay

    I would use the $10 billion in four areas: First, on equipping groups and governments with talent, technology and training so cycles of growth continue after funding dissipates. Second, on creating public policies that give people access to opportunity and help strengthen resilience in their neighborhoods, villages and cities.

    Third, investing in partnerships and networks that connect entities across disciplines and sectors, assuring that successful local innovations are more widely adopted. Fourth, finding new ways of mobilizing market and financial institutions that enable private capital to complement traditional resources.

    From Sir Ronald Cohen's essay

    $10 billion should be used to seed a powerful and effective social-investment sector across the world. This would boost social entrepreneurship, which is a tremendous new force for tackling social issues.

    Organizations whose primary focus is to achieve positive social outcomes are unable to access capital markets in the way normal businesses do. Such organizations need powerfully capitalized social-investment banks that can offer a combination of financial and social returns to a wide range of investors.

    Read original article

  • Summary

    A transportation business that provides bus service for students and workers from poor parts of London is following an equity model to raise funds. Bridges Ventures, Futurebuilders, and Rathbone Greenbank Investments are among the impact investors in the company.

    HCT Group, a community bus business run by a Welsh former miner, is raising GBP 5m via a "social loan", a new form of debt designed to fuel the growth of the fledgling social enterprise sector. Backers include Bridges Ventures, the social investment business chaired by Sir Ronald Cohen, the veteran venture capitalist.

    HCT, originally called Hackney Community Transport after the working-class London borough where it is based, lists "social justice" as one of its prime objectives. Turnover has grown by about 25 per cent a year for the past eight years and is expected to top GBP 20m in the year to March 31, 2010, when profits will be around GBP 1m.

    The social loan will allow HCT, which operates bus routes in east London and the City and school buses in Yorkshire, to expand its fleet of 250 vehicles and staff of 500.

    Read original article

  • Summary

    Venture capital is being used in India to fund affordable healthcare, dairy farming, and a literacy program for poor children.

    The main purpose is social upliftment, but there is an important twist. Each project follows a "for-profit" model, is expected to show revenues and profit annually, and is backed by venture capitalists looking for decent returns.

    Following the model pioneered by microfinance institutions, a group of entrepreneurs across the country are setting up firms that seek to fulfil the twin aims of making profit while providing social uplift. From being on the fringes of the consciousness of urban Indians, the "other India", which includes dairy farmers in rural Orissa, youth in Uttarakhand and fisherfolk like the Fernandez family, are taking centre stage. Investors are putting money and giving attention to what is now being referred to as the business of social good.

    "We are right at the inflexion point and will see the emergence of more social ventures that will raise commercial capital to build for-profit businesses and investors willing to take the risk of investing in such enterprises," says Vineet Rai, founder and chief executive officer of Aavishkaar Venture Management Services, who pioneered the trend of making risk capital available to entrepreneurs aiming at helping society with their business.

    Unlike earlier, when philanthropic capital was used solely to create livelihood and products that the poor could afford, this new wave of enterprise works like a business corporation with a profit motive, while attempting to retain the essential social purpose.

    Read original article

  • Summary

    Impact investment into Global Easy Water Products, a for-profit company which has developed a manually-operated drip irrigation system, is benefiting hundreds of small holder farmers in India.

    Global Easy Water Products (GEWP) has done this in India for farmers who operate plots of between one and four acres, often in places where water is increasingly scarce.

    "We know farmers whose fathers never had a problem with their bore wells and now they're finding they don't have enough water to take care of their fields," says Katie Hill, the Hyderabad-based India portfolio manager at Acumen Fund, the social venture fund that has invested in GEWP's technology.

    The company has developed a drip irrigation system that consists of a bicycle-tyre inner tube and requires no electricity for the pumping mechanism but instead has a foot-pedal pump.

    "It's labour-intensive but the one thing poor farmers often do have at their disposal is labour," says Ms Hill.

    According to Acumen Fund, the system has raised the income of smallholder farmers by an average of $400 a year, increases crop yields by 30 to 70 per cent and delivers water savings of between 30 and 50 per cent.

    Read original article

  • Summary

    Impact investing and development aid together fund a solution to malnutrition in Kenya.

    Soon, low-income families in Kenya will be able to add to their diet a pre-cooked porridge product that is rich in proteins and vitamins and supplies the nine essential amino acids required by the human body.

    The porridge will not be delivered under the auspices of an aid agency or a government-funded programme.

    Most families will buy it as part of a revenue-based approach to attacking malnutrition.

    ***

    Acumen Fund's investment will, over the next six years, allow Insta to establish a local factory to produce and distribute up to 12,600 tonnes of the porridge a year.

    It will also help pay for product launches and marketing campaigns.

    The porridge will be priced so that it is affordable for low-income families, with 25 US cents buying a 100-gramme packet that provides a nutritional meal for four.

    Read original article

  • Summary

    MetLife and NCB Capital Impact recently announced they've provided $5 million in capital via a "social investment loan" to California community health centers.Their goal of these investments is to help preempt a potential decline in health services for vulnerable populations due to the state's budget crisis.

    The initiative is part of NCB Capital Impact's $75 million, three-year "Healthier California" program, the organizations said Jan. 12. MetLife provided a $5 million social investment loan with favorable terms and conditions to support the initiative.

    Funds will be used to finance community health centers statewide, and were made possible under the California Organized Investment Network, a state Department of Insurance program that provides incentives for investments in California Community Development Financial Institutions.

    ...Nationally, community health centers serve more than 17 million patients, about 40 percent of whom have no health insurance, the statement said. In California, where one in five residents is uninsured, the centers attract more than 11 million patient visits annually to 800 sites.

    Arlington, Va.-based NCB Capital Impact has loaned or invested $500 million for community health centers nationally, according Terry Simonette, its president and CEO.

    Program Related Investments, and other so-called mission-related and social investments are said to combine the resources of social investors with impact investment funds from private investors so community development organizations can increase the flow of capital to low-income communities. At the end of the investment period, the social investor gets the capital back so it can be used for more communities in need.

    Since 1997, NCB Capital Impact has received $50 million in PRIs resulting in $110 million of financing in low income communities nationwide to increase access and quality of health care, education and affordable housing.

    Read original article

  • Summary

    A profile of GIIN Investor's Council member, Acumen Fund, an Acumen Fund fellow, and Acumen investee D.Light.

    Much of this demand is being fed by a new generation of financiers and entrepreneurs. Jacqueline Novogratz, Acumen's founder and chief executive, says interest in her organization is mounting. The fund has $40 million invested in 44 projects in East Asia and South Africa.

    D.Light is one of those. Other than the social half of its mission - the other half being profit - it's a traditional venture-funded startup that, if not today, is very close to achieving profitability.

    "There's a convergence that's happening with Wall Street and banks looking to extend what they do," Ms. Novogratz says, "and governments and nonprofits becoming more businesslike on the other side."

    Read original article

  • Summary

    Article text below.

    A casual reader of international news might assume that New York's big event two weeks ago was US President Barack Obama's maiden speech to the UN. Rather, it was the formal launch of the Global Impact Investing Network (GIIN), a platform important enough to bring together Bill Clinton, JPMorgan, the Rockefeller Foundation, Al Gore, Bill Gates and a small group of other institutions.

    So what is GIIN? And what is "impact investing"?

    The second question first. Impact investing is the term given to a new class of investing that generates a financial return alongside a social or environmental benefit. The GIIN website describes it as driven by "the shared conviction that creative investments can play a crucial part in addressing social and environmental challenges. This investment interest is sparking the emergence of a new industry that operates in the largely uncharted area between philanthropy and a singular focus on profit-maximization (emphasis mine)".

    How big can impact investing get? A report by the Monitor Institute, the research arm of Monitor, a consulting firm, suggests that impact investing could grow to $500 billion within a decade.

    For some, impact investing is just the latest jargon in the social change arena. Various terms have been coined to capture the complex range of actors and motivations in this space - social entrepreneurs, corporate social responsibility, triple bottom line, social markets and so on. But while each of these has merit, what was missing was a coalescing force that could pull these energies into a "sector".

    Much like the origin of planets, the hybrid social change space has witnessed a whole lot of gas and dust, looking to cool and coalesce around a core idea that can then exert an increasing gravitational force to attract more gas and dust. The key condensation criterion is the ability to create a common grammar for diverse players to come together and have conversations. Measured on this scale, "impact investing" seems a likely winner.

    To the first question, then. GIIN has been launched by a small handful of institutions with the intention of creating coherence in this space. Among the key activities that GIIN will take up is the creation of a scoring system called IRIS - Impact Reporting and Investment Standards. When completed, IRIS will provide a common framework for measuring social and environmental impact of investments, thereby allowing the various stakeholders to come together. In other words, the grammar.

    There are other contenders, however. Two weeks ago, San Francisco saw the second annual conference on "Social Capital Markets", with 1,000 delegates from at least 30 countries. And in a few months, Cornell University will host a "Net Impact" conference, which will, in its words, "bring together the players behind the sustainable global enterprise movement, including sustainability and corporate responsibility practitioners, social entrepreneurs, and non-profit leaders". Sounds like a lot of competing forums for condensation work.

    The big players, however, are beginning to cast their lot. Jamie Dimon of JPMorgan Chase (the only banking chief to emerge from the financial crisis with a larger halo) said: "We're very excited by the momentum behind the GIIN -(it) can provide the framework and catalyst to help evolve from a primarily fragmented industry to a mature market."

    Irrespective of which of these networks succeeds, the essential thread holding these players together is what is really exciting: the quest for a new way of thinking about markets and their intersection with social issues, the acknowledgement that the world we live in has too many challenges to be ignored, the possibility of giving meaning to one's work while pushing the boundaries of innovation and networks of knowledge.

    And, in all this excitement, what of India? One of GIIN's directors is Pawan Mehra of Intellecap, a firm focused on social enterprises. His presence is symbolic of India being one of the hotbeds of action for the impact investing space. Our importance stems from a number of factors: We face enormous social challenges, many of which would be very well served by the principles of impact investing; we have a large and growing pool of entrepreneurs; and, we have already seen proven examples of scaled-up ideas that have worked in the hybrid social/markets space.

    The potential of impact investing doesn't mean that there are no concerns-indeed, this emerging field is throwing up many new questions even as old ones get answered-about the limits of greed and ambition as motivators of social change; about the relevance of ethics and values; about the thin-but important-line between profit and profiteering.

    These questions will need to be answered as the field evolves. And here, networks such as GIIN can help by not just getting the grammar right, but also the spelling.

    Read original article

  • Summary

    On September 30th, GIIN Investor's Council member Triodos Bank launched a capital raising issue, driven by strong growth across the bank's activities.

    Over the next three to four years, Triodos Bank expects to double its balance sheet total, customer numbers and lending to sustainable companies.The financial crisis has led to unprecedented interest in Triodos Bank's sustainable approach to banking. The capital raising will help support the growth of the Bank's sustainable loan portfolio, with an extra EUR 90 million needed to meet growing demand for Triodos Bank finance. The capital raising will take place in The Netherlands, Belgium, United Kingdom, Spain and Germany, and is set to run until 17 November 2009.

    Triodos Bank's CEO Peter Blom says: "New capital will enable us to lend to even more to sustainable projects and companies. Our growth is faster than foreseen; we continue to thrive despite the financial crisis, and have no shortfall of capital. This year we have grown faster than ever before, with more than an 18% increase in our customer numbers since January 2009."

    Peter Blom: "If nothing else, the financial crisis has taught us that it pays to choose sustainable."

    Read original article

  • Summary

    Two events this month should give believers in social finance a lift. On September 1st nearly 900 people, from institutional investors to social entrepreneurs, gathered in San Francisco for SoCap09, a conference dedicated to building "social capital markets". The event was abuzz with novel ideas such as a "social stock exchange" and "sustainable hedge funds".

    And on September 25th, at the meeting of the Clinton Global Initiative in New York, the Global Impact Investing Network (GIIN) was due to be launched. This is, in effect, a commitment to create a new asset class - impact investing - yielding a financial return alongside a social or environmental benefit. The network's 20 or so members include big banks (Citigroup, Deutsche Bank, JPMorgan), philanthropic institutions (such as the Bill & Melinda Gates Foundation and the Rockefeller Foundation), the Acumen Fund, which invests charitable donations in firms supplying health care, clean water and so forth in Africa and India, and Generation Investment Management, a green-tinged fund manager co-founded by Al Gore.

    The GIIN's goal is to share information on what works and what does not, to agree on common language and measures of performance, and to lobby for helpful laws and regulations. The creation of just such an organisation was a priority set out earlier this year in a report by the Monitor Institute, the research arm of Monitor, a firm of management consultants. If this group succeeds, the report argued, within five to ten years impact investing could grow to $500 billion, around 1% of the world's total assets under management in 2008.

    Sir Ronald Cohen, Social Finance: "This reminds me of private equity in the early 1980s, just before it started to grow," he says. It was only when the disparate private-equity firms got together and formed a network that things really took off, not least because they began to standardise and speak with one voice to regulators about what the industry needed to thrive. He hopes the same will now be true of impact investing. As a participant in the GIIN puts it, the real test will be "whether people put their money where their mouth is. Will you see deals done together?"

    Read original article

  • Summary

    The Bill & Melinda Gates Foundation plans to offer $400m in loans, equity investments and guarantees over the coming months, in a pioneering move away from traditional grants.

    "We are using a conservative approach to leverage our balance sheet," said Alexander Friedman, the foundation's chief financial officer and a former investment banker. "This gives us a $400m envelope beyond our programme budget of firepower to do deals for the poor."

    Read original article