• Summary

    GOOD magazine profiles Acumen Fund, Aspen Network of Development Entrepreneurs, Omidyar Network, RSF Social Finance, and more in this slideshow.

    "The Social Capital Markets Conference was an opportunity to find the best new social entrepreneurs to fund. GOOD talked with some of these pioneering investors to get tips for social entrepreneurs who want to attract values-driven cash."

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    Acumen Fund portfolio company WaterHealth International argues in Fast Company that creating an economic system to ensure clean water will have longer lasting results.

    "The for-profit model can be successful in helping underserved populations by effectively supplementing other activities. The public sector can do much more on their limited budgets by supporting business models that leverage private sector funding. This enables the public sector to reach a larger number of underserved communities compared to what would be possible if they went it alone."

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    The Economist discusses the momentum building around impact investing.

    "Investors have greater choice than ever. Five years ago anyone wanting explicitly to combine financial returns with virtue was limited to investing in social housing for poorer people in rich countries, microcredit and a handful of ethical mutual funds that shun sinful shares such as tobacco and defence companies. In June Impact Assets published a list of the top 50 impact investors, ranging from Blue Orchard, which has invested around $1 billion in microcredit, to IGNIA, which is investing its first $100m fund in growing small businesses in Latin America and is about to start raising a second fund."

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    The Financial Times interviews Caroline Mason, the chief operating officer of Big Society Capital, which hopes to attract more capital to social enterprises in the UK.

    "The Big Society bank cannot fill the hole left by public spending cuts, its chief operating officer has admitted, but aims to create a market for social investing that will draw in at least £3bn of private money. The bank, now renamed Big Society Capital as it will not take deposits and will only lend wholesale, will focus on facilitating investment rather than funding frontline services."

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    LeapFrog Investments, a social investment fund, made a $15 million investment in a unit of Shriram Group, a Chennai-based financial services company, that is targeting the lower-end mass market in India with insurance.

    "'It's very difficult for societies to develop without the ability to transfer risk,' says Jim Roth, co-founder of LeapFrog. Insurance, he believes, is key for that. But Mr. Roth is also clear that such a business needs to make a profit. 'If we don't make a profit, this is not going to be sustainable,' he said. 'We don't make a big margin on each client, but we look at a large number, a large base.'"

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    This issue of Innovations journal from MIT is dedicated to impact investing and features substantive conversations from industry leaders. The GIIN contributed this discussion about IRIS and the stakeholder involvement necessary to establish standards for a new industry.

    "Standardized accounting practices and financial reporting have evolved in tandem with the investment industry, and are now universally accepted and used. Today, the International Financial Reporting Standards (IFRS) guide reporting and aid interpretation of a business's financial position, and it is both de facto and, in much of the world, de jure that a business will regularly report standardized financial statements in order to function in a market.

    "How do such standards emerge? Can a common reporting framework be credibly developed and accepted over a few decades, rather than over millennia? After all, the IFRS have yet to be adopted in the United States, which instead uses the generally accepted accounting principles (US GAAP), a reporting standard that fulfills the same purpose. These are key questions for the impact investing industry, as efforts to develop and adopt a standardized set of social and environmental performance indicators begin to gain traction. For impact investing, uptake and widespread adoption of a credible, independent, common set of standards is critical for social and environmental impact to be realized and far-reaching, and thus for the industry to flourish."

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    Ron Cordes, co-founder of the Cordes Foundation, discusses his career in the investment industry, impact investing today, and his motivations for founding ImpactAssets.

    "The impact investing space is still in its infancy, but several studies from JP Morgan and others have projected that it will grow over the next 5-10 years into a sizable market - which is consistent with all of the conversations I'm having today with leading players in the field. Like any new investment category it will take time for investors and the advisors who serve them to embrace this new opportunity - but I'm quite confident that a strong groundswell of interests exists from individuals and family foundations who are becoming increasingly aware of how they can connect their 'passions with their portfolios'."

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    Fast Company profiles Acumen Fund's Director of Business Development, Sasha Dichter, who talks honestly about the challenges facing impact investing today: finding the right talent, communicating the cause, and rigorously applying impact analysis and metrics.

    "'We as a sector have a responsibility to not be apologetic about what the [investment] story is. There is no tradeoff,' he explains, the way there was a generation ago with the screened investment funds of the 1990s that peddled various 'vice-free' stocks. 'A certain amount of results have to be proven,' Dichter adds."

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    Forbes interviews Kevin Jones, Co-founder and Convener of SOCAP, a multi-platform organization dedicated to the flow of capital towards social good.

    "Conceptually, we’ve come a long way; the idea that you can make money investing in for profit companies focused on solving social and environmental problems is no longer regarded as kind of a crazy idea, something heretical and out on the fringe. The demand, just within the U.S. has been sized at more than $100 billion, while other reports talk about a global demand for impact investing in five years that's an order of magnitude larger."

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    The Global Impact Investing Rating System (GIIRS), which utilizes the Impact Investment and Reporting Standards, was launched to the public. GIIRS is a ratings system for mission-driven organizations and funds.

    "[GIIRS] is expected to open the way for the already clearly identified pent up demand of high net worth investors, family offices and institutional wealth managers. It will let these new-style investors compare and measure the kind of social and environmental impact they can expect from their investments and donations. GIIRS will be a bridge that should accelerate the flow of capital to good."

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    The author postulates that in these tumultuous markets, microcredit is a good bet for financial returns and for social good.

    "As stock markets around the world are turned into trampolines, there is solid and stable ground on which to stand and make steady returns in the credit markets - the microcredit markets."

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    This article in the Financial Times announces the capitalization and official launch of Big Society Capital, a financing organization established by the U.K. government to support the social sector.

    "The Big Society Bank - now renamed Big Society Capital at the insistence of the Financial Services Authority, which has ruled it is not a bank - took another step forward on Thursday with the announcement of a heavyweight board and a trust to oversee it, and with news of its first investment.

    "The investment company has also reached a settlement in principle with the big four UK high street banks over the GBP 200m that they have been cajoled into putting into the fund. They were demanding that the money be loaned on 'commercial terms.'"

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