GIIN in the news Press releases

Government and Nonprofits Experiment with New Approach on Financing

via The Chronicle of Philanthropyby Martha Ann Overland

February 19, 2011

Summary

As governments in the United States consider social impact bonds, the idea gets coverage in this article, which appeared in the Chronicle of Philanthropy.
From original article:
"Now a new financing effort getting attention from foundations and governments - most notably the Obama administration, which last week offered up to $100-million toward the approach - may help nonprofits like Earthen Vessels attract the money they need to expand, with the goal of saving money for society in the end.
"Backers of the new financial tool, known as social-impact bonds, want to tap the discipline of the business world by enlisting investors to put up the money to run social programs that the government normally pays for.
"The incentive for investors: If they back programs that get results, the government will not only repay the money but also provide a bonus.
"The concept is popular because it reduces fund-raising headaches for nonprofits and because it allows the government to avoid paying for programs that don't make a difference.
"If a nonprofit fails to reduce homelessness or doesn't increase graduation rates, for example, then the government pays nothing."

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Entrepreneurs Are Transforming The Developing World

via The Huffington Postby Randall Kempner, Aspen Network For Development Entrepreneurs

February 17, 2011

Summary

Aspen Network for Development Entrepreneur's Randall Kempner makes the case that investing in small and growing businesses provides valuable economic and social benefits to developing economies.
From original article:
"For the impact investing community, and even the broader investment community - SGBs provide a valuable channel and opportunity. More and more investors are realizing that they can reap financial rewards as well as social and environmental impacts by investing in these types of businesses. Our upcoming Impact Report will share research that demonstrates that in 2010 alone, 31 new funds targeting SGBs were launched."

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The Most Exciting 0.003% of Obama's Budget

via Fast Companyby Alex Goldmark

February 15, 2011

Summary

Reporter Alex Goldmark looks into the motivations behind social impact bonds, which are allocated $100 million in President Obama's proposed budget.
From original article:
"Buried deep within President Obama's $3.7 trillion budget is a tiny little item that might just change public finance forever... if it works.
"Well it's tiny by comparison anyway. President Obama is asking for up to $100 million — less than 0.003 percent of his overall proposed budget — to pilot a brand new way to pay for public services called the Social Impact Bond. The plan uses private, profit-motivated investment money to fund public services up-front. The government only pays if the services deliver as promised, and only out of government cost savings. No taxpayer money wasted on failed programs in this plan...
"...'There are a whole range of social issues, where if we get better at preventing them, then prevention is cheaper than cure,' Eccles says. 'That's something that is hard for government to commit to,' especially in tight fiscal times like the current ones, but private investors are used to paying up front and waiting for results."

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Rockefeller Foundation Sees Social-Change Dividend

via Wall Street Journalby Shelly Banjo

February 14, 2011

Summary

GIIN Board Chairman Antony Bugg-Levine's impact investing program at the Rockefeller Foundation is the subject of this article, which details the work that's being done to bring social impact bonds to the United States.
From original article:
"Originating in the U.K., social-impact bonds encourage private investors and philanthropic foundations to fund privately managed social programs in areas such as health care and prisoner recidivism. If the programs succeed in reaching previously set targets - and social outcomes improve - investors receive so-called success payments from the government. If the programs don't work, the government pays nothing. In these scenarios, investors take on all the risk and the government pays only for programs that work...
"...'There simply isn't enough money in philanthropy and government alone to solve the problems that need to be solved,' Mr. Bugg-Levine says. 'There's $80 trillion in for-profit capital markets and we believe there's huge potential in unlocking some of that money and deploying it to solve social problems.'"

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India

via LiveMintby Pierre Omidyar, Founder Of Omidyar Network

February 09, 2011

Summary

Pierre Omidyar, whose Omidyar Network is a founding member of the GIIN Investors' Council, writes in this guest column about the Omidyar Network's approach to financing social and environmental businesses that can accelerate India's economic development.
From original article:
"We also hope to have a catalytic effect with our investments. This implies a focus on investments or grants at organizational inflection points, when financial resources and professional expertise will have the most impact in helping an enterprise grow. Typically, this means companies with a proven model and demonstration of social impact, supported by a strong management team. Success is judged by how many people's lives each organization is impacting and to what extent. This evaluation system is imperfect, but we believe it's a good indicator of the type of impact we want to see in the world.
"Our hope is that this type of impact investing can play an important role in India's development by supporting innovative organizations that foster economic, political and social advancement for all Indians."

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Morgan Stanley Pledges $500 Million for Small Biz Lending

via Bloomberg Businessweekby John Tozzi

February 09, 2011

Summary

GIIN Investors' Council member Morgan Stanley will take advantage of a new program from the Small Business Administration that provides government guarantees for loans that create or retain small business jobs.
From original article:
"Morgan Stanley (MS) plans to buy up to $500 million of commercial property loans made to small businesses over the next few years, a move the bank says should help ease credit by allowing community and regional banks that make such loans to move them off their books and make new ones.
"The investment will inject much-needed liquidity into a loan market that has not yet recovered from the financial crisis. Morgan Stanley will buy commercial mortgages made through the Small Business Administration's 504 program, which companies can use to purchase or improve their properties or invest in new equipment. 504 loans, which are partially guaranteed by the government, require businesses to create or retain one job for each $65,000 that the SBA guarantees."

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For Federal Programs, a Taste of Market Discipline

via New York Timesby David Leonhardt

February 07, 2011

Summary

Governments in the United States are considering the social impact bonds first piloted with organizations that aim to prevent prisoner recidivism in the United Kingdom.
From original article:
"Wouldn't it be nice if taxpayers could somehow get a refund for government programs that didn’t work?
"Instead, the opposite tends to happen. Programs that fail to make a difference - like many of those that train workers for new jobs - endure indefinitely. Often, policy makers don't even know which work and which don't, because rigorous evaluation is rare in government. And competition, which punishes laggards in the private sector, is typically absent in the public sector.
"But there is some good news on this front. Lately, both American and British policy makers have been thinking about how to bring some of the competitive discipline of the market to government programs, and they have hit on an intriguing idea.
"David Cameron's Conservative government in Britain is already testing it, at a prison 75 miles north of London. The Bloomberg administration in New York is also considering the idea, as is the State of Massachusetts. Perhaps most notably, President Obama next week will propose setting aside $100 million for seven such pilot programs, according to an administration official."

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Energy Firms Aided by U.S. Find Backers

via New York Timesby Matthew Wald

February 01, 2011

Summary

Seeded with grant-funding from the U.S. government, six new clean energy ideas have attracted traditional investment capital to move their businesses forward.
From original article:
"In late 2009, the federal government gave $151 million in grants to advance 37 clean energy ideas deemed too radical or too preliminary to attract much private financing - like electricity storage that mimics photosynthesis and batteries that double or triple the energy stored per pound.
"Since then, six of the projects have made enough progress to attract $108 million in private venture capital financing - about four private dollars for every dollar that the taxpayers spent to get them rolling - the Department of Energy plans to announce Thursday."

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How to Have An Impact

via Financial Advisor Green Magazineby Tom Kostigen

January 31, 2011

Summary

In his first post for an impact investing blog hosted by Financial Advisor Green magazine, Tom Kostigen highlights the progress of the impact investing industry, including mentions of the GIIN and other key groups and initiatives.
From original article:
"Showing your value to the wealthiest people in the world may mean showing your values. And one way to do that is through impact investing.
"This blog will be devoted to providing you with the tools, tidbits, insights, and information you'll need to capitalize on the burgeoning field of impact investing, which is now being deemed so hot it is its own asset class.
"Refresher: Impact investing aims to solve social or environmental challenges while generating financial profit. It differs from philanthropy because that is, bluntly, charity. And it differs from socially responsible investing because that is, bluntly, more passive; SRI typically uses screens and filters to adhere to investor preferences (winnowing out, for example, sin stocks). Impact investing is more akin to private equity investing: more risky but more rewarding—in ways that go beyond mere moolah."

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The Big Idea

via Harvard Business Reviewby Michael E. Porter, Mark R. Kramer

January 14, 2011

Summary

In an issue of the Harvard Business Review that explores the failings of capitalism, Michael Porter and Mark Kramer discuss in detail the value of positive social and environmental impact beyond simple profit.
From original article:
"The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a "social responsibility" mind-set in which societal issues are at the periphery, not the core.
"The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges."
Link to Acumen blog post about this article

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ShoreBank International Unit Wins Independence with New Investment

via Crain's Chicago Business Newsby Steve Daniels

January 13, 2011

Summary

Two GIIN Investors' Council members partner to revive ShoreBank International, the global arm of ShoreBank Corp.
From original article:
"ShoreBank International said Friday it's won financing from the venture-capital arm of the Triodos Group, a Dutch bank holding company that focuses on socially conscious lending and financing.
"Triodos Ventures B.V. is now the 'anchor shareholder' of ShoreBank International, which works with lenders and others internationally to make small loans to entrepreneurs in Third World countries. ShoreBank International said it expects other 'like-minded' investors to follow suit."

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Make an Impact with Your Investments

via Market Watchby Thomas Kostigen

January 13, 2011

Summary

Thomas Kostigen explores the opportunities in impact investing in his opinion column Ethics Monitor from Market Watch.
From original article:
"Loosely defined, impact investing aims to solve social or environmental challenges while generating financial profit. It differs from the more traditional form of investing in the space - socially responsible investing, or SRI - by actively seeking to place capital in businesses and funds that produce returns and effect social change. SRI vehicles typically rely on screens to filter out "sin" stocks among public companies. In short, SRI uses a "negative" approach to invest in good causes while impact investing uses a more positive approach.
"To be sure, there is crossover. Also, many of the big players that have embraced impact investing are the same players in the SRI sector. One executive from the Calvert Group, a well-known SRI fund group, is said to have left to launch a series of offerings for impact investors. A look at the Global Impact Investor Network shows many familiar SRI investment companies."

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