Posts

rock on penniesIn exploring the social innovation space, one term seems to find its way to center stage on a regular basis. Impact investing. Whether you are a social entrepreneur, non-profit, student of the field, foundation or investor looking to make a difference with your dollars, this is a key concept to explore.

What is Impact Investing?

Impact investing is the concerted effort of investors to fund or otherwise contribute to market solutions that have a positive social or environmental impact.Another way of thinking of impact is investing is to see money or profit as one stakeholder in a business, and that environment and society/community to also be stakeholders. Impact investing, then, seeks to maximize the ‘triple bottom line‘ by seeking a return on investment in terms of capital, social impact, and/or environmental impact.

Defining Definitions

Wikipedia defines impact investing as:

an investment strategy whereby an investor proactively seeks to place capital in businesses that can generate financial returns as well  s an intentional social and/or environmental goal.

The Global Impact Investing Network (GIIN) defines impact investing as:

Impact investments aim to solve social or environmental challenges while generating financial returns, which can range from producing a return of principal capital to offering market-rate or even market-beating financial returns.

GIIRS, a rating and analytics methodology expounds on the GIIN definition:

Investors are increasingly seeking impact investing opportunities or investments that generate a financial return while solving social and environmental problems. The Monitor Institute’s recent report on “Investing for Social & Environmental Impact” estimates that Impact Investing has the potential to grow to about 1% of total managed assets, which would result in about $500 B of capital channeled toward social and environmental impact.

The Economist, in their recent article “Happy Returns: birth of a virtuous new asset class” impact investing is explained as:

designed to yield both a financial return and a broader benefit to society.

The Rockefeller Foundation explains the concept:

Impact investing— which helps address social and/or environmental problems while also turning a profit—could unlock substantial for-profit investment capital to complement philanthropy in addressing pressing social challenges.

The Wary Eye

Can social innovation have its cake and eat it too? Is it possible to create market solutions that create social and environmental good but that also can put capital in the pockets of entrepreneurs, investors, companies, and even governments? Not everyone is so sure.

There has been some criticism of the concept and viability of impact investing.

For example,  Next Billion posted this article “The Dangerous Promise of Impact Investing–From Ashoka Europe” quoted Ashoka’s Europe director’s qualms with impact investing:

“Great social entrepreneurs look for the fastest way to change the system with the cheapest form of funding available – not for the safest way to produce surpluses to pay back expensive loans or mezzanine capital.” This exposes the weakness of the impact investing movement, which is predicated on the ability, and willingness, of social ventures to generate income.

And, in the same article in which the Economist outlines the concept, it also outlines some skepticism:

New regulations are needed (to clarify, for instance, whether pension funds can invest with an explicitly social purpose). More people need to be tempted out of mainstream finance. Better metrics for social impact are essential. None of this is easy, especially in turbulent times.

 

Impact Investing Lens on Social Entrepreneurship

SOCAP11 (Social Capital Markets Conference 2011) may have ended last Friday, but its concepts and topics are coming to life as they are retweeted, blogged about, and discussed in articles, message boards, and through various social and professional networks.

One topic that I was eager to learn about through attending SOCAP11 was impact investing. As a concept it is a source of intrigue and fascination, but in practice I wanted to chat with investors dedicated to impact investing to learn about this niche, its need, and what criteria impact investors base their investments upon. And, I was equally curious about how impact investing works abroad.

Meet Absolute Impact Partners, Impact Investment Firm

So it was serendipitous to run into the Director of a new impact investing firm based in Singapore, called Absolute Impact Partners. In the video below, Lynna Chandra explains the concept behind their entry into the impact investment field, what they hope to achieve, and she outlines the criteria they use before making an impact investment or assisting a local social entrepreneur with mentorship resources.

Watch the Interview

Key Points

Absolute Impact Partners was started alleviate poverty through a multi-level approach, with a focus on addressing the lack of access to global markets faced by many local social entrepreneurs.

Lynna spoke about connecting local manufacturers to international markets, through creating distribution streams for products so that entrepreneurs have multiple distributors for their products.

She mentioned that her firm looks to identify businesses or projects seeking impact investment are socially aware, environmentally conscious, generate profit, and create change in the community.

Follow SOCAP11 Coverage

You can read posts about this year’s conference by clicking on the SOCAP11 tag on Innov8Social. You can also catch tweets from SOCAP11 @innov8social on Twitter and can search #SOCAP11 on Twitter for related tweets.

One way of getting to SOCAP11 this year at the Fort Mason Center was via the Bus 30 stop in San Francisco. Veering right, then left, and hiking a mini super hill would lead you to this view of what would become your new home campus for the next few days:

SOCAP11 at Fort Mason Center

SOCAP11: Money + Meaning = ?

September 6-9th 2011 marked the 4th annual Social Capital Markets Conference (SOCAP). SOCAP connects social innovators including investors, social entrepreneurs, foundations, non-profit institutions, designers, ‘social’ media, and thought leaders.

As the best attended SOCAP to date—with well over 1500 attendees—this year’s conference focused on impact investing and featured a number of sessions that explored the financial angle of investing in social ventures. It also took a look at the big why—why it matters to invest in projects that have meaning or create some material positive impact. And it delved in to the big how’s—how to design for social innovation, how to build audience, and how to secure seed funding and investment.

Outside Insider

SOCAP11 was an insider’s conference—with plenty of financial-speak, legalese, design lingo, and social innovation buzzwords to tire out your Twitter fingertips.

And SOCAP11 was a place for newbies too, providing a guided path into the world of social impact investing through a broad variety of session tracks, ‘open space’ time for impromptu sessions, and plenary group sessions to bring everyone together and to help distill the deluge of useful information.

In fact, there was a balanced buffet of tracks an attendee could choose from to explore their interest in the field, and even partake in a few “Wild Card” sessions that didn’t squarely fall into a track but were topics of interest. And you could mix, match, sample, and float in and out of tracks based on your preferences.

SOCAP11 Tracks

Doing Well By Doing Good

A huge focus of the conference was exploring the meaning behind social innovation. And time and again individuals from various niches mentioned this phrase…”doing well by doing good.” It seems to be the call that social entrepreneurs, designers, socially-inspired professionals and impact investors alike are determined to answer.

Tweet-casting

After tweeting live from Dreamforce and appreciating the experience as a way to share and learn from various perspectives, I joined a number of other regulars tweeting live from #SOCAP11. It was a great way to connect in real-time. There was even a “tweet-up” to meet the fellow tweeters live.

Parse, Share, Repeat

I met a number of interesting innovation start-ups, learned even more about the benefit corporation movement, and was introduced to a plethora of new keywords. I look forward to parsing out the ripe picks and sharing them with Innov8Social readers. So, don’t change that dial—I will be sharing my experience through photos, video, informative posts, buzzword drilldowns, and reflections on Innov8Social in the upcoming days. To stay connected, just click the SOCAP11 tag to see all Innov8Social coverage of the event.

Catch Up on SOCAP11

There are a number of ways to get your fill on the conference and individual sessions.  Here are a few:

SOCAP11 kicked off informally Tuesday with pre-registration at the Hub in San Francisco. The conference officially starts on Wednesday, September 7th at Fort Mason.

Welcome to SOCAP11

This excerpt from SOCAP Convener Kevin D. Jones in the conference guide explains a little background behind SOCAP:

“SOCAP’s mission is to help create social and economic power for the poor. And we help catalyze a for-profit market to make that happen. Our initial goal in creating SOCAP was to show that the market between giving and investing was real, that it was big and that it was growing…”

SOCAP11 Coverage

Follow our live tweets of SOCAP11 @innov8social on Twitter. You can also search  #SOCAP11 on Twitter for related tweets. After the conference, read posts by clicking on the SOCAP11 tag on Innov8Social.