Progressive philanthropy has (at least) two mantras: do more with limited resources and tackle systems while working on problems. Both of these core motivators for mission investors can help clarify how to move the field forward.
I recently received an email from a top-performing global macro hedge fund manager. We had met two years ago when he spoke at a student conference on alternative investments I helped organise while at LSE. Now, he was calling to learn about the peer-to-peer lending industry.
The way to popularize “impact” investing — for now still dominated by private placements — isn’t, as some futurists would have it, through do-it-yourself technologies alone. Instead, says the Global Learning Exchange, it’s in a combination of tech and mainstream investment packages supported by sound research and good advice.
Impact investing will struggle to gain scale and relevance without both the participation of mainstream capital markets, and investment professionals and the expansion into more traditional and non-private financial products.
2014 will be a year we dig deeper in impact investing and measure the impact it has on our local communities. Two new studies provide insights on good financial returns from a range of impact investments.
Even as most of us remain fixated upon the highs and troughs of the stock market, there are those who, being driven by an increased consciousness of their responsibility towards society and the environment, have been investing in concerns with a social impact agenda. The KL Felicitas Foundation (or KLF) of Charly and Lisa Kleissner has grabbed headlines for proving the success of social impact investing in terms of a positive financial ROI.
A report published by Sonen Capital in October 2013, Evolution of an Impact Portfolio: From Implementation to Results discusses the KL Felicitas Foundation's (KLF) efforts in allocating 100% of its capital to impact investing over a period of seven years. As an early mover in impact investing, KLF's experience nicely displays early challenges and changes over time as the industry matured.
Impact investing — where private capital is harnessed for greater social good — has had several early successes as well as its share of challenges. While analysts predict the market could reach $1 trillion by 2020, less than $40 billion has been committed to date. Investors cite a variety of challenges, including the lack of an established track record of exits for investors in double-bottom-line companies and the perceived conflict between social responsibility and fiduciary duty.
Martin Reed has been selling sustainably-sourced seafood over the internet since 2010, but until recently he had never tried to sell investors on Blue Sea Labs, his San Francisco-based startup. This year, though, Reed decided to expand his company, which sells wild salmon, oysters and crabs on its ilovebluesea website.
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