This post was written in March 2012 by Mailande Moran, a first year Duke MBA and a student fellow with CASE i3.
On Wednesday, the CASE i3 Initiative on Impact Investing co-hosted a meeting of roughly 80 leading investors, entrepreneurs, academics and intermediaries from the global impact investing community in Oxford, before the start of the Skoll World Forum on Social Entrepreneurship. These leaders came together to discuss the best practices and barriers that currently exist in the field of impact investing – a field that holds immense potential, but which is still maturing and lacks data-driven and practitioner-guided research.
In order to meet this need, CASE, InSight at Pacific Community Ventures, and ImpactAssets announced an exciting new global research partnership at Wednesday’s meeting: “The Impact Investor: People and Practices Delivering Exceptional Financial and Social Returns.” (read full press release here) The project has attracted significant funding, most recently a $350,000 grant from Omidyar Network, and has released its first report, “The Need for Evidence and Engagement” (download pdf of report here).
The excitement around this new initiative was clear at Wednesday’s meeting. The attendees, representing diverse organizations including the Calvert Foundation, Bridges Ventures, Capricorn Investment Group, the World Bank and the Australian government, helped begin the conversation around gaps and needs in the sector. Two interactive discussions were held; one on the barriers and lessons for limited partner investors in impact investment funds, and one in the barriers and lessons from the general managers of impact investment funds around the globe working to meet or exceed investor expectations through their investing. CASE advisory board member Laura Callanan of McKinsey & Co expertly synthesized each session and left us with some key takeaways, including:
- There is a growing demand from investors for impact investing products but we need to educate financial advisors so that they better understand and become more comfortable with these products.
- Similarly, we need champions in the sector – respected and experienced investors who can serve as mentors and role models for newcomers to the field.
- There is also a need for defining what a successful impact investing fund looks like, how you build one, what metrics are involved, and how those metrics should be communicated. The common terminology of “impact-first” investors vs. “financial-first” investors is no longer granular enough – we need to start segmenting the market to reduce friction and confusion.
- There is still a mismatch of the type of capital/the risk level that investors are willing to take, versus what is currently needed by impact entrepreneurs.
- Investors need to clearly define their goals and beneficiaries, and use those decisions to dictate which kind of capital they use, and to what end.
- In philanthropy, program officers routinely partner in supporting grantees. Their ability and willingness to share information and due diligence makes it easier for them to be collectively effective. In this way, impact investing should be more like philanthropy than traditional investment – we can and should share our information with each other to help the field advance more quickly and cut down on transaction costs.
This meeting was only the beginning of a series of conversations as part of the “The Impact Investor” project. Ben Thornley, Director of InSight at PCV, talked about the need to acknowledge that until more rationality is brought to the impact investing markets, larger pools of more mainstream capital will not enter the market. Jed Emerson, vice president at ImpactAssets (to whom the title of this blog post is also attributed), added: “Now, we’re moving from talking to walking; we have to be able to see each other as we move forward on our paths. Collective inquiry and innovation are what will help us catalyze significant amounts of capital and convert an inflection point to a point of sustained impact.”
For another perspective on Wednesday’s session, check out a post on the Skoll World Forum blog from Aunnie Patton, currently a student at Said Business School, Oxford. Thanks, Aunnie!
The project is also currently hiring an MBA summer intern to work in PCV’s San Francisco office! Check it out here!