According to Wikipedia, “Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside (or in lieu of) a financial return.”
The Financial Times puts it this way, “The term ‘impact investing’ is used informally by many in the investment community but there is increasing demand from investors to develop a global standard such as set out by the Global Impact Investing Network (GIIN). Impact investing is generally accepted to describe investing that intentionally seeks measurable social and environmental benefits. It differs from socially responsible investing which traditionally avoids investments that are inconsistent with the values of the investors, such as tobacco and arms, or investments that might be associated with poor labour rights.”
Ignite Philanthropy’s mission is to connect people, ideas and capital to fuel community solutions. We strongly believe in impact investing’s promise of social and financial return in addition to measurable impact. Our company’s vision for impact investing is consistent with that of (GIIN): “Impact investing has the potential to unlock significant sums of private investment capital to complement public resources and philanthropy in addressing pressing global challenges.”
Impact investing is still considered a new tool in the philanthropic and investment marketplace. As a thought leader, GIIN surveys the field annually. A summary of the 2017 survey indicates a market of $22 billion in 8,000 deals in 2016. What’s striking is that only 11% of the respondents were foundations. The survey predicts 17–20% growth in 2017 and undoubtedly, the marketplace is much larger than just the GIIN respondents.
Local Impact Investing
Few would argue that impact investing has the potential to leverage the social return of traditional philanthropy. Although momentum appears to be growing, the local marketplace for impact investing is still in its infancy. The Greater Cincinnati Foundation has been active locally with over $10 million invested to date. The Port Authority (recently renamed Greater Cincinnati Redevelopment Authority) has used impact investing to drive industrial revitalization, most recently at the former site of Cincinnati Gardens. Morgan Stanley Wealth Management created a toolkit and hosted a women’s breakfast in Cincinnati this fall with its Director of Investing with Impact, Lily Trager. Chris Flores of Three Corners Capital has been beating the impact investing drum for several years, hosting the Calvert Foundation (recently renamed Calvert Impact Capital) to introduce their impact investing strategies. Bill Tucker of Flywheel Social Enterprise Hub is preparing a cohort of five social enterprises for impact investments at the SE CINCY Demo Day on February 7th, which both Ignite Philanthropy and Social Venture Partners are sponsoring in an effort to increase the local appetite for impact investments.
How can we ratchet up local interest in impact investing? Is it a viable strategy to tackle big social problems in new ways? If you are intrigued or interested, call one of the local partners listed above or contact Scott Provancher or me about ways to connect or invest. Together, we can assess and explore options for scaling the local impact investing marketplace.