Acumen Blog

Sasha_Global Philanthropy Forum

Join the conversation
with this hashtag:
#impinv

Global Philanthropy Forum – Impact Investing Panel

I had a great time on Tuesday’s panel at the Global Philanthropy Forum with Matt Bannick, Maya Chorengel and David Bank.  It was an opportunity for all of us to dig in, in a substantive way, to the “facts and fictions” of impact investing.  My high-level takeaways from the panel were:

  1. We all agreed that just because there may not always be tradeoffs between financial return and social impact certainly doesn’t mean that there are never tradeoffs between the two.  This was language that Matt Bannick used and I thought it captured very well the nuance that, it feels to me, the impact investing sector misses when you just read the headlines.
  2. While the impact investing sector has grown and there’s more money at play, there’s still very little risk capital available, especially for early-stage ventures.  I include philanthropically-backed investment capital and enterprise philanthropy in the bucket of “risk capital,” and I’d say that, by and large, a year after the publication of the Blueprint to Scale report, as a sector we haven’t in any substantive way addressed the “Pioneer Gap” of early-stage, risk capital for entrepreneurs looking to solve old problems in new ways.
  3. A corollary of the previous two points is that we still haven’t mapped out a clear third way between “100% loss of principal” (philanthropy) and “market rate returns.”   My view is that until we create an equilibrium point around what this third way is, and until we do a better job articulating the impact we are having (and on who), then we have come up short in creating a new sector and a new way to solve problems.
  4. We have to get the metrics right.  If we can achieve breakthrough in how we quantify and understand impact, I believe we could change the whole game.  We all agree that there are some tradeoffs between seeking returns and seeking impact, but because it’s so much easier to gravitate to what we can quantify – the financial returns – and so much harder to accept tradeoffs when you struggle to describe what you’re gaining when you take more risk, we keep on gravitating to financial returns as the best indicator of success.   The onus is on all of us to articulate and quantify the increased impact you can have when you target harder-to-reach populations; when you dig into untested sectors like truly low-income housing or land rights or sanitation; or when put up risk capital on new, untested, potentially breakthrough ideas.

This panel was a conversation that wouldn’t have happened just a few years ago, and it’s a testament to how far we have come as a sector that we are able to delve deeper into the questions that underlie this work.  Enough time has passed that we have real data from which to draw initial conclusions.

At the same time, I’m reminded of how early we are in our evolution as a sector.  “Impact investing” as a term was coined in 2007, and each of the sectors in which we are investing – whether clean energy, agriculture, primary health services, etc. – are themselves nascent.  It is early days, and we must continually remind ourselves that we are in a period of experimentation and learning.  Indeed I fear that in an age where information and ideas flow so rapidly, we have rushed to conclusions far too quickly relative to the time it takes to actually build businesses on the ground.  We must ask ourselves: what changes can be accelerated by better information flows, better technology, more appropriate risk capital, and what changes necessarily come more slowly?  I know that if we retain a spirit of inquiry and openness, if we allow ourselves to continue to learn and evolve, rather than getting boxed in to an old, narrow view of what success looks like, then I believe we can really get there.

In case you missed the livestream, here’s the video of the panel.  Enjoy.

Comments

Why India’s Economic Growth Depends on Vocational Training

India has an enormous population of young people – over half of the 1.2 billion people are younger than 25 years old. Yet, only 2% of its 500 million person workforce has any skills or training. The majority work in the informal sector (90%), where there are few opportunities for education other than what workers ‘pick up’ on the job. This reality limits overall productivity, as well as upward mobility. [Read More]

Letter from Jacqueline: My Week in Ghana

I am writing on a return flight from Ghana. The country has not seen a single case of Ebola, yet the impact of fear is profound. As travelers enter the country, attendants screen for high temperatures. Hand sanitizer dispensers are omnipresent. Hotels and conferences have seen massive cancellations. Everywhere are constant reminders of our fragility and the strength of our connectedness. [Read More]

Six online courses we’re taking this year

+Acumen’s free online courses are a great way to learn tools that will help you develop both professionally and personally. Whether you are a social entrepreneur who wants to market to your customers or a young professional that wants to strengthen your leadership skills, we are offering six courses this Fall that will help you develop the tools, knowledge, and networks to change the way the world tackles poverty. [Read More]

Four Emerging Leaders Building the Future of Pakistan

With 60% of Pakistan’s population living under less than a dollar a day, the external narrative of Pakistan is characterised by what the country lacks; a lack of security, a lack of women’s rights, a lack of access to education, and the list goes on. What this narrative ignores are the individuals who work tirelessly to plug those gaps. From human rights to education to food security, Acumen Pakistan Fellows are affecting change through organizations committed to tackling poverty. Their work is truly inspiring, promising a hopeful future for Pakistan. Here are four fellows that are building this future for Pakistan and come together periodically to share learning experiences and grow as leaders. Through five seminars, the fellows have strengthened skills of adaptability, communication, empathy and problem solving through listening. If you are committed to creating change in your community, apply now to be an Acumen Pakistan Fellow. The deadline is 29 September. [Read More]

Acumen Partners with AlphaSights to Better Access Global Expertise

In our work investing in social enterprises that deliver critical goods to the poor, there is a substantial amount of work to evaluate each investment opportunity. A critical part of the diligence process, particularly when it comes to emerging markets, is speaking with industry experts who can provide reliable information about sector trends, market dynamics and public policy – all of which affect our evaluation of potential investment opportunities. [Read More]

DE-BUNKING THE BURDEN MYTH: IMPACT DATA GOES LEAN

Our manifesto begins, “it starts by standing with the poor.” Yet for good reasons, the sector has found it challenging to measure which customers are actually being served through social impact investments – getting accurate data on incomes is notoriously difficult and the logistical challenge and cost of conducting surveys in person prohibitive. [Read More]

Questions for Aspiring Leaders

Bavidra Mohan, Acumen’s India Fellows Manager, attended this years Aspen IDEAS festival as a Scholar. The Scholarship program was established to invite guests from around the world to bring a diverse set of experiences, voices and perspectives to the rich conversations that take place at the IDEAS festival each year. [Read More]