Social Impact Investing

in the developed and the developing worlds.
Impact Investment is also getting more local,
be it a Venture Capital firm investing in rural
developers as Aavishkaar is doing in India, or
developing new homes for the poor as Ignia
is doing in Mexico. As new models are flourishing,
new geographies are also coming into
focus. Layered structures are also helping to
drive money into new areas. For example,
IFFIm bonds are currently tapping the reserves
of the wealthier Western world to provide
immunisation for the 70 poorest countries
globally.
All Asset Classes are Now Showing
Development of Impact Investment
The majority of Impact Investment is no longer
composed of microfinance loans or equity
Old Sector Beliefs are Breaking Down
As these Impact Investments become more
widespread, when faced with a choice between
putting their money in traditional
investments or Impact Investments, foundations,
high net worth individuals and institutions
are increasingly opting for the latter. The perception
that Impact Investment necessitates
accepting sub-market rate returns is eroding.
For example, many investors choose to invest
in sustainable banks like Triodos, a bank which
provides financing exclusively to companies
and projects that have a social or environmental
impact and delivers market rate returns
to its depositors. Many funds today are raising
their second or third fund after delivering
market-rate or above returns to their investors.
Microfinance, once viewed as an investment
opportunity only for the benevolent, currently
has over 100 investment funds managing $6.1
investments in cleantech start-ups. It is moving
far beyond the quoted asset class in which
Socially Responsible Investment (SRI) has its
roots. Whether through sustainable forestry
or cash lending to community development
banks, investors have more choice than ever
to diversify their portfolios through Impact Investments.
There are investments across all
asset classes that provide investors with numerous
options to trade off among risk, return
and level of impact.
billion in assets and draws money from all investor
types as larger institutional investors
are attracted by the diversification, returns,
and social impact generated from these investments.
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As Funds Mature, Some are Moving from
Impact First to Financial First
Many impact-oriented funds cited their beginnings
as Impact First funds. Traditionally, their
investor base was made up of foundations and
high net worth individuals that were willing to
receive below-market returns in exchange for
certain levels of impact. As these funds were
able to prove that they could also generate
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International Association of Microfinance Investors
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