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Date: 2024-03-29 Page is: DBtxt001.php txt00006530 |
Investment |
Burgess COMMENTARY |
2014: The Year of Impact Investing This is shaping up to be the year of impact investing – the year when impact investing ceases to be a buzzword or a niche play and when mainstream investors start to recognize the opportunity presented by this growing investment thesis. Impact investing refers to investing capital with the intention of producing social benefits alongside financial returns. Take, for example, Pacific Community Ventures’ 2003 investment in the Evergreen Lodge, a historic Yosemite destination. Over the course of a decade, Evergreen’s management team transformed the lodge from a mom-and-pop seasonal motel to a year-round, premier destination resort. Since PCV’s investment, Evergreen’s leadership not only increased revenues by 18 times and its number of employees five-fold, but also implemented an internship program for at-risk Bay Area youth as well as cutting-edge energy and environmental conservation practices. PCV exited this investment in 2013, with substantial returns — both financial and social. Impact investing is here to stay. A growing body of research illustrates that impact investing has not only arrived, it is growing exponentially. The Aspen Network of Development Entrepreneurs (ANDE) recently estimated that there are 199 impact investing funds; a survey by J.P. Morgan and the GIIN in late 2011 found that 19 percent of the impact investors surveyed believe the market is about to take off. J.P. Morgan also estimated that global impact investments exceeded $50 billion in 2010 and predicted that invested capital in the impact investing market could reach $400 billion to $1 trillion by 2020. What makes impact investment funds successful? The latest important research, issued late last year at the World Economic Forum by PCV in collaboration with the Center for the Advancement of Social Entrepreneurship (CASE) at Duke University and Impact Assets, paves the way for a new era of impact investing – one that brings the market closer to the mainstream. The report, ”Impact Investing 2.0: The Way Forward – Insight from 12 Outstanding Funds,” represents the largest public release of data on the financial performance of 12 successful impact investing funds. The authors analyzed more than $1.3 billion in investments across more than 80 countries, and they reached exciting new conclusions about the factors and trends that lead to a fund’s success.
Looking to the future The scaffold has indeed fallen, and impact investing is here to stay. But there is still much more work to be done to activate capital and to grow the field in a meaningful way. First, more research is needed to pinpoint what makes investments successful in different asset classes. Second, industry (and educational institutions) will have to grapple with the new requirement for multilingual leaders who have experience across different sectors. How do we accelerate the development of these leaders? And third, public policy will have to keep up the pace to build a stronger framework and drive more capital to solve the environmental and social problems that are just too big for governments to address on their own. Beth Sirull is president of Pacific Community Ventures, whose mission is to create jobs and economic opportunities in low income communities through the direct support of small business and entrepreneurship as well as by promoting policies that drive investment in underserved communities. PCV is an impact investor providing capital directly to small businesses. The organization also works to build the capacity of these small companies to accept and deploy impact capital effectively. |
Contributor ... Beth Sirull, President, Pacific Community Ventures
Thursday January 9th, 2014 |
The text being discussed is available at http://www.triplepundit.com/2014/01/2014-year-impact-investing/ |
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