What’s New In Impact Investing? December Roundup

Patrick DugganImpact Investing, InSight

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Impact investing is about using markets and money for social good. Impact investing is built on the belief that private capital can play a powerful role in solving the massive global challenges of our day, and that capital markets should work for good as well as profit. This vision is realized through investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.

Every month, PCV will give you a roundup of what’s new in the field, what conversations are taking place, and how you can get involved. Here are some highlights from December:

Impact Investing For The People

The goal of impact investing, broadly speaking, is to turn markets and capital toward their best selves – facilitating businesses that create value for everyday people and creating social and environmental benefits in addition to returns. We talk a lot about the players and the deals, but we don’t focus enough on people. This month in Stanford Social Innovation review, Amy Cortese of Locavesting talks about the first comprehensive snapshot of community investing in the United States, and how it points to increased diversity and inclusion for startup funding. Foundations and impact investors should pay attention.

As more money folks embrace impact investing, it seems some impact folks are running away. The latest case in point, so to speak, is Steve Case, who took pains to make clear to The New York Times that his new Rise of the Rest Fund – dedicated to fund entrepreneurs living outside of the wealthy coastal hubs — is not an impact fund. Much like Bono’s comment last year that impact investing has become “a lot of bad deals done by good people,” Case’s binary framework struck many in the field as disconnected, especially since Jean Case, Steve’s wife and CEO of the Case Foundation, has proven with her career that the notion profit must be sacrificed for purpose is Myth No. 1 about impact investing.

IMM Is Our New Favorite Acronym

A new report published by our partners at the Global Impact Investing Network (GIIN), provides a comprehensive survey of the state of impact measurement and management (IMM) in the impact investing industry. The State of Impact Measurement and Management Practice, which captures data from 169 impact investors, provides valuable insight into how these organizations are assessing their social and environmental impact and how they are using that information for decision-making.

Among the key findings are that impact investors actively seek to understand and manage their impact, but not always in the underwriting process. IMM is sometimes seen as a compliance or reporting activity; this research shows that IMM is actually a management tool, actively used by investors in a variety of ways to improve both their impact and business performance.

The Future Is Female

Investors need to talk about why they’re investing in women. System-change requires a shift in cultural norms. In ImpactAlpha this month, Suzanne Biegel has a smart take on why some venture capitalists talk about gender and others don’t. “The only way we’ll accelerate the movement of capital at scale is by building an evidence base and normalizing the notion that investing in women is smart at all levels of the financial system,” Biegel says. Read three reasons to own your gender lens.