Impact Investing 2.0: Insight from 12 Outstanding Funds
This 2013 report, supported by Omidyar Network, RS Group, Annie E. Casey Foundation, W.K. Kellogg foundation, Heron Foundation, and Deutsche Bank, draws on an analysis of 12 high performing impact investing funds to surface themes, best practices, and steps that proven impact investors have taken to deliver exceptional financial and social performance.
Core Themes Explored
Beyond the attributes shared with successful traditional investors, the report identifies four qualities that are distinct to impact investing:
POLICY SYMBIOSIS: Effective impact investing is grounded in cross-sector partnerships, including with the public sector. Impact investing intersects with all levels of government, consistent with the public sector’s strong interest in maximizing social and environmental benefits to society, and the promise that impact investing can deliver these benefits at scale.
CATALYTIC CAPITAL: Funds demonstrate that investments that trigger additional capital not otherwise available to a fund, enterprise, sector, or geography can be transformative, generating exponential social and/or environmental value. Catalytic Capital can be instrumental to a fund, from providing early funding to driving reputational benefits.
MULTILINGUAL LEADERSHIP: Those responsible for making investments must execute with unshakable financial discipline, but successful fund leadership is about more than simply effective money management. It requires cross-sector experience and fluency both at the institutional and individual level.
MISSION FIRST AND LAST: As opposed to being “financial-first” or “impact-first,” successful funds place financial and social objectives on an equal footing by establishing a clearly embedded strategy and structure for achieving mission prior to investment, enabling a predominantly financial focus throughout the life of the investment. Ultimately, identifying these practices signified to us that, while inherently diverse in its application, impact investing is in fact more developed and coherent than many believe.