Impact Investing in the News: Summer Roundup of the Best Research and Articles
The past few months have been good ones for the burgeoning impact investing movement. This summer brought us a study that offers quantitative evidence in support of the central hypothesis that investors can earn market-rate or better financial returns from investments that also advance important social goals.
Since most of you don't have time to troll the interwebs looking for the latest research paper or thoughtful article on the important topics related to impact investing, we bring you this roundup.
1. Perhaps the most important publication of the summer: The first Impact Investing Benchmark study was performed by Cambridge Associates and the Global Impact Investing Network. Read it here.
Excerpt: "Impact investment funds that raised under $100 million returned a net IRR of 9.5% to investors. These funds handily outperformed similar-sized funds in the comparative universe (4.5%), impact investment funds over $100 million (6.2%), and funds over $100 million in the comparative universe (8.3%). Emerging markets impact investment funds have returned 9.1% to investors versus 4.8% for developed markets impact investment funds. Those focused on Africa have performed particularly well, returning 9.7%.
2. Doing Less, Better. This author argues that the real power of social enterprises lies not in their combination of revenue-generation with charitable purpose, but in their ability to focus on doing fewer activities. This is in stark contrast to typical nonprofits where more programming is a sign of more impact.
3. Impact Investing Goes Mainstream? This Forbes article by Devin Thorpe goes point by point through reasons why impact investing is finally being accepted broadly. Thorpe even goes so far as to suggest a financial advisor has an obligation to consider it for his client's portfolios.
4. Impact investing opportunities needed for smaller investors. Nesta, a major U.K. based innovation charity is urging the government to make available 'individual savings accounts' to provide smaller investors with a tax-efficient way of investing in enterprises that combine financial returns with social or environmental benefits. Read about it here.
5. Growing demand for socially-responsible investment options. "As of 2014, there were 456 mutual funds with $1.9 trillion in assets (and 20 ETFs with $3.5 billion) incorporating ESG criteria, up from 333 mutual funds with $641 billion in assets in 2012, according to the Forum for Sustainable and Responsible Investment." This article explains how asset managers and mutual funds are responding to demand from millennials and women to create socially-responsible investment options.