Founder, Tiffany, attended the IMPACT Texas conference in Austin earlier this month. The event’s goal was to impress among the participants the importance of investing in social enterprises in order to create jobs, personal wealth, and stronger communities.
The speakers and sessions focused on the need, issues, ways to make this type of system work, and the great impact it can have. The main challenge is translating this highly intellectual and nuanced practice into common vernacular.
So what is impact investing? One of the speakers, Randall Kempner, described impact investing as the intersection of philanthropy and commercial capitalism to support social entrepreneurship in emerging markets with the ultimate goal of achieving dual success.
The hardest part in managing these sorts of investments is marketing them in a way that doesn’t sound like begging for a donation. Moreover, investors seeking a double bottom line, still want to see return on their investment as well as social impact. The conference highlighted the many ways investors can participate in social initiatives.
In one example, the Capital Good Fund, a nonprofit committed to ridding America of poverty, implemented a groundbreaking strategy to increase funding. By selling “social innovation shares,” donators feel like they are buying themselves a voice rather than just giving their money. The Capital Good Fund sells these shares for $25 each and purchasing one gives the shareholder a vote at their meetings. The more shares you purchase, the more votes you get.
The industry seems new, but there is a long niche history of impact investing; traditionally there has been very little in the way of standardized impact measurement. During the conference, IRIS presented their replicable tool for impacting investment outcomes. It measures social and environmental good by setting performance targets, monitoring and managing performance, and reporting on those actions.
The most important reason to increase social investments is because of the incredible impact they can have. Randall Kempner gave an example of a company that is looking at different ways to access capital to work on issues at the bottom of the pyramid. He described Waste Enterprises, a company that is using human waste (in third world countries) and turning it into bricks that can be used to fuel incinerators for concrete production.
The want and need to invest in these companies is there. It is just a matter of working with resources in order to achieve the investment goals and connecting the investors to the causes that are worthy of investment.