Is there room for NGOs in the impact investing ecosystem?
Last fall, two separate groups of NGO representatives had impromptu gatherings at conferences on opposite coasts of the United States to discuss how they might get involved in impact investing. Such keen interest surprised organizers, and it signals a growing desire from international nongovernmental organizations to figure out their approach to investing for development outcomes.
As traditional sources of capital show no signs of growth, as donors are making a push to work with more local organizations, and as impact investing and the role of entrepreneurship in development have gained more attention, INGOs are exploring their options.
Part of that process is a fledgling working group facilitated by the Aspen Network of Development Entrepreneurs and InsideNGO. Already it has 30 members across a spectrum of engagement — from those already doing impact investing to those who are considering what role their organization could play in the emerging ecosystem.
“I think a lot of organizations have a feeling they have to get into this, that it’s a new approach they have to get in on,” said Chris Walker, social innovations director at Mercy Corps.
And there is space for them in the industry, though there’s likely to be some skepticism, both internally at individual INGOs and externally from a broader impact investing community that might question their ability to understand business models, analyze investments and structure deals.
One place where INGOs could step in is the missing middle of financing, the $25,000 to $200,000 or up to $500,000 range of investment, which many impact investors find too risky or too expensive, said Jenny Everett, the deputy director of ANDE. They can also play a role in helping entrepreneurs gain the skills they need to be ready for investments from other investors, she said.
But for many NGOs, working in impact investing will be a new approach and will include the need to either train staff or bring in people with the right skill sets.
