I recently went to an event at the Center for Strategic and International Studies called ‘Impact Investing: An Opportunity for Development?’. The event brought together a diverse panel of experts from the private and philanthropic sectors to discuss what the title implies: impact investing and its potential to address global issues.
With all the hype surrounding it these days, impact investing could easily be considered the magic remedy for international development and economic growth. Part of its allure is the promise that both investors and investees can win.
Filling funding gaps
Saadia Madsbjerg, Managing Director at Rockefeller Foundation, opened up by pointing out the need for more capital for development. She noted that there was a $200 trillion funding gap in dealing with the problems in the developing world – a gap that impact investing could help fill.
Impact investing is a fast growing segment of the investment marketplace, and will continue to grow. Although the market has not been fully quantified, GIIN with J.P. Morgan released their annual investor survey report for last year, which showed more than a hundred investors (organizations, foundations, institutions and individuals) reporting to manage over $60 billion in impact investments. Calvert Foundation investors alone have invested more than $1 billion since 1995. John Simon, Founding Partner of Total Impact Advisors, asserted that impact investing is growing at about $10 billion a year and will continue to grow for the foreseeable future. Stats like these are impressive; but if philanthropic and public sector funding gaps continue to grow in the trillions, even with its projected growth the impact investing sector won’t be able to fully address those gaps.