The world of social impact investing is expanding rapidly. In 2012 the Forum for Sustainable and Responsible Investment reported $3.31 trillion in US assets held by 443 institutional investors and 272 money managers. In addition,1,043 community investment institutions applied ESG standards into their investment portfolios. One of the most interesting parts about social impact investing is the returns investors are seeing. A 2015 Report by Morgan Stanley indicated that sustainable investing funds have actually met or exceeded the median returns of traditional equity funds. The report also made an excellent point about volatility. The report states that 72 percent of the companies surveyed with a social impact purpose showed higher profitability and lower volatility. This is important to note, because where there is low volatility and growth in a certain sector, big sums of money tend to pour in.
As advisers and fund managers approach clients and investors they can now come with tangible evidence that putting money into social impact investing can be profitable and less risky then traditional markets. In fact, since 1990 the MSCI KLD 400 Social Index fund outperformed the S&P 500 on an annualized basis, with the MSCI KLD 400 achieving an annualized return of 10.14%19, compared to 9.69% for the S&P 500.
The future of social impact investing.
As Millennials start to gain more and more equity in the markets this is an absolute sector that will continue to grow. 90% of Millennials would switch brands to one associated with a cause, so why wouldn’t Millennials switch to investments with these same values as well. With these numbers social impact investing is poised to be a huge trend. Below are financial ventures changing the world through social impact investing. Whether they are investing in organic farmland, innovative entrepreneurs, or sustainable energy, these companies and organizations are using their funds to create a better, more sustainable world.
Better Ventures backs entrepreneurs building a better world. They provide funding and support to early-stage technology companies pursuing social and environmental objectives with high-growth business models. Better Ventures typically invests $100-250k at the seed stage, get actively involved with the founders to help them build successful companies, and provide larger follow-on investments through Series A and beyond.
Ananda Ventures invests in high growth companies based in Europe and targeting social issues in the region. Ananda Ventures works with the founders of social enterprises in the spirit of equality. They have created a unique network of investors, business people, social entrepreneurs and experts to achieve common goals. Ananda Ventures currently manages approx. 30 million euros in two funds (Social Venture Funds I + II). The social impact is determined when the investment is made and then measured over the course of time. Ananda Ventures have developed their own method for measuring the social impact of their portfolio companies. This is based especially on performance indicators (KPIs), which are determined and collected on an ongoing basis together with the Social Enterprise.
The Reinvestment Fund (TRF) is a national leader in rebuilding America’s distressed towns and cities, through the innovative use of capital and information. TRF achieves its mission through investing, housing development as well as data and analytical services. TRF’s investing activity creates affordable homes, quality educational opportunities, access to healthcare and healthy food, jobs and thriving businesses in neighborhoods that need them most. TRF’s housing development activity is concentrated in distressed markets, where TRF uses a “build from strength” strategy that reinforces local assets to create healthy communities.
Acumen’s mission is to change the way the world tackles poverty by investing in companies, leaders, and ideas. They raise charitable donations to invest patient capital in business models that deliver critical goods and services to the world’s poor. Since 2001, Acumen has globally invested more than $83 million in 73 companies. Acumen also works to build a global community of emerging leaders that believe in creating a more inclusive world through financial and operational expertise combined with moral imagination.
Dreamlabs is a $50 million fund established to invest in companies, leaders, and ideas that positively impact the lives of people. The aim is to work with entrepreneurs who seek to invent new market categories or transform and disrupt existing ones. The main focus is to invest in entrepreneurs with ideas that will generate both strong social & financial returns.
Adobe Capital is a social impact investing fund focused on triple bottom line businesses that drive social and environmental impact with innovative, profitable and scale-able models. They provide financing and strategic support for the development of success cases. Adobe Capital invests in Mexican companies with fewer than 50 employees, with less than 5,000,000 USD in sales and strong growth potential. Larger companies may be analyzed in specific cases. Adobe Capital seeks investments that generate economic, social and environmental benefits, i.e. in “triple bottom line” investments and seeks to strengthen business strategies to ensure a sustainable growth by providing strategic support. Adobe Capital promotes the growth of the impact investment sector by demonstrating that small investments in social and environmental SGBs can be made in an efficient and profitable manner.
The Ecosystem Integrity Fund is focused on identifying promising solutions to key threats to the ecosystem, from the perspective of both investment value and environmental benefit. The partners have the diverse and complementary skills and backgrounds needed to invest in clean technology enterprises, platforms, projects, and project developers. Together, the partners have expertise in commercial finance, investment evaluation, and research consulting across a wide array of sectors related to clean technology and natural resources. Additionally, the leadership of Ecosystem Integrity Management bring senior-level operating experience to the management of the Fund’s portfolio investments. Beyond investment management skills and clean technology expertise, the team has a robust network of venture capitalists, family office investors, public corporations, entrepreneurs, research labs, technology specialists, and consultants that are active in environmental sustainability.
Across the developing world, the rural poor—approximately 75 percent of the 2.6 billion people living on less than $2 a day— are marginalized from the formal economy. Most of these people depend on agriculture as their primary source of income. Without access to capital and viable markets for their crops, millions of small-scale farmers in the developing world are trapped in a cycle of poverty. Root Capital, a nonprofit social investment fund, grows rural prosperity in poor, environmentally vulnerable places in Africa and Latin America by lending capital, delivering financial training, and strengthening market connections for small and growing rural businesses. Root Capital’s lending is directed towards businesses that are too big for microfinance, but generally unable to secure credit from conventional commercial banks – “the missing middle” of developing-world finance.
The UNSIF is a Social Impact or Blended Financing platform in partnership with social responsible public and private sector investors that tie directly into and support the achievement of the newly established SDG priority sectors. The fund brings together the resources of philanthropy and commercial capital, UNSIF invests in innovative solutions to the world’s toughest challenges. Leveraging expertise in both downstream operational management and upstream policy advice, UNSIF drives positive change towards responsible investing. Working with their portfolio companies, UNSIF helps partners to both make and measure greater impact in their communities and ecosystem.
Vital Capital is a leading social impact investment, private equity fund focused on improving the well-being of underserved sub-Saharan African communities while generating market rate returns for its investors. Since the inception of its 1st fund (US$350M) in 2011, Vital has been demonstrating its No Trade-Off approach, by investing at-scale in the most impactful sectors across sub-Saharan Africa such as affordable housing, healthcare, water, agriculture and renewable energy. By systematically utilizing proprietary and industry standard impact metrics, rigorous financial underwriting and ongoing hands-on operational oversite, Vital is demonstrating the achievement of significant and tangible quality of life improvements for large local populations, while on-track for delivering risk-adjusted returns for its investors.
Domini Social Investments is a firm specializing exclusively in social impact investing. They manage mutual funds for individual and institutional investors who wish to integrate social and environmental standards into their investment decisions. When you invest with Domini, you as a shareholder are making an impact. As a shareholder you will invest in companies that are solving major issues such as global warming, sweatshop labor, and product safety. Revitalizing distressed communities. Bringing new voices to the table. Redefining corporate America’s bottom line. Invest for your future while helping to build a world of peace and justice.
Global Partnerships is a nonprofit impact investor whose mission is to expand opportunity for people living in poverty. GP creates opportunity for people living in poverty to earn a living and improve their lives by investing impact-led capital in social enterprises that bring sustainable opportunity to millions. Since inception, GP has invested $190 million in 89 partners across 14 countries. To date their work has impacted over 4.1 million lives.
Alterfin’s shareholders consist of non-governmental development organisations, banks and over 5.000 individuals. Alterfin inests in microfinance institutions, producers’ organisations and SMEs involved in smallholder agriculture in Latin America, Africa and Asia. Their mission is to achieve human dignity in developing countries by promoting individual and collective economic activities. Alterfin aims to link people in the North willing to invest their money in a sensible way to organizations in the South that extend credit to local entrepreneurs and farmers who can use such a loan to build a better future.
The U.S. Fund for UNICEF Bridge Fund is an innovative financial tool created by the U.S. Fund for UNICEF to speed life-saving assistance to children in need. The Bridge Fund provides flexible capital, enabling UNICEF Supply Division to react immediately when children’s lives are at risk to fast-track programmatic activity or the purchase and delivery of vital health, educational and other essential supplies. The Bridge Fund helps save the lives of vulnerable children by reaching them when every minute counts, buys time to secure better pricing and ensures a continuous supply of safe commodities from reliable manufacturers.
One Acre Fund supplies smallholder farmers with the financing and training they need to grow their way out of hunger and poverty. Instead of giving handouts, One Acre Fund invests in farmers to generate a permanent gain in farm income. They supply a complete service bundle of seeds and fertilizer, financing, training, and market facilitation—and deliver these services within walking distance of the 400,000 rural farmers they serve. One Acre Fund began in East Africa, and now currently serves farmers in Kenya, Rwanda, Burundi and Tanzania.
The Media Development Investment Fund invests in independent media around the world providing the news, information and debate that people need to build free, thriving societies. Timely, accurate, relevant information is critical to free societies, enabling fuller participation in public life, holds the powerful to account and protects the rights of the individual. The MDIF has investments in more than 100 media companies in 38 countries. They have provided more than $134 million in financing, including $117 million in debt and equity investments. MDIF has received $63 million in recovered principal, earning almost $40 million in interest, dividends and capital gains, and returned $28 million to investors.
Bamboo Finance is a commercial private equity firm specializing in investing in business models that benefit low-income communities in emerging markets with offices in Luxembourg, Geneva, Bogota, Nairobi and Singapore. Bamboo Finance uses a market-oriented approach to deliver social and environmental value and provide attractive financial returns to investors. Bamboo Finance launched in 2007 with a goal to demonstrate that private capital can be profitably deployed as a tool for effective change. To date, they manage 250M USD; representing two global funds and a combined portfolio of 46 investments operating in 30 emerging market countries. Bamboo has a track record of demonstrated commercial returns, and a portfolio of investments that have provided 16 million clients with access to services and created more than 20,000 jobs.
The Accion Frontier Inclusion Fund is the first global emerging markets fintech fund for the financially underserved. The Fund invests in innovative financial technology and services companies that promote financial inclusion for the two billion people around the world who lack access to savings accounts, checking, insurance, credit, and other basic financial services. Accion is striving to reach the nearly three billion people worldwide who still seek these crucial financial services. In the area of investing, Accion provides equity, quasi-equity, and loan guarantees to help grow companies sustainably and support a financial ecosystem that will radically enhance the efficiency, reach, and scope of financial services at the base of the economic pyramid.
Farmland LP is a U.S. real estate fund that acquires conventional farmland and converts it into Organic, sustainably managed farmland. We specialize in enhancing soil fertility and productivity through science-based livestock and crop rotations. We currently own and manage 6750 acres of farmland currently valued at $50 million in the San Francisco Bay Area and Oregon’s Willamette Valley. More than 10% of our acreage is certified Organic and the rest is in transition. Through our expertise in agriculture, soil biology, real estate, and farm management, we have forged a new model for how farmland is owned and managed. Our model benefits farmers, investors, the environment, and consumers. Our investors benefit from the security of owning farmland while participating in the growth and profitability of local, Organic food markets. Our fund intends to demonstrate that sustainable agriculture at-scale is more profitable today than chemical-dependent commodity agriculture.
CRF fills a gap in community development funding by bringing a larger amount of capital to the communities that need it most. This has a powerful impact, creating a huge ripple effect and improving more lives of disadvantaged people in distressed neighborhoods all across the country. Together with lending partners, they provide small business loans not found elsewhere for people living in underserved communities so they can. CRF has provided more than $1.5 billion to finance small businesses, affordable housing and community facilities in 47 states and more than 750 communities. These loans have improved the lives of more than 613,000 people by creating jobs, funding small business growth, affordable housing, community facilities, and by providing highly personalized loan servicing for low-income homeowners. CRF blends philanthropic giving with socially motivated investments from foundations and market rate investments from institutional investors that otherwise would not invest in community development in low-income communities.
Vox Capital is Brazil’s pioneer and leading impact investing firm. Founded in 2009, it invests in high potential start-ups serving the Brazilian low-income population delivering solutions in health, education and financial services. Currently, Vox Capital manages over USD 50 million in assets and has invested in over 20 companies. Vox Capital is member of ANDE (Aspen Network of Development Entrepreneurs) and was a founding member for its Brazilian chapter. It is also an active member at ABVCAP (Brazilian Venture Capital Association). Vox is a founding fund at GIIRS (Global Impact Investing Rating System).
The Grassroots Business Fund (GBF) is a global impact investment organization whose mission is to grow viable businesses that generate sustainable earnings or cost-savings for people with low incomes in Africa, Asia, and Latin America. Companies in developing economies often face financing constraints and lack sources of business advice. The GBF establishes innovative financing vehicles that provide long term, risk sharing capital to these businesses, while its not-for-profit component crafts incremental business advice programs to help strengthen companies’ operational fundamentals. Since 2011, The GBF’s first private investment fund has invested over $30M and conducted over 200 advisory projects with businesses that benefit 1.7 million people per year.
Calvert Foundation empowers investors to empower communities. Through the Community Investment Note, they connect individual investors with organizations working around the globe, developing affordable housing, creating jobs, protecting the environment, and working in numerous other ways for the social good. Since 1995, more than 13,500 investors have invested $800 million in the Calvert portfolio of nonprofits and social enterprises worldwide. The foundation has enabled everyday individuals to invest in this change through their flagship Community Investment Note, which supports organizations creating positive social change.
Renewal Funds provides an opportunity for investors to participate in the development of business at the forefront of social and environmental innovation. Renewal Funds invests in change by supporting businesses at the forefront of social and environmental innovation. They believe that there must be a fundamental reinvention of where and how capital is deployed. The Renewal Funds model is to deliver above market returns by investing in businesses in Canada and the US that provide the finest sustainability solutions.
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