Change Magazine July 2017 issue - Page 11

pact alongside a financial re- turn. It aims to address urgent challenges of poverty, inequal- ity, health and climate change that the government and philanthropy alone can’t solve. Impact investing can be direct- ed to both for-profit social en- terprises and nonprofits with revenue streams provided that they can return investments as simple loan repayments or as shares of revenues for equi- ty investment. GIIN estimates that there will be 500-1000 bil- lion USD impact investments by the year 2020. Some impact investors may expect a lower than market return for the positive impact. However, the actual perfor- mance of impact investment is comparable to market return. Based on a survey in 2015 by Cambridge Associates and GIIN, impact investment funds under $100 million returned a net IRR of 9.5% to investors outperforming similar-sized conventional investment funds (4.5%). Impact investment funds over $100 million (6.2%) are lower than their counter- parts (8.3%). Emerging mar- kets impact investment funds have returned 9.1% to inves- tors versus 4.8% for developed markets impact investment funds. Those focused on Afri- ca have performed particularly well, returning 9.7%. Impact investing helps you gain a significant amount of capital in your early project stage to scale up quickly under the condition of good social impacts and revenue predic- tion. and return. A large scale in- vestment is made to acquire your equity and the investor becomes your shareholder. He Global Impact Investing Network will be involved in your future management by offering his expertise. With the investment Take for instance this simple Kerosene lamps are replaced and expertise, you are now able case of how impact investing so safety is no longer an issue. to scale up and serve 1 million can help scale up your solid Seeing this value, community people across your country or initiative: Imagine that you are members will not mind pay- even globally. running a solar energy NGO ing a small amount of money for a community in a rural for your solar products. Then Growing your initiatives area with an annual budget of you design a market research (an unsolicited advertisment) 10,000$. With your current and come up with a solid busi- budget, you can only serve 100 ness plan to generate revenue Your sustainable passion people for free. After a year of to cover 10,000 people instead. largely relies on how much you operation, people in the com- At this point you have accom- can grow your initiative at an munity find that solar energy plished the 0 to 1 stage men- early stage. Mentorship, busi- can create value. Children can tioned above. With your solid ness plan development, impact now help farming in the day business operation, an impact investment, publicity and com- time and study at night with investor learns about your ini- munication are the factors that solar light bulbs so they can tiative and is optimistic about you need to take into consider- keep up with their education. your economic sustainability ation. 8