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.
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