Venture capitalists in Silicon Valley know a good opportunity when they see one. And this week, investors and entrepreneurs flocked to San Francisco's fourth annual Social Capital Markets (SOCAP) conference to explore how the invisible hand can lend a helping hand.
In the world of finance, ROI -- "return on investment" -- rules the day. But there is a new kind of investor nowadays seeking a different kind of return. We call them impact investors, and they seek to put markets to work for millions of people around the globe -- from the Tenderloin to the slums of Mumbai -- who struggle with hunger, homelessness, disease, and environmental degradation.
Until recently there were not many opportunities for socially conscious investors -- either institutional or individual -- to pursue financial returns and the greater good with the same investment. But that's all changing, thanks to the emerging field of impact investing, and the impact investors who are building a new kind of marketplace in which financial and social returns are closely linked.
As SOCAP participants know all too well, for-profit capital markets hold more than $100 trillion in opportunity. So this week's conversation keyed on simple, but powerful questions: "How can we tap into these enormous private capital resources that are looking for places to invest? Can we catalyze the markets to invest in solving social challenges?"
The response to these queries has been extraordinary. One survey of just 42 investors showed approximately 2,200 impact investments last year worth nearly $4.5 billion. And these impact investors are incredibly diverse: private equity and public pensions, foundations and major corporations, retail investors, governments and community banks
At the Rockefeller Foundation, we're focused on unlocking more of this innovative form of financing. Like any new industry, impact investing needs common tools to assess what does and doesn't work, and facilitate and implement new ideas. So over the past five years, we've committed our philanthropic dollars to help build the critical, long-term platforms, networks and capacity that will accelerate the field's forward momentum and benefit millions of poor or vulnerable people.
We've brought together institutional investors like TIAA-CREF and J.P. Morgan to create the Global Impact Investing Network, a forum for identifying and addressing systemic barriers that hinder the industry's efficiency and effectiveness. The GIIN Investors Council now has 50 members, ranging from banks to pension funds to family offices. Likewise, we've supported the development of objective, credible standards for measuring and communicating the social impact of these investment funds and the companies in which they invest, including rating over 250 such companies.
Closer to the ground, the Rockefeller Foundation has helped build demand for these investments, for instance, seeding a social stock exchange in Singapore and cultivating the small and growing businesses that have the potential to become a potent engine of economic and social change in the developing world. Many of these projects have involved exciting new types of public/private partnerships, with governments, foundations, nonprofit organizations and private investors rethinking how they leverage capital.
One of the most innovative of these public/private initiatives is called a "social impact bond," which uses philanthropic and private capital to scale proven, effective social services (e.g. prisoner re-entry programs) that save the government enough money to repay investors down the line. Because investors are only repaid if the program succeeds, social impact bonds allow cash-strapped governments to experiment with evidence-based, outcome-oriented solutions to social challenges without putting taxpayers' money at risk.
On the West Coast, the Rockefeller Foundation is working with state governors and treasurers to develop a tri-state infrastructure exchange that will streamline the planning, financing and construction of vital projects. This will allow big institutional investors like CalPERS to fund a toll road or alternative energy plant and reap a 10-15 percent return over the next several decades -- filling potholes as well as pensions.
At this stage of development, we've reached an unprecedented opportunity to transition from piloting programs to changing lives. With federal and state budgets tight, with more investors than ever eager to align their investments with their values, there's never been a better opportunity to bring our markets and our morals together in service of a better world.
This wasn't about making me rich, for in the not to distant future I will be planted in the good earth and can't take it with me. The reason I have worked my butt off for 5 years was about leaving a positive legacy of a technology that in a small way will bring safe, reliable, clean power to people that really need it.
Over the years I have contacted lots of financiers with little luck. All they want to hear about is ROI and what kind of security we have.
If Ms Rodin really wants to help, finance a bunch of seed and angel funding groups that will loan $50,000 to $150,000 money on terms and low interest rates to start ups and new technologies. The real problem is there is not enough risk capital available for the innovator and entrepreneur. If anyone is interested, our website is www.powerstationafrica.com.
Looks to me that Capitalists are trying to destroy Capitalism.
Regards, Geoff
Leadership Coach
"Global Transformation through Leadership Performance"
http://www.geoffedwards.net
However:
The neo-liberal privatize everything paradigm has brought more than enough misery to the world. It's been pushed on everyone by countless rw think tanks adn very powerful institutions from the IMF to the World bank over the last 30 years and brought the world the mess we have today.
The idea that private/public investing is going to do anything other than transfer public wealth into the hands of a tiny few private sector interests is delusional. By definition, the private sector would not be involved if not for the expected profits, which by the nature of the profit equation, makes the project more expensive.
Whether in the UK, US or any developing nation in the world, the private investor seeks to join up with governments for profit and nothing else. They join up with Government to ensure that the public sector always maintains the risk, while they, the private sector retain the profits. Regardless of the "deal" it always ends the same way, with the public sector holding the proverbial bag with nothing to show for it.
The market cannot now nor never will address social issues. For if that was the case we would have full employment and no poverty.
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The smokescreen of helping with hunger, homelessness, disease, and environmental degradation is lame at best.
These investors are profiteers not helpers.... no saints among those folks
The entire point is to shroud the privatization of government services in the concept of "social impact investing."
I've translated the article from Plutocratic English to Common English:
"We've weakened government to the point it's on it's knees, and now desire to replace it with our Ogilopoly. You need our vast investment capital to maintain social functions. Resistance is futile."
endangered species to vanish, or a hellacious drought parching
innocent livestock and families to wither to skin and bone or
200 tons of fossil fuel emissions or the polar ice caps melting to
convince us to revisit and pursue the Thorium Molten Salt Breeder
Reactor Dr Alvin Weinberg engineered as Director of Oak Ridge
National Labs in the 1960s.
http://www.the-weinberg-foundation.org/
http://nucleargreen.blogspot.com/2008/04/alvin-m-weinberg-bell-and-bomb.html
http://www.youtube.com/watch?v=BOoBTufkEog
http://www.guardian.co.uk/environment/2012/sep/09/climate-change-expert-calls-for-nuclear-power-boost?INTCMP=SRCH