The UK government planted the Union Jack squarely at the center of social impact investing at the dedicated G8 meeting June 6 - hosted by Prime Minister David Cameron in concert with Cabinet visionary Nick Hurd, Minister for Civil Society, and Sir Ronald Cohen, who in the space of eight hours was anointed the grandfather, godfather, and architect of social finance.
The fluency of UK policymakers on the societal implications and substance of impact investing was simply breathtaking across all areas and levels of government. The picture of a cohesive and fast-growing social finance field in the UK, anchored in energetic public/private partnership, was a profound lesson on the benefits of pursuing a clear and consistent vision over almost 15 years, through unerring, post-partisan leadership.
The meeting can justifiably claim to have primed the pump for the next few years of work on impact investing. We need only to bottle the collaborative essence of the UK experience - which it must be noted is easier to extract when much of the action is in one city, London. Investing is literally and figuratively more decentralized in the US and other countries, and we like it that way. But it makes mind meld challenging.
Impact investing remains as aspirational as it is tangible, of course. But each convening brings us closer to a consolidated set of challenges and priorities. Here are five takeaways from June 6:
- Definitions: Ambiguity about what impact investing is, and what social enterprise encompasses, remains problematic. It appears that simply having the intent to deliver measurable social or environmental benefits through a purpose-built investment strategy or business model is not sufficiently concise. International development, microfinance, access to capital for charities, social impact bonds, and community investment in infrastructure, housing or SMEs are all just too different. And as Nick O'Donohoe, CEO of Big Society Capital, explained: "We must be able to recognize social enterprise". Some delegates suggested that an explicit focus on underserved populations may provide additional clarity. Regardless, the related need for segmentation is urgent, as is the importance of transparency and standardization in impact evaluation.
The work of the G8 is only just beginning. A new taskforce chaired by Sir Ronald will focus, among other things, on the measurement of social returns and the asset allocation strategies that frame impact investing. A new Global Learning Exchange will be created by the World Economic Forum and supported by the Impact Investing Policy Collaborative (IIPC) and the Global Impact Investing Network among others. The IIPC holds its annual meeting in July in the UK as a follow-up to the G8 and will be developing The London Principles on excellence in policymaking in this area. The US government has created a new National Impact Initiative and numerous new investments have been green-lighted including a new GBP50 million Community Assets Fund from Big Society Capital and the Big Lottery Fund, and an additional commitment of $50 million from the US Small Business Administration to the Small Business Investment Company program targeting early-stage enterprises.
Not bad for a day's work. But only made possible by the tireless efforts of political, financial, entrepreneurial, and social sector leaders in the UK, over more than a decade.