IMPACT INVESTING INITIATIVE STRATEGY OVERVIEW Delivering social change at scale will require more capital than philanthropy and public resources can provide. While almost all of the trillions of dollars of assets around the world remain tied up in investments that seek only to maximize financial returns, a relatively small but rapidly growing industry is emerging that could unlock enough of thisinvestment capital to complement philanthropy in addressing pressing social challenges. This industry, called “impact investing,” is comprised of investors seeking to generate both financial return and social and/or environmental value—while at a minimum returning capital, and, in many cases, offering market-rate returns or better. Despite, and sometimes because of, a proliferation of activity,the impact investing industry stands at a delicate moment. On one hand, structural forces around the world are gathering to bolster the industry’s development, despite the recent market disruptions and economic contraction in much of the world. Wealth is increasingly concentrated in the hands of people attracted to private-sector solutions to social problems at the same time that a new generation ofentrepreneurs is launching viable ventures across an array of geographies and sectors that address social challenges. On the other hand, the nascent industry remains beset by inefficiencies and distortions that currently limit its impact in the areas of the Rockefeller Foundation’s strategic focus and threaten its future trajectory. Lack of coordination hampers collaboration to build theinfrastructure the industry needs to flourish. Intermediation—the placement of money between investors and the businesses and projects that can use it productively—is generally sub-scale and specifically embryonic in sub-sectors of impact investing such as public health and agriculture. And basic market infrastructure and the investment ecosystem necessary to identify, vet, and monitor investmentsefficiently are missing. The Rockefeller Foundation believes that the lack of intermediation capacity and leadership to generate collective action is currently the binding constraint on expanded investment. The Foundation’s Impact Investing initiative seeks to catalyze the leadership the emerging industry needs at this crucial stage in its development to build the intermediation capacity and investinginfrastructure that can unlock the industry’s impact. In support of this objective, the initiative focuses on four primary change levers outlined below CHANGE LEVERS • Incubating platforms for collective action. The impact investing industry is currently inefficient, with duplication in some areas and gaps in others, as innovation occurs through uncoordinated activity responding to investorinterest. Developing effective mechanisms for disseminating standards, sharing information, and collaborating on deals will be crucial. Among other things, this lever focuses its support for coordination and collective action on the development of a Global Impact Investing Network, which serves as a membership organization for a select but diverse group of impact investors, including pension funds, familyoffices, private banks, and foundations. The network is the vehicle through which these investors and intermediaries can launch initiatives, such as an independent standards-setting body, and ultimately undertake advocacy and marketing.
Initiative in Execution: Impact Investing Update
Supporting the development of intermediation vehicles. The history of microfinance and U.S.low-income housing development investments, as well as the evolution of mainstream capital markets, demonstrates the centrality of intermediation capabilities in unlocking investment flows. The Rockefeller Foundation believes that substantial latent investment capital will flow once intermediation develops to help place it, so the Foundation: (1) supports investment vehicles that channel funds to...
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