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Investing for Impact

Investing for Impact

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January 2012

Research Institute
Thought leadership from Credit Suisse Research and the world’s foremost experts

Investing for impact
How social entrepreneurship is redefining the meaning of return

Credit to Credit Suisse
January 2012

Research Institute
Thought leadership from Credit Suisse Research and the world’s foremost experts

Investing for impact
How social entrepreneurship is redefining the meaning of return

Credit to Credit Suisse

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Published by: Social Enterprise at Relief International on Jul 23, 2012
Copyright:Attribution Non-commercial


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Investing for impact
January 2012
Thought leadership from Credit Suisse Researchand the world’s foremost experts
How social entrepreneurship is redefining themeaning of return
This report is a joint publication of Credit Suisse andthe Schwab Foundation for Social Entrepreneurship.For more information please contact:Robert Ruttmann, Global Investment Products andStrategy Committee Office, Credit Suisse PrivateBanking, robert.ruttmann@credit-suisse.comFor more information about the Schwab Foundation,please contact us at:91 93 route de la CapiteCH-1223 Cologny/GenevaSwitzerlandinfo@schwabfound.org www.schwabfound.org www.twitter.com/schwabfound www.forumblog.org/socialentrepreneurs
03 Editorial04 New ways to invest for socialand environmental impact10 A view from the top: trends in impact investing Interview with Mark Kramer 13 Unlocking capital to drive social impact16 Funding growth of social businesses19 Social entrepreneurship movesfrom niche to mainstream25 Stories from the field31 A new world of metrics:trends in monitoring social return37 Avoiding traps in impact investing: lessons learned41 Stories of private impact investors45 Creating a capital curve for social enterprises50 Microfinance as a more mature impactinvestment opportunity – Interview with Rupert Scofield52 The role of business in catalyzing impact Interview with Sir Richard Branson54 Authors55 Imprint/Disclamer 
The growing interest in impact investingis hard to miss. Today, more investorsand entrepreneurs than ever are proac-tively investing their capital in solutionsdesigned to generate a positive social or environmental impact, while also havingthe potential for some financial return. Inpractice, such opportunities are emerg-ing in most parts of the world, acrossnearly all asset classes, and at many dif-ferent levels of risk and return. A standard impact investment struc-ture today will invest in enterprisesthat provide self-sustaining solutionsto social problems, such as access toclean water, improved health care, or the provision of clean energy. Investingin these organizations provides a directand significant impact for those in pov-erty, and in many cases also offers afinancial return.
Beyond investing in social enterprises,other impact investment vehicles are alsoevolving fast, ranging from a variety ofinnovative impact bond structures topeer-to-peer funding platforms to seed-stage investing forums. Still, the field isat an early stage of development, withparticipants grappling with a number ofhurdles such as agreeing on standard-ized impact metrics, finding optimalfinancing mixes, avoiding mission drift,and, of course, connecting investors whocan deploy “patient capital” with promis-ing social enterprises. The purpose ofthis report is to offer investors and socialentrepreneurs alike a better understand-ing of these complexities.
The report begins with an introduc-tion to the topic by Credit Suisse ana-lysts, offering a contextual frameworkfor impact investment solutions. Thisintroductory chapter is followed by aninterview with Mark Kramer, co-founder of FSG Advisors and a leading authorityin the field, who presents an overview ofthe major trends shaping the industrytoday. Chapter three analyzes the driveto expand the range of vehicles availableto retail investors, while chapter four features a fascinating discussion be-tween Dr. Julia Balandina Jaquier andDr. Ernst von Kimakowitz, on the prom-ise and the risks of promoting growth inthe social entrepreneurial space.In chapter five, Katherine Milligan at theSchwab Foundation for Social Entrepre-neurship charts the rise of social entre-preneurship over the past decade anddiscusses some exciting examples ofhow leading social enterprises deliver impact. Several examples are profiled inthe section “Stories from the field.” Inchapter six, Cathy Clark and Jed Emer-son present an overview on the currenttrends in the development of metrics tomeasure social impact and offer prag-matic advice to newer investors. Chap-ter seven includes the most important“lessons learned” by early pioneeringimpact investors, including several spe-cific examples in the section “Stories ofprivate investors.”In chapter eight, Brian Trelstad andRob Katz of Acumen Fund, one of theoldest and most respected impactinvestment funds, share the lessonsthey have learned over the past decadeon the optimal financing mixes through-out the entrepreneurial trajectory ofsocial enterprises. Chapter nine pres-ents the insights of Rupert Scofield,CEO of FINCA, one of the largest globalmicrofinance institutions, on what other social enterprises can learn from thepioneering work done in the microfi-nance sector. Chapter ten closes thepublication with a thought-provokingand engaging interview with Sir RichardBranson, who discusses the instrumen-tal role business-based solutions canplay in solving some of the world’s mostintractable problems.The underlying message of this col-lection of articles is clear: the potentialof growing efforts to deliver entrepre-neurial solutions to global problems isbigger than ever before – as are theopportunities to channel private capitaltoward social and environmental issues.We hope this publication will offer youmore insight into this exciting new field.
Giles Keating,
Head of Researchfor Private Banking and AssetManagement, Credit Suisse
Mirjam Schöning,
Senior Director of the Schwab Foundation for SocialEntrepreneurship

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