NB Financial Innovation
Impact Investing Buzz: GIIN and Toniic Mix with Growth Reports
The knock on impact investing – both within and outside of the industry – is the lack of long-term data and platforms to observe deals in a more transparent way.
The Global Impact Investing Network (GIIN) and Toniic, arguably the industry’s most influential trade groups, both released studies designed to turn around some of those perceptions.
Unveiled at the GIIN Investor Forum 2016 Wednesday in Amsterdam, the GIIN’s Impact Investing Trends: Evidence of a Growing Industry report showed “overall assets under management and capital raised by fund managers increased substantially at a compound annual growth rate of 18 percent between 2013 and 2015.” The study relied upon 62 impact investment organizations that have completed GIIN’s annual impact survey in each of the past three years. Those qualifying to respond had to either commit USD $10 million in impact investments since their founding or conduct at least five transactions. Fifty-six percent of these organizations identified as fund managers, 20 percent are foundations and the remainder represent banks, pension funds, insurance companies or other development financing groups.
GIIN is mainly focused on institutional impact investors, and its study indicates they are a relatively happy bunch, with 95 percent of impact investors reporting financial returns are meeting or exceeding expectations, and 98 percent reporting that these investments met or exceeded their impact expectations. The top sectors by assets under management were microfinance, other financial services and energy. The report also revealed some discomfort on the part of investors who listed a lack of capital depending on risk levels and a dearth of strong investment opportunities as prime challenges.
Nick O’Donohoe, a senior advisor at the Bill & Melinda Gates Foundation focusing on blended finance, told the 800 or so attendees at the conference that the growing pains for impact investing are very similar to those experienced by the venture capital industry a few decades ago.
“When this sort of movement gets the momentum we have today it doesn’t just stop,” he said. “The idea that we can incorporate impact intentionally and measurably … that idea has taken root and it’s not going away.”
Meanwhile Toniic, an association that encourages high net worth individuals and family foundations/offices to move some or all of their assets toward impact investing, released what it described as its first longitudinal study of 51 portfolios from its members.
Toniic is comprised of 160 members representing more than 360 investors in 22 countries. The inaugural T100 report reviewed the 51 investment portfolios shared by Tonic’s 100% Impact Network members, a subset of its membership who have committed to moving 100 percent of an investment portfolio to social or environmentally inclined purposes. Those investors manage portfolios valued anywhere from USD $2 million to more than USD $100 million, which collectively represent $1.65 billion committed to impact investment, of which $1.14 billion is already allocated toward it.
Charly Kleissner, co-founder of Toniic and the 100% Impact Network, told me he hopes the number of portfolios making up the directory will double by this time next year. “What we wanted to prove is that you can achieve impact at or above market rates regardless of portfolio size, geography or asset class,” Kleissner said.
The Toniic report also showed that 87 percent of respondents say their investments have either met or exceeded their impact and financial goals, and the majority bested market returns as well.
In terms of themes, the T100 report showed environmental causes represented 32 percent of those investments, while poverty alleviation efforts made up 12 percent. But many types of investments blur the lines between different categories. Toniic plans to frame its investment categories closer to the Sustainable Development Goals by next year.
Another long-term project is a new Toniic Directory, which also was launched Wednesday. The publicly facing directory shows more than 1,000 impact investments backed by its members. But it doesn’t specify members by name or how those investments have panned out, either from an impact or a financial standpoint.
However, it does give users a sense of the types of companies and funds that have garnered interest by impact investors. Kleissner said Toniic members can access more specifics about the investments. He added that the Tides Foundation and Impact Assets have committed to adding their investments to the directory.
“This is the start of a multi-year project,” said Adam Bendell, Toniic CEO. “We’re going to revisit these portfolios (and) add several more. We have open-sourced the Toniic directory to other providers. … We invite the contributions of anyone in the impact community who wants to put their investments online. We’re not saying who the asset owner is, we’re protecting that level of confidentiality, but we’re really trying to inspire traditional investors to come and swim with us.”
NextBillion will have more coverage of the GIIN Investor Forum next week.
Scott Anderson is a contributing editor at NextBillion.
Photo above: Amit Bouri, GIIN CEO, addressing the assembly.