NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, December 2, 2016

A new report prepared by the Omidyar Network suggests that impact investing can be done well along a continuum with fully commercial investments on one end and charitable gifts on the other.

The report is based on analysis of more than $1 billion invested in a combination of for-profit and nonprofits over the last 12 years. The result of the two-year-long analysis is what the report’s writers call a “framework for investors across the returns continuum.” In other words, how do you decide how much return you want and how much good you want your money to do?

All kinds of business forms were evaluated, with high-growth venture capital forays on one side of the continuum and grants to nonprofits on the other side. When it comes to social impact and results, which is better—grants or investments? Is there a tradeoff? The Omidyar Network says, “It depends.”

That answer’s not as fuzzy as it sounds. The report offers specifics on how to carefully structure decision-making and includes numerous examples.