NB Financial Health
A Flexible Toolkit Increases Your Impact: (With video) Omidyar Network shares lessons learned from the impact Investing field (Pt 3)
Editor’s note: This is the third in a series of four posts. Please check out additional articles below.
Being able to use a range of tools — from traditional for-profit investments to grants, and everything in between — benefits our ability to achieve impact in a number of ways.
When considering individual deals, for example, it allows us the flexibility to think creatively about what kind of investment would best support the work of our investees. For example, when we first invested in Bridge International Academies (a company delivering low-cost quality education to the poor in urban Kenya), it was an untested business model in a very risky market environment. Convinced of the firm’s potential to create a new industry sector with massive impact, we invested through our foundation using a program-related investment (PRI). Bridge’s model quickly gained traction and their next round of funding came from more commercial investors who didn’t want to be limited by foundation investing constructs. We were able to shift tools and do a more traditional commercial investment to participate alongside these funders in Bridge’s second round.
No matter what structure you use to do impact investing – be it a stand-alone fund, a foundation, or a family office – you likely have access to a broader toolkit than you think. Luther Ragin, Jr., CEO of the Global Impact Investing Network, applies this concept of flexibility to the private foundation world, disagreeing with the idea that foundations are so inherently limited that they cannot engage a full financial toolbox. He argues this conviction is based more on limitations that come from the habit and culture of traditional philanthropy, and there is actually far more that can be done.