Scott Anderson

Impact Investors Ready to Open the Spigot : J.P. Morgan, GIIN study projects $9 Billion Committed for Impact Investing 2013

In the weekly roundup posted Saturday, I tried to get a read on how the tea leaves were shaping up for impact investing in 2013. After all, we had a flurry of announcements of new investment funds and new investments closing at the end of 2012. I wondered if last year would live up to the promises. Today we seem to have an answer.

J.P. Morgan and the GIIN today released Perspectives on Progress, which takes the collective temperature of the impact investing community – and the mercury is rising. The 99 investors who replied said they plan to commit a total of USD $9 billion toward impact investments in 2013. That’s $1 billion more than these organizations said they invested in 2012.

It appears that the total investment size of the survey respondents did, in fact, match up to the 2012 projections – and then some. In a similar JP Morgan/GIIN study from December 2011, investors projected they would commit $4 billion for investments in social enterprises in 2012. However, because the number of survey respondents grew (99 in 2012 compared with 52 in the previous study), it’s not a 100 percent apples-to-apples data comparison.

This year’s study quizzed fund managers, development finance institutions, foundations, diversified financial institutions, and other investors. To participate in the study, these organizations needed at least USD $10 million committed to impact investments.

GIIN notes that the majority of the investors said their impact investment portfolios are meeting or exceeding social, environmental, and financial expectations, with 65 percent targeting market-rate financial returns.

A few other quick points made in the report:

  • “Most respondents report that their portfolios’ financial and impact performance are in line with their expectations

  • Ninety-six percent of respondents measure their social and/or environmental impact, and four out of five fund managers highlight the importance of impact measurement for raising capital

  • While respondents believe the market continues to be challenged by a lack of appropriate capital across the risk/return spectrum and a shortage of high quality investment opportunities, they indicate progress is being made evenly across these and other indicators of market growth (bold emphasis is mine)

A USD $9 billion impact investing market for 2013 is the headline. But equally important is the fact that two thirds of funds say they are meeting their expectations, both in terms of financial and social returns.

impact investing