Rob Katz

Insight into the Impact Investment Market: An Interview with Amit Bouri

Editor’s Note: This article also appears in the Acumen Fund Blog.

J.P. Morgan and the Global Impact Investing Network (GIIN) recently released “Insight into the Impact Investment Market,” a report incorporating data from more than 2,200 private transactions and the perspectives of 52 impact investors on returns, risk, and impact measurement practices. The report states that while the impact investing industry is “in its infancy and growing,” its outlook is generally positive: data indicate that the surveyed investors are planning to invest almost USD 4 billion over the next year and that they expect impact investments will compose between five and ten percent of overall portfolios in ten years’ time.

One of the report’s authors is Amit Bouri, director of Strategy and Development for the GIIN. I recently spoke with Amit about the challenges and opportunities he sees across our nascent industry. I first met Amit in 2009, when he was a strategy consultant at the Monitor Institute. In fact, he was part of the team that produced the “Investing for Social & Environmental Impact” report (2009), which essentially launched impact investing as a sector by describing the role private capital can play in advancing social and environmental causes.


Rob Katz: Can you describe to our readers how you got involved in the field of impact investing in the first place, and also what prompted you to make the shift from Monitor Institute to the GIIN?

Amit Bouri: In early 2008, I worked on a project funded by J.P. Morgan, the Annie E. Casey Foundation, the W.K. Kellogg Foundation, and the Rockefeller Foundation while working at Monitor Institute. Our goal was to identify ways to increase the amount of private investment capital working to address social and environmental issues. There was a lot of impact investing activity from pioneering organizations, but we sought to determine what building blocks and infrastructure were needed to scale the industry.

As we worked on the report, we realized that a lot of the industry-building work depended on collective action – for example, the creation of impact measurement standards and forums for investors to convene and share best practices. Coordination and collaboration were needed to harness the energy of investors to build an industry where capital could efficiently flow to high-impact projects at scale. The GIIN was created to lead this collective action as a credible, objective, and responsive institution to the investor community, with a mission to increase the scale and effectiveness of impact investing.

Thus, I was motivated to join the GIIN because the market-building work was challenging, and it was an opportunity to help accelerate the flow of impact investment capital to address the world’s pressing social and environmental challenges.

RK: Why this report, and why now?

AB: Though the industry has grown, it is still young and remains opaque. Potential and current impact investors are faced with information asymmetry; they often don’t know how their investment practice compares relative to the rest of the market, and lack context for their work.

The GIIN tries to increase clarity through the community that we have created and through our market-building programs. For example, we manage the Impact Reporting and Investment Standards (IRIS), a set of metrics that can be used to describe an organization’s social, environmental, and financial performance. The IRIS initiative encourages voluntary contribution of IRIS-aligned data and aggregates it anonymously to produce market intelligence as a public good.

Last summer’s Impact Reporting and Investments Standards (IRIS) report complements the J.P. Morgan-GIIN report because both rely on data-driven analysis. The latter discusses investment mechanics in terms of expectations, realized returns, impact goals, fee structures, and others, to bring more clarity to the market. It adds investors’ perceptions to these data to give a snapshot of where the market is today and where it’s going. As more information is shared, investors can get a better sense of the overall direction of the market.

RK: In 2009, Monitor Institute identified three issues in the impact investing industry in their report, Investing for Social & Environmental Impact: (1) Lack of intermediation, (2) Lack of infrastructure, (3) Lack of absorptive capacity i.e., dealflow.

In the 2011 J.P. Morgan-GIIN report, investors listed the top three challenges to industry growth as: (1) Lack of track record of successful investments, (2) Shortage of quality investment opportunities, and (3) Inadequate impact measurement practice.

As we move into 2012, how have things changed?

AB: We have seen a lot of progress along all three fronts over the last couple of years, but the report highlights the long-term nature of these challenges. The GIIN works on these market-building projects that will help build a successful industry.

The 2009 Monitor report emphasized legitimizing impact investing. In 2011-2012, governments and institutions have launched impact investing initiatives, and several others are in development. In terms of infrastructure, the GIIN has contributed to progress in impact measurement through IRIS; 65 percent of investors surveyed in the GIIN-J.P. Morgan report said they aligned their metrics with IRIS (See Figure 15 of the report).

That said, there are still a few areas that are pretty intractable. Intermediation has grown a lot stronger and valuable experience has increased, but many fund managers aren’t on their third or fourth funds – they’re on their first or second. We need to be patient as it takes time to build experience, but there are opportunities to develop more products that address the needs of different types of investors and investees.

RK: Some investors think there is a tradeoff between social impact and financial returns in impact investing, while others think not. Is this a disagreement, or does it represent the diversity of actors in the field (Figure 9)?

AB: This year’s report showed that there are a diversity of impact investors with various return expectations, impact goals, and perceptions about tradeoffs. The nature of a deal and the type of investor will affect perspectives on the relationship between financial returns and social impact. For example, microfinance institutions in emerging markets and community development finance in the United States will have different strategies and return profiles than investment opportunities in less-developed sectors.

This diversity is evident in the 2011 report, in which investors responded to questions about the relationship between impact and financial returns. Sixty-two percent of the 52 investor respondents said they would sacrifice financial returns for greater impact. However, when asked whether a tradeoff is necessary, only 40 percent said yes. Looking deeper in the data, all of those who would not sacrifice returns for greater impact also believed that a tradeoff was not generally necessary. Those who would sacrifice returns for greater impact were split – one-third of them believed a trade-off was necessary, while the others did not. Overall, it’s interesting to see that many impact investors believe they don’t have to give up financial returns in order to generate impact.

RK: Who are the new investors moving into the space, including high net-worth individuals, and how do they change things from when it was primarily institutions and foundations?

AB: We’re seeing new investors of all types – including high net worth individuals, angel investors, and others investing through private banks and family offices, as well as new institutional investors. As new inflows of capital enter the market, greater formalization will occur. Processes that were ad hoc in the past will be standardized. The evolution of impact measurement is one example: Investors have been measuring impact for a long time, but they’ve typically been using proprietary systems. The market cannot scale without standardized, credible performance terms and metrics that have the same rigor as financial accounting measures. Also, tools and platforms like the GIIN’s ImpactBase, the online global directory of impact investment funds and products addressing the market’s information asymmetry, will continue to be essential as the market scales. Finally, continued convenings of the increasing number of actors in the impact investing community are needed to chart the course going forward, and to keep the focus on impact. The GIIN will continue to be a platform to channel this energy and dedication.

The progress we’ve seen is thanks to everyone pitching in – sharing data, experimenting with new processes and tools, contributing expertise, and improving products and systems. This report embodies that collaborative spirit in many ways because 52 investors have shared sensitive, private data aggregated as a powerful knowledge product, and offered as a public good.

RK: How is the GIIN working to alleviate the top risks faced by investors, as identified by respondents in the report, which were (1) Illiquidity or long tenors of investment, (2) Uncertainty regarding achievement of stated financial objectives, and (3) Uncertainty regarding achievement of stated impact objectives?

AB: It is critical to talk about the risks faced by the industry in addition to discussing financial returns and social or environmental impact as the market grows. The top risk identified by investor respondents, illiquidity, is not surprising, because most impact investments require patient capital. In the current financial markets, there’s a lot of emphasis on liquidity in general.

The uncertainty around achieving stated financial returns and impact objectives is also understandable given that the investors are working in a market in its infancy and growing. With brief track records, little shared data on realized returns, and the long tenors of deals, the market lacks information on how things are playing out. The GIIN, and we hope others, will continue to surface data to address the risks and increase certainty in the market.

RK: What are other big trends you’re seeing?

AB: Some of the other trends we’re seeing are (1) continued enthusiasm among new and existing industry actors and (2) demand for tools and resources that support the practice. With the industry’s energy and momentum, the question is: How can we develop resources and tools that help impact investors effectively place capital to address the world’s most pressing social and financial challenges?

The GIIN has been working to create and maintain market infrastructure, and we are increasing our focus on supporting practitioners. For example, we are working to increase IRIS adoption while continuing to advance and refine the standards. In addition, the GIIN will soon release a set of impact investment profiles that highlight specific deals in response to those who want tangible examples. With these examples and further data-driven work, we hope that the GIIN helps accelerate the flow of impact investment capital addressing social and environmental challenges.


A few interesting thoughts emerged from our conversation, particularly on the relationship between social impact and financial returns and the role of information access in growing the sector. As impact investing goes mainstream, the achievement of social impact and financial returns will be increasingly important. It’s clear that Amit and the GIIN emphasize shared information, accountability, and collaboration: transparency of impact objectives, methods, and measurement will be vital in taking impact investing to the next level.

Thanks to Rohit Gawande of Acumen Fund and Min Pease of GIIN for their editing and research contributions to this interview.

Impact Assessment
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