Impact Investing: Building on Strong Foundations in the U.S.
Wednesday, March 12, 2014
Impact investing in the U.S. has a rich history and established communities of practice — spanning community finance, socially responsible investment, micro-finance, housing finance, environmental finance, small business finance in underserved “emerging domestic markets,” sustainable development and, more recently, social finance, which explicitly ties investment returns to social outcomes using tools like “pay for success.”
In most of these markets, and through various stages of development, government has played a critical role. In short, active impact investing markets are built on substantial policy foundations.
However the different strands of government effort engaged in the common activity we call impact investing have often operated independently. Instead, they could and should be knitted together into a cohesive platform that helps identify what works and what more can be done, building on the seminal efforts of groups such as “Investing in What Works”, an initiative of the Low Income Investment Fund, Federal Reserve Bank of San Francisco and Citi Foundation.