North American impact investors are keeping their money close to home
Thursday, September 6, 2012
Since philanthropy blogger Lucy Bernholz pronounced “impact investing” a buzzword of 2009, the idea that investment capital can be used to generate both a financial profit and a social benefit has drawn the attention of more and more institutional investors. Without a doubt, whether impact investments are a new asset class or simply a new source of philanthropic capital in the face of shrinking government coffers, they are gaining recognition as a legitimate use for at least some of investors’ money.
Of course, the impact investment industry is still young; there is much to be learned and the universe of active funds is still relatively small. But recent surveys have begun to reveal details about the industry, including where investment capital comes from, how investments are identified and how investments are ultimately used. According to one report, the majority of institutional asset owners’ investments go through fund intermediaries – funds skilled at selecting assets capable of returning blended value.1
According to the results of several other surveys, it appears that a large portion of North America’s impact investments remain inside the continent. That is, available data suggest that impact investments are unevenly distributed as compared with need, and that assets are disproportionately directed to domestic organizations and companies.