What?s Cooler Than a Million Dollars? Changing a Million Lives

Monday, May 9, 2011

Henry Ford once said that abusiness that makes nothing but money is a poor business. Impact investing takes that idea to a new level.

Impact investors look for businesses that have a positive social or environmental impact as well as the potential for financial return. These enterprises can be anything from schools to mobile carriers serving the poor. Can profit-led companies solve social problems? Impact investors think they can.

One of the pioneers in the field is the Omidyar Network, created by Pierre Omidyar, the founder of eBay, and his wife Pam. Amy Klement, who leads Omidyar Network’s Access to Capital initiative (and previously headed up payments at PayPal) told me that Omidyar’s approach to philanthropy was formed by eBay. “By providing tools and a platform, he saw what people could do with opportunities. Ebay created more than 1 million new entrepreneurs” Klement said.

The Omidyars initially created a non-profit, family foundation but quickly realized that this imposed a lot of restrictions. It was very difficult to make for-profit investments in social enterprises. “According to the tax laws, if something is a business it can’t be for good.” explained Klement. “Through eBay the Omidyars had seen that businesses can have social impact and lasting social impact. They are sustainable, they are scalable in a way that non-profits generally aren’t.”

Source: Venture Beat (link opens in a new window)