Scott Anderson

Weekly Roundup: 2-12-12 – ROI (Return on Impact)

Macro issues dominated at last month’s World Economic Forum in Davos. Although Europe’s debt crisis and whether there will be an intact Euro Zone by Davos 2013 were the main attractions, that doesn’t mean social enterprise discussions were completely relegated to the sidelines. In fact, several participants made the case that business development responses to poverty are permanent members of the Davos team, even if they didn’t see much time on the field this year – to belabor this analogy.

“Satisfying shareholders while also achieving measurable social outcomes at scale is a promising field that’s been studied and experimented with by many great thinkers, and doers. But I doubt it’s ever been as front-and-center in the conversations of global leaders who gather here in the Swiss Alps as it is this year,” Karl Hofmann, president and CEO of Population Services International, wrote in the Washington Post.

Perhaps Hofmann caught wind of a detailed yet eminently readable report from Credit Suisse Research Institute, in collaboration with the Schwab Foundation for Social Entrepreneurship, “Investing for Impact: How social entrepreneurship is redefining the meaning of return.”

Contributors included Mark Kramer, the founder of FSG Social Impact Consultants, Rupert Scofield, the founder of FINCA International; and Sir Richard Branson, founder of the Virgin Group. Catherine Clark, Director of the CASE i3 Initiative on Impact Investing and professor at Duke University’s Fuqua School of Business, and Jed Emerson, president and founder of ImpactAssets, discuss aligning metrics with investment expectations. Acumen Fund’s Brian Trelstad and Rob Katz also author a chapter on ‘Creating a Capital Curve for Social Enterprises’ in which they detail the challenges: “In the past ten years, we have spoken to more than 5,000 social ventures – and invested in just 57.” But they also offer lessons on scaling and the role of grants and hybrid finance products.

For NB readers, this report will be review of well-treaded territory. For many others I think it’s a compact resource on the state of play (complete with glossary) on both the potential and risks of scaling growth for social enterprises, the importance of the right mix of financing structures to reach elusive scale, the development of standardized metrics, and frank lessons by some the trailblazers of impact investing.

Congrats to each of the authors on their efforts. Be sure to download the full report here.

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impact investing, scale