James Militzer

Weekly Roundup – 6/28/14: “A New Day” for Impact Investing?

If there’s one knock against impact investing, it’s this: though the sector is full of promise, it’s just too small to make a significant dent in the world’s social and environmental needs. What’s more, those needs seem to be growing far faster than the amounts invested to address them. The impact movement may be reaching the point where it needs to either move toward the mainstream and start attracting more and/or larger investors – or resign itself to niche status.

But this week, many impact investors and other stakeholders in the U.S. celebrated a development that they believe could be a turning point in the sector’s development. On June 25, the Obama White House hosted a roundtable on impact investing, at which over 20 corporations, banks, foundations and individuals announced commitments to invest more than $1.5 billion in new capital into companies and funds focused on both financial and social impact. Federal agencies like the Small Business Administration, USAID and Treasury also announced programs to support impact investments and social enterprises by facilitating the flow of private capital toward sustainable business models. As CASE Foundation CEO Jean Case put it, “It’s a great week for impact investing … A new day has dawned.”

The announcement is the latest move from the administration to support the growth of the sector, coming just over a year after it launched the National Impact Initiative to expand the use of impact investing as part of its efforts to encourage economic growth and global development. It builds on other initiatives run through federal agencies to spur innovation and job creation, to mobilize funding for impact investments, and to transform private capital into solutions for national and global social and environmental challenges.

This week’s announcement was complemented by the release of a report from the private sector U.S. National Advisory Board on Impact Investing, featuring policy recommendations aimed at mainstreaming impact investing within the United States. Called “Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing — and Why It’s Urgent,” the report has been made public online.

But though the president and federal government are increasingly on the impact investing bandwagon, will it be enough? One encouraging sign: the White House event included not just impact investing pioneers like the Omidyar Network and Case Foundation, but also some major mainstream names like Prudential, and the Ford and MacArthur Foundations. If these players continue amping up their involvement in impact investing, it could draw other big names into the sector – especially if the federal government maintains and expands upon its current support beyond the two years remaining in Obama’s term (not an entirely safe bet).

So though it may be a bit premature to declare the dawn of a new day in impact investing, it’s safe to say that it was a momentous week.

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governance, impact investing