Impact Investing: Thinking Differently About Scale and Sustainability

Blog

March 03, 2016

Impact Investing: Thinking Differently About Scale and Sustainability

InsideNGO CEO Tom Dente speaking on a panel about Impact Investing at our 2016 Annual Conference.

By Tom Dente

President and CEO InsideNGO

Over the last several years, InsideNGO has become increasingly involved in convening our community around the subject of impact investing through symposia, the Annual Conference, and in other settings. As I wrote in a prior blog, almost 75% of our leaders reported in a recent poll that they anticipate major shifts in resources, especially funding, in the next three to five years. While impact investing as a source of funding isn't new to the NGO community, it is an emerging area, and presents new opportunities as NGOs ponder the issues of scale and sustainability. Here’s what some of our members, as well as we at InsideNGO, are doing:

NGOs Finding Opportunities

InsideNGO members Accion and The Nature Conservancy are among several NGOs making strides in impact investing. At a recent event co-sponsored by InsideNGO and Venable, LLP, Impact Investing and Nonprofits: Opportunities, Innovative Structures, and Creative New Ways to Raise Funds and Further Your Mission, Accion’s Deputy General Counsel, Kevin Saunders, Esq., and Kamil Cook, Esq., Senior Attorney at The Nature Conservancy’s impact investment division, NatureVest, shared some of their lessons learned.

Saunders suggested that NGOs that wish to explore the opportunities in the areas of impact investing begin by asking, “Do we actually have a product or services that could benefit from a commercial approach? Do you have something that’s investable?” He acknowledged that this is a complicated question, and explained that while impact investing has been a primary activity of Accion for decades now, that it wasn’t always the case.

“Accion did not go into this in 1973 thinking ‘this is something that will eventually benefit from a commercial approach,’” Saunders said of his organization’s initial foray into microcredit. “Its impact is what led our decision making at that point, and then later on, we sort of came organically to the conclusion that the commercial approach worked better. It took us another 20 years to build an investable institution.”

The Nature Conservancy launched its impact investing division about two years ago, Cook said. In her remarks, she emphasized the scale that can be attained through impact investing, saying that it can be “catalytic, because it can help magnify and amplify the conservation work that we do, which is quite difficult with pure philanthropy.” She noted that some of the key learning from NatureVest’s experiences to date include the importance of selecting the right strategic partner, making sure that for-profit investors are aligned with the NGO in terms of their mission and thinking about the project, because these partnerships endure for up to a decade.

Both Saunders and Cook noted that there is a tension that exists between the commitments in working for public good vs. the need to ensure private benefits. These new models require that NGOs modify how they conduct some of their activities, but the trade-offs enable impact on a different scale.

The power of member collaboration

At InsideNGO, we’re working to support members as they collaborate more on these opportunities. Together with MercyCorps, Pact, and GOAL, and in partnership with the Aspen Network of Development Entrepreneurs (ANDE), we have formed an INGO Impact Investing Forum, with another 20+ members from the international community.

This forum is a means to share sector practices, knowledge and insights; convene meetings around key topics and issues in this area; and perhaps most importantly—in a sector increasingly seeking evidence to further its impact—highlight the mission, value, and results by NGOs as they creatively develop market-based investments that generate returns. International NGOs offer unique skills and expertise in making investments, channeling investments from others, and in providing a range of capacity development and technical assistance in this area, all in support of their missions. Success requires new internal capabilities, navigating complex legal and technical environments, and effectively engaging new and different actors from the growing impact investing ecosystem. Devex highlighted news about the forum in this recent article.

Over the next several months, InsideNGO will share more as we work with members to understand the range and depth of activities in this area. We welcome the involvement of interested members in this newly launched forum. And, as you continue to address the need for scale and sustainability of mission benefits with creativity and innovation, we invite you to draw upon the expertise within the InsideNGO community and partner network as you explore these and other opportunities.

## Comments

Login to join the discussion.