Impact Investing 2.0

As impact investing matures as a field, the first attempts at applying formal research methodology to the field’s activities are beginning to appear. One such project debuted last week at the World Economic Forum, Impact Investing 2.0, a collaboration between InSight at Pacific Community Ventures, CASE at Duke University and ImpactAssets.

The project began at the 2012 Skoll Forum, as the study’s authors whittled down 350 funds to the 12 that became the focus of rigorous study. These leading 12 funds, including our client Aavishkaar, were selected due to their “exceptional performance,” defined as meeting or exceeding the financial and social returns that they had promised at their inceptions. The study attempts to understand what common factors contributed to these funds’ considerable success.

As the practice of impact investing shifts from the values that motivate and inspire it – the “why” – to the practices that will perpetuate and promote it – the “how” – it is imperative that investors, fund managers, policymakers and others learn from what has been demonstrated to work. Each of the 12 funds that the study will profile over the next three months has a minimum of five years of operation, has demonstrated financial returns and has clearly accounted for the impact it has helped to produce. As best practices in the field emerge, it is exciting to see ample evidence that impact need not come at the expense of returns (or vice versa) and it is cheering to know that leading practitioners in the field are willing to share the practices that have led to their success.