It was an invigorating first day at SOCAP16, connecting with innovators, all convening for one sole reason: strategizing the best way to leverage capital for social benefit.
At the forefront of strategies is impact investing. From the plenary speech alone, it was clear how much the impact investing field has evolved. Access to capital has been growing over the past ten years, and international collaboration is increasing in order to build a stronger infrastructure to support impact investing. The field is evolving at a rapid pace, creating a lot of opportunity for creativity in structuring the market.
From governments working with nonprofits, to corporations working with social entrepreneurs, industries are coming together to push the field forward. But, impact investing means a lot of different things to a lot of different people. Without an official or universal definitions of impact, it is becoming increasingly difficult to visualize progress. Therefore, we need to think about the why and how we can build a stronger, more inclusive approach to impact investing.
The Path to Effective Impact Investing
Once impact investments are made and projects are kicked off, the sector will still be searching for a way to measure effectiveness. Sound familiar? The impact investor wants to measure financial performance and the distribution of positive social change. For these measurements to be achieved, beneficiaries and how they will be helped must be defined. This is extremely important for investors who are living at the intersection of “Money and Meaning.”
Another important topic of discussion is around “scale.” Foundations and NGOs want to know how to take the best bits of successful investments—the “best practices”—and use those tactics to spread social good across different locales. But it’s not that easy. Our friend at Hewlett Foundation (@Hewlett_Found), Margot Fahnestock, pointed out the cultural difficulties with setting up an effective women’s reproductive health system in Zambia. Cultural traditions are preventing them from using the same methods in nearby countries. Contextualizing outcomes from the start is crucial with the portfolio construction. This should be evident through consistent reporting, structured platforms and networks, and aggregated data around mapped outcomes
Finally, there’s a discussion in the sector about what I’ll call “market creation.” How can the sector find out about projects in need of funding? Can we develop a common set of metrics so the sector can evaluate success? Can we put all of that information into a single platform for the world to participate in this market, and—if we do—can we create a secondary market for other investors to participate in the same way people invest in the stock market? I believe it is here where technology providers play a pivotal role in the creation of information to power decision. There are solutions already doing this for grants. The question is can we crack the code for impact investments?
ABOUT THE AUTHOR
Charlie Vanek joined MicroEdge in October 2012. Charlie has had broad responsibilities in the software and information sector for the last eleven years including roles in Operations, New Product Development, Product Marketing and Business Development. He is responsible for MicroEdge’s partnership and acquisition strategy.
Charlie joined MicroEdge from Thomson Reuters, where he was Head of Insurance Solutions, Financial and Risk, directing Sales, Marketing and Product Development for Thomson Reuters’ insurance information and software business. Prior to that, Charlie had progressive experience in Thomson Reuters’ Business of Law division. At FindLaw, Charlie was a patent assignee to the Thomson Corporation for products that convert textual information to visual graphs.
Before Thomson Reuters, Charlie worked in Yield Management and Corporate Finance at Northwest Airlines. He has a B.S. in Mechanical Engineering from Iowa State University and an M.B.A. from the University of Chicago. He is on the Board of Directors at Open Eye Figure Theatre, a 501(c)3 in Minneapolis.