Impact Investing: Transforming How We Make Money While Making a Difference Hardcover – Sep 13 2011
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This groundbreaking book charts the path of a new industry, explaining how impact investing is and can be a positive disruptive force. Impact Investing affirms that it is possible and desirable to address social and environmental problems with investments that generate financial profits.
Antony Bugg-Levine and Jed Emerson reveal how impact investing is a transformational vehicle for delivering blended value through investment. The authorstwo leaders in the burgeoning field of impact investinggive a name to a set of activities previously siloed in enclaves and reveal how these activities are linked within what is becoming a new and dynamic field.
The authors don't take a normative approach to argue how investors should behave but instead show how entrepreneurial people and institutions are already offering an integrated alternative. Impact Investing defines this emerging industry for all the institutions and people it is affecting (investors, funders, social entrepreneurs, educators, policy makers, and marginalized communities) and showcases illustrative examples of challenges and successes. The book also explores the potential that impact investing holds to tackle the most critical social and environmental issues of our day on a scale never seen before.
Ultimately, Impact Investing offers a fundamentally optimistic vision. This unifying vision illuminates what can be achieved when we capture total blended value, when all our assets work in unison with our values and beliefs.
From the Back Cover
Praise for Impact Investing
"My experience with eBay demonstrated that you can do well by doing good. Impact Investing explores this important idea and provides many examples of the social impact that a for-profit business can ignite." Pierre Omidyar, founder and chairman, eBay; founding partner, Omidyar Network
"An informative and perceptive insight into the world of impact investment." Ronald Cohen, cofounder, Apax Partners; chairman, the Portland Trust and Bridges Ventures
"In business schools around the world, impact investing is hot. For all those young professionals and their teachers, Bugg-Levine and Emerson, pioneers of the field, have written a great introduction to the realities of using markets to address society's problems." Michael Chu, professor, Harvard Business School; cofounder, IGNIA Fund
"An insightful, compelling, and highly readable road map for investors and their wealth managers seeking to achieve blended value. As global thought leaders in impact investing, Bugg-Levine and Emerson share their perspectives and real-life examples of investors and investments achieving a combination of financial and social/environmental returns. It's a must-read for anyone interested in how investment can tackle the world's toughest problems." Ron D. Cordes, cochairman, Genworth Financial Wealth Management; coauthor, The Art of Investing and Portfolio Management
"Impact investing just might be the game-changer we need in the quest to end poverty. Building on the forces of socially responsible investment, microfinance, and many others, impact investing shows that we can solve many of the world's social problems while making attractive financial returns. This superb book is a clear and compelling guide to any reader who wants to be a part of this powerful new force in development. The book is fresh and accessible, with an eye for metaphor and self-deprecation that is rare and welcome among policy wonks."Elizabeth Littlefield, president and CEO, Overseas Private Investment Corporation; former CEO, CGAPSee all Product Description
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This is a must-read for current and potential impact investors, social entrepreneurs, the philanthropic community, and policymakers interested in impact investing. I also highly recommend this book to individuals who are simply curious about the topic as it is not only informative, but also an enjoyable read.
Also, I think the book failed to bring up or provide valuable information about many key aspects of the world of impact investing, such Muhammad Yunus' concept of Social Business which is growing in popularity and the opportunity for a Social Stock Exchange. Perhaps this is because one of the authors was a founder of a very controversial microfinance bank and, from my viewpoint, talking about these topics would go against the values that he believes in which pushed that bank to it's controversial IPO.
Additionally, I believe there were some misstated or under-explained parts of the book which, for me, took away its ability to be a valuable collection of information that I would recommend to my friends interested in this space. One example is that there is a reference in the book that Muhammad Yunus is a supporter of non-profit microfinance, when his for-profit bank (Grameen Bank in Bangladesh) is perhaps the most famous microfinance bank in the world. Also, the author talks lightly about the controversy around the investors in Comportamos and SKS gaining massive amounts of wealth in their IPO's, but doesn't talk about the details of the controversy - such as the interest rates of Comportamos that led to it's profit margins (80-100%) and the cruel collection methods of SKS that contributed to it's rapid expansion, many suicides, and (in part) the Indian microcredit bubble. I can't help but think that the authors left this information out on purpose to present a particular image of impact investing which doesn't accurately represent the entire space.
Lastly - as someone who does have enough wealth to be identified as an "accredited investor," I would have liked to learn more about the current landscape and future potential of retail-level impact investments.
For the finance types, this is not a how-to book on impact investing as it does not focus on the pricing and valuation methodologies, rather it's more of a framework for approaching investing that incorporates social objectives into an entire asset management portfolio.
For the social sector practitioners, it's a great primer to help un-demonize the financial markets' role and its potentially huge contribution to the impact investing space and the social sector, if framed appropriately.
"Without philanthropy, modern microfinance would not exist. But without ... integration into the global investment system, microfinance would likely not have exceeded so spectacularly ..." (p. 46)
The closing line of the above paragraph then asks the key question for the entire book: "But at what price?" Emerson and Bugg-Levine tackle the costs and losses that have resulted from the decades of experiments that bring impact investing to this moment. Money has been lost, reputations ruined, lives taken. It has not been a straight line to success and the way forward presents no guarantees. Like any good financial discussion, previous outcomes are no guarantee of future results.
The book comes at in important time for impact investors (and for Emerson and Bugg-Levine themselves, both of whom have just taken on new jobs). SoCAP 11, the fourth annual conference that has become almost synonymous with Impact Investing opens this week in San Francisco. The first SoCAP conference launched one month to the day after the 158 year old Lehman Brothers investment bank went bankrupt. The disarray, panic, and anger from that scary time have raised and ruined political careers, redrawn the global map of economic powerbases, and given rise to bestselling books and award winning movies. They've also opened wider the window of opportunity for new concepts of capitalism, new measures of profit, and more widespread conversations about sustainable enterprise.
Bugg-Levine and Emerson tell this story from the inside. Bugg-Levine led a grantmaking portfolio at The Rockefeller Foundation for several years that poured tens of millions of dollars into the infrastructure of impact investing. Emerson has staffed and consulted to several investor-side enterprises over the years. They present the historical roots of the ideas and give numerous examples from across the globe of the roles and permutations of development finance, microfinance, socially responsible investing and philanthropy that merge, as streams into a river and then as rivers into the sea (a favorite metaphor of theirs). Their direct involvement in building and promoting these tools and values are strong credentials for the two authors - and they tell a good story. There is (thankfully) no glorifying or covering up - people they know made mistakes and experiments went wrong. The authors are emphatic to this point, impact investing is not a silver bullet.
For my purposes, the more interesting section of the book comes in part two - what will the future hold? They address this in two ways - the practical and the predictive. They identify several sectors where impact investing opportunities are likely to grow and offer guidance for interested investors to pursue such opportunities.
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Impact investing is complicated. It is also essential, given the magnitude of the issues the world is facing and the relatively limited resources of philanthropic capital. Their comprehensive overview with clear examples and their direct, candid approach, not only provides the reader with a sense of the opportunities and challenges, it also creates a sense of excitement and possibility of the potential for impact investing in challenging our current investment paradigms.
Clearly, the capital markets as we know them have some extraordinary challenges The authors make a very compelling argument that there is an increasingly important place for impact investing and innovative approaches to finance which impact investing represents. In short, this book is a very compelling read which I highly recommend.
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