Giving Compass' Take:

• There needs to be a shift in mindsets so that impact investors and social entrepreneurs can work together on integrated strategies that support social good projects. 

• How can donors help facilitate relationships between impact investors and social entrepreneurs? Where are the connective points in these industries? 

•  Read why both of these investors are the driving forces behind social innovation. 

Social Finance and Impact Investing are clearly hot topics. The media are full of them and the global impact investing market is growing dynamically. However, it is far from clear which different nuances the terms comprise and what types of investors make up this new investment market.

For this reason, several market studies are currently being conducted by national off-springs of the Global Steering Group for Impact Investment that came into live in 2015. Anecdotal evidence and preliminary data suggest impact investments happen where a balance between near-market financial returns and some social impact can be achieved under conditions of moderate to low risk. This is for example the case in renewable energy projects or in ‘tech for social good‘.

However, we see a mismatch in that impact investing is not meeting social entrepreneurship in all its facets. If impact investing is to have the transformative effects on society it proclaims, we need to find ways to channel it into fields ridden by persistent problems such as global supply chains suffering from human rights issues, homelessness, or inequalities and lack of empowerment for vulnerable groups.

In order to increase the social innovation and impact produce when impact investing meets social entrepreneurs we need to foster a mind shift on five different levels. The first two I discuss here, have to do with the need to revisit the rationales that guide investors’ and entrepreneurs’ decision-making.

  1. Acknowledging complexity in impact measurement
  2. Moving from idiosyncratic to integrated strategy

Read the full article about impact investing and social entrepreneurship by Gorgi Krlev at Alliance Magazine.