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Giving Compass' Take:
• Ryan Waggoner describes the various types of impact investing, ranging from mechanisms for higher education projects to a replacement for restrictive public funds.
• What are potential pitfalls with impact investing? How is it disrupting the philanthropic sector?
• Get more acquainted with impact investing as it becomes more mainstream.
Social impact investing is a fast-growing sector driven by investors who want to use private capital to further the public good. This industry provides a unique opportunity for results-oriented social entrepreneurs to invest in businesses, funds and nonprofits with the intention of generating positive, measurable social change alongside financial return.
Impact investing is a booming trend at our nation's finest research universities. For decades, professors and students from the best schools -- armed with big ideas that could change the world -- have struggled to access the capital necessary to further develop their innovations into commercial enterprises.
Why? Because for investors focused solely on financial return, it makes little sense to deploy capital to a risky startup run by a science professor or recent college graduate with no demonstrable track record of commercial success.
Enter the impact investors. University-affiliated impact investment funds have been sprouting up across the country. Using cash raised by universities, corporations, philanthropic institutions and university alumni, these funds deploy seed and early-stage capital to university-affiliated innovators.
These impact funds are able to leverage significant sums of money to help unleash the innovative power of high-potential, but inexperienced, entrepreneurs. While the likely rate of return on these risky ventures is relatively low, impact investors understand their dollars are being used to promote innovation and entrepreneurship that has the potential to create a significant positive impact on the world.
Impact investment is also disrupting the traditional economic development ecosystem. Instead of relying solely on limited and highly-restrictive public funds to finance revitalization efforts, initiatives are in place across the country to engage all sectors of the community -- charities, big business, educational institutions and private donors -- to improve the places where people live, work and play.
Read the full article about impact investing by Ryan Waggoner at The Daily Herald