One critical insight we’ve gleaned from our work is that funders seeking impact at scale must view their work within the context of a broader ecosystem and adjust their behavior in response to change within that system. We call this idea ecosystem investing, and it is inherently more complex, requires a different set of assumptions, and produces different results than traditional programmatic investing.
One of the big outstanding questions for PFS is how participants think about outcomes that don’t come with dollar signs attached, says Nima Krodel, a director at the Nonprofit Finance Fund, which advises on PFS contracts. “How the government is valuing those outcomes, so it’s not just about the cost savings piece, is one of the big conversations that is happening across the country,”
A homeless person who cycles through the prison system and emergency health services typically costs the county about $40,000 a year, Keith Ackerman, executive director of Cottages at Hickory Crossing, told HuffPost. This innovative housing program will bring those costs down to less than $13,000.
One of the most enduring misconceptions about impact investment has been that it is a trade-off, where financial returns are sacrificed in favour of social return. This is rooted less in fact than in fear. The industry is starting to collect quantitative data providing evidence that a company can be for-profit and for-purpose, without making long-term sacrifices to either goal.
Goldman Sachs last month named Hugh Lawson to lead the asset-management unit’s ESG investing program. So-called sustainable-investment assets jumped 61 percent globally in two years to $21.4 trillion at the start of 2014, according to a report earlier this year from the Global Sustainable Investment Alliance. “What some clients want to do is take another step, and say there’s a set of values or priorities or objectives we have, and I really want them amplified in my portfolio.”
“Beneficial State Bank gave us an attractive, competitive arrangement. And they are environmentally oriented,” says Frank. “The other banks we worked with were just giving us a deal.” All distributed bank profits – from affinity cards and other revenue sources – are reinvested in low-income communities and environmental causes via the Beneficial State Foundation.
Microfinance for business has had mixed impacts but there is evidence that it could succeed in funding sanitation facilities in developing countries. While sanitation loans are not income-generating, borrowers find that they can be “income-enhancing”, creating a stream of benefits for households – by reducing medical expenses, the number of days lost to illness, and by increasing productivity – which helps them repay the loan.
Xendit is a startup launching out of our current class that’s bringing trusted mobile financial services to a country where banks have yet to prove their relevance to the majority of the population. ‘In Southeast Asia, it’s the perfect storm. One is a huge population with technology, two is nascent financial services, and third is it’s one of the most viral regions. In Indonesia, there’s [greater than 100 percent] penetration for phones.’
A group of people who call their effort effective altruism is encouraging donors to think more scientifically about philanthropy. William MacAskill, one of the founders of the movement, has just published a book-length manifesto, “Doing Good Better: How Effective Altruism Can Help You Make a Difference”. Although a philosophy professor at Oxford University, Professor MacAskill’s arguments rely on economic concepts. They include opportunity cost and the notion of unintended consequences, since not all gifts bring the sparkling benefits that the donor expects.
Water: while they sleep, we’ll be able to fund 2 wells per night!
Health: while they sleep, we’ll be able to fund almost 3 patients per day on watsi.org!!!