Impact Investment Funds work just like regular lending accounts, in that 100% of the lending funds you upload, and their repayments, go to your chosen entrepreneurs. In addition:
A portion of the 5% service fee paid by all Zidisha borrowers is reinvested in the account with every loan funded, so that its value can grow over time.
Lending funds paid into the account are tax-deductible as charitable donations in the United States.
Impact Investment accounts include a Lending Fund Value page, which tracks changes in the value of the fund and its outstanding loan portfolio.
Business schools—once reserved for those who wanted to pursue careers as bankers, consultants, and CEOs—now boast a wealth of social entrepreneurship and social innovation courses. More and more students are seeking out these courses with a hope of creating high-impact future careers. This increase in demand for social impact courses leaves universities and extracurricular education programs with an opportunity to reconsider their offerings.
The efficient impact frontier is a tool that intentionally simplifies the way that expected impact and expected return interact within a given portfolio of investments.
According to McKinsey, 60-80 million lives were touched last year across the financial inclusion, agriculture, health care and education sectors. In two-third of social enterprises, focused social impact funds have led the first investments.
The need for exotic currency hedging in microfinance offers a case in point. MFIs, to meet the needs of their borrowers, lend out money in local currencies that have very low liquidity. As the microfinance market grew, the MFIs’ currency risk grew as well. But few financial institutions offered hedging products for the relevant local currencies, and institutions that did offer those products often imposed onerous collateral requirements on customers.
This study does show that conservation impact investing is real and growing rapidly. One reason for this growth may be that it has broad appeal, as illustrated by the variety of collaborators on our study.
The Engine will choose companies that can have the most social impact in the world. Through the new accelerator, entrepreneurs (including those who had no MIT affiliation in the past) will be able to access a marketplace for renting specialized equipment on campus. The marketplace will also give access to space at other universities and organizations in the area. Inside the accelerator’s own 26,000-square-foot headquarters, entrepreneurs will have access to legal, business, and tech licensing expertise.
A venture fund will provide long-term capital support, while taking less equity than a typical investor.