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What is Impact Investing?
Impact investing is a strategy that aims to create positive and beneficial social, or environmental changes in addition to financial gain. The whole point of impact investing is to use capital or money for good socially or environmentally. This way, the negative effects caused by businesses and their activities can be reduced to a certain extent. A good example of impact investing is when an individual or company invests in a food program for children in needy schools because they believe that this type of investment will cause a positive social impact in society. At times, impact investing is considered an act of philanthropy.
Types of Impact Investments
Impact investing takes on many forms and it provides investors with different possibilities and opportunities when it comes to the returns generated. According to research done by the Global Impact Investing Network (GIIN), a majority of investors who take on impact investing are also looking for market-rate returns. Among the industries where impact investments span includes Agriculture, Education, Energy, especially clean and renewable energy and ESG.
Impact Investing Firms
Vital Capital Fund
Vital Capital Fund manages approximately $350 million in assets and is a private equity fund. The firm uses its expertise in operations to identify overlooked opportunities and invest in them in order to enhance and transform the quality of life of communities living in, primarily developing nations mostly in sub-Saharan Africa. While doing this, they also ensure that the investors get high returns on their investment. Vital Capital Fund primarily focuses on the development of housing projects, development of infrastructure, renewable energy, education and health care. Among the fund's investments are the Luanda Medical Center in Angola and WaterHealth International.
Triodos Investment Management
Triodos Investment Management is a wholly-owned subsidiary of Triodos Bank. The firm has been actively involved in impact investing for more than 25 years. It's located in Zeist, the Netherlands and the main aim of the firm is to invest in projects that create a positive social or environmental impact, in addition to a healthy financial return. The firm manages a number of sustainable investments and it has about $5 billion in assets. Their primary areas of focus when it comes to impact investing include renewable energy, sustainable food and agriculture (including organic farming), health care, and education.
Triodos is one of the founding members of the Global Impact Investing Network. The firm's investments are spread throughout Europe, South America, Africa, India, and Southeast Asia.
The Gates Foundation
The Gates Foundation was founded by the Windows pioneer, Bill and Melinda Gates. They are of the belief that all lives have equal value and that's why they transferred $20 billion of Microsoft stock to their foundation in order to on take on some of the toughest and most important problems globally. Among the problems that they address include gender equality, global development, global growth and opportunity, global health, global policy and advocacy and U.S program. While the foundation is mostly involved in philanthropic work, it also has a strategic investment fund with $2.5 billion under management, which is invested in ventures that align with the Foundation's goals of improving health, education, and gender equality. The strategic investment fund supports organizations or projects that benefit the world's poorest and are often overlooked by traditional investors.
Soros Economic Development Fund
The Soros Economic Development Fund (SEDF) is a New York-based investment firm that is part of the Open Society Foundations. It was founded in 1997 by billionaire philanthropist George Soros. In total, Soros has contributed approximately $18 billion to the Open Society Foundation. Among the $18 billion contribution, $90 million has been actively invested in impact ventures. The foundation seeks to open societies by promoting democracy, legal reforms, higher education, and journalism, as well as other fields. The foundation has made investments in the following fields financial services, agribusiness and logistics sectors and makes program-related investments in frontier markets. Among the causes that the foundation fights for include democratic practice, economic equity and justice, health and rights among many others. The foundation has additional offices in London, Johannesburg and Freetown.
The Ford Foundation
The Ford Foundation was founded in 1936 by Edsel and Henry Ford. Initially, it was funded by a $25,000 endowment from Edsel Ford. Today it has among the world's largest private endowments with about 14 billion under their management. The foundation has a strong belief in the inherent dignity of all people. Through its headquarters and ten international offices, the Ford Foundation gives out grants to support causes that align with the foundation's values. Among the causes that the support include social justice, diversity equity and inclusion, disability inclusion among others.
BlueOrchard Finance S.A.
BlueOrchard is among the leading companies in the impact investment management space. It has its principal office in Switzerland and operates in more than 80 emerging and frontier markets around the world, including areas in Asia, Latin America, Africa, and Eastern Europe. Their mission is to generate a long-lasting positive impact for communities and the environment while still giving back attractive returns to their investors. The company was established in 2001 by initiative of the UN as the first commercial manager of microfinance debt investments worldwide. From then onwards, the company has evolved into a leading global impact investment manager, connecting millions of entrepreneurs in emerging and frontier markets with investors. To date, the company has invested over $8 billion across 90+ countries. As of June 2021, 223 million people with low income in emerging and frontier markets received access to financial and related services with the support of BlueOrchard.
Community Reinvestment Fund, USA
Community Reinvestment Fund, USA was established in 1988 as a national non-profit certified community development financial institution. The institution works to address social and economic inequity through new financial solutions that help empower people, build sustainable communities and inspire systemic change. So far they have facilitated more than $2.4 billion in loans, investments and bonds to economically transform challenged neighborhoods into communities that thrive. The Community Reinvestment Fund partners with local private lenders to provide financing capital for community development projects. These include small business loans for the purpose of growing a business, expanding staff or increasing energy efficiency. With more than $250 million in assets, along with access to additional long-term loan capital through the Community Development Financial Institution Bond Guarantee Program, the Community Reinvestment Fund also provides funding assistance for community housing projects, health care centers, charter schools, daycare centers, and small businesses.
Among the services offered by the bank include checking, savings, credit cards, etc.
Fresh Ventures
Fresh launched in 2021 to work alongside founders to address the world’s most pressing problems through scalable impact ventures. Fresh Ventures is a venture-building program and startup studio based in The Netherlands. They co-found companies with experienced professionals and entrepreneurs to address systemic challenges in the food system. The goal of the program is to help founders understand and get validated solutions to challenges in the food system from a systemic point of view.
Good Fashion Fund
The Good Fashion Fund is an initiative that was created with an aim of creating systemic change within the textile and apparel industry as the fashion industry supply chain creates negative environmental and social impact. There are in fact solutions to these challenges but the only problem is the lack of capital to scale these technologies within the various supply chains . How the fund works is by financing the implementation of highly impactful & disruptive production technologies in Asia. The Fund targets long-term USD debt investments in textile & apparel manufacturers in India, Vietnam & Bangladesh.
Obvious Ventures
Obvious Ventures is a company that was founded with the belief that the largest companies in our time will make use of technologies to solve systemic problems in a profitable and scalable way. The fund offers support to entrepreneurs who are building such disruptive solutions. The funds issued to the entrepreneurs are meant to create positive social impact, transform capitalism while delivering great financial returns.
Bay Street Capital Holdings
Bay Street Capital Holdings is an independent investment advisory, wealth management, and financial planning firm headquartered in Palo Alto, CA. They manage portfolios with the goal of maintaining and increasing total assets and income with a high priority on managing total risk and volatility. Although many advisors may focus on maximizing returns, they place a higher priority on managing total risk and volatility.
Our founder, William Huston founded Bay Street after 13 years of supporting the United States' largest retirement plan ($650B) Thrift Savings Plan. He is recognized as Investopedia’s Top 100 Financial Advisors for 2021. In California, only two black-owned firms out of nineteen firms received this recognition. In Scottsdale Arizona, Ekenna Anya-Gafu CFP, AAMS is recognized among the Best Financial Advisors for his responsiveness, friendliness, helpfulness, and detail. Bay Street was founded to advocate for diverse and emerging fund managers and entrepreneurs. In 2021, Bay Street was selected as a finalist out of over 900 firms across the US in the category of Asset Manager for Corporate Social Responsibility (CSR).
