Impact Investing

A Tool for New Partnerships for Sustainable Development

Defined as investments “made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return,” impact investing is a $120 billion industry practised by asset owners (such as pension plan members, high-net worth families, corporations, governments), asset managers (managers of private equity funds, endowments, development finance institutions, etc.), demand-side investees (particularly small businesses, social enterprises, cooperatives, financial institutions), and service providers (e.g. standards bodies, universities). While some international development NGOs have participated in investment funds or development impact bonds, most international volunteer cooperation organizations (IVCOs) are still assessing the potential of impact investing to advance their missions. A review of the field indicates that IVCOs can choose among at least five roles in impact investing through which to form new partnerships to advance the SDGs. They can serve as an investor or co-investor, financial product developer, business advisor, evaluator or field builder, or pursue a combination of these roles. IVCOs interested in pursuing these possibilities should learn more, ensure relevant internal capacity, and test initial lines of action.

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