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SDG Library - Impact Investing Module

Access to impact investment

This module defines what impact investing is, why it is important to achieve social inclusion, and what type of organization is suitable for such an investment. It also provides a case study that details the relationship between a social entrepreneur and impact investor and the complexities this relationship entails.

Introduction to impact investing and why is it important

When we are talking about impact investing with a focus on developing regions, we are talking about how investors can drive economic and non-economic resources to organizations that are driving social change and aid in the generation of social inclusion through their business models. Impact investing goes beyond just providing financial resources for social entrepreneurs to scale; it is about helping find new and more sustainable solutions to old but urgent social, economic, and environmental challenges. Impact investors usually think in terms of financial and impact return. Financial-first investors are those that are more interested in market returns whilst impact-first are those investors that give a priority to social and environmental indicators. Furthermore, many impact investors are trying to not give up market returns in exchange for an increase in impact. In this sense, many of them are searching for competitive opportunities in terms of market return and impact return simultaneously. Developing regions are the main contexts where impact investment directs its resources. Therefore, successful processes of impact investment require a knowledge of and experience in developing regions in order to adapt to the complex contexts in developing countries marked by weak institutions and government corruption. Ultimately, the strategy of an impact investor is to negotiate resources for positive social and/or environmental impact and financial return.

How to attract investors

Additional readings (Optional)

Case Study

Quiz

Group Discussion

Assignment