SAN FRANCISCO — A consortium of world leaders have formed a social impact task force to bring “impact investing” to the forefront of global policy.
The task force emerged out of the G8 summit held earlier this summer, but was formally announced this morning at the Social Capital Markets (SOCAP) conference.
Making the announcement was Matt Bannick, a managing partner at social impact investing fund Omidyar Network. Bannick will serve as one of the U.S. delegates to the task force, along with Don Graves, the deputy assistant secretary for small business, community development and housing policy at the Department of the Treasury.
“G8 looked at the relevant role of government, social, and private sectors through the lens of impact investing,” Bannick said on stage. “The task force is soliciting different points of view, developing innovative ideas, developing relationships, and making policy recommendations to get stuff done. The roles all of us can play will be fleshed out over time.”
Impact investing is a nascent sector, but one that has increasingly attracted attention from global leaders, venture capitalists, non-profits, and entrepreneurs alike in recent years. Impact investing is a form of socially responsible investing where investments are made into companies, organizations, and funds that are designed to generate measurable social good as well as financial return.
J.P. Morgan released a survey which found that this “emerging asset class” is growing and respondents plan to commit $9 billion in impact investment in 2013.
Impact investing brings together elements from the public, private, and non-profit sector with the goal of effecting good at the greatest possible scale. Non-profit organizations have knowledge on the social, economic, and political situations in their area of focus, but often struggle to scale their efforts. Executives of large companies and entrepreneurs can leverage their expertise growing businesses to help non-profit organizations scale effectively. Many governments are interested in initiatives that fuel economic growth as well as address social issues, and can take national measures to promote social entrepreneurship.
Jonathan Greenblatt has been involved with “impact investing” for over a decade, before the idea had a name. He currently serves as the director of the Office of Social Innovation for the White House.
“The President deeply believes impact investing is part of our economic strategy, and is looking at how can we encourage this across the world,” Greenblatt said on stage with Bannick. “But economic recovery is not something we are only seeing from Washington. It is being driven from Silicon Valley. Entrepreneurs, investors, and executives are figuring out how to standardize social metrics, to measure impact as a complement to policy.”
Greenblatt previously founded the Impact Economy Initiative at the elite Aspen Institute, after selling his Ethos Water company to Starbucks in 2005 and serving as VP of Global Consumer Products. He said his role will be to facilitate input from the task force to the President, and that this is a “moment we want to leverage.”
Impact investing can take many forms. Before now, this idea manifested across multiple industries and in many different ways. Part of SOCAP and this task force’s mission is to provide structure to these efforts and facilitate communication.
Jason Green is a founder and partner at Emergence Capital and has been instrumental in promoting social entrepreneurship for the National Venture Capital Association. He said that a confluence of factors have given social entrepreneurship the momentum it currently has. The economic crisis has engendered widespread mistrust in large organizations and caused people to look for alternative models.
“There is cynicism that government and big companies have the best interests of the world at heart,” he said in an interview with VentureBeat. “This is a new way of building an organization to make sure it is aligned for the long haul and having a positive impact on the world. It is a third new way of solving big world problems.”
Cultural shifts are also happening at a more grass roots level. Green said that young people are much more driven by “mission” than older generations and he foresees a future where most private companies, whether they are small startups or multinational corporations, have a social mission worked into their business.
The UK’s Prime Minister David Cameron recently said “social investment can be a great force for social change on the planet. It can help us build bigger and stronger societies. That power is in our hands. And together we will use it to build a better future for ourselves, for our children and for generations to come.”
The formation of this task force is a signal that impact investing is maturing, and gaining attention and investment on a global scale.