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Impact investing what, why and how -pdf version
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Impact Investing What, Why & How Suman Chowdhury Mony [email protected] Big investment, little financial benefits, more social impact...
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Impact Investing is a growing developmental tool. It can play a good role in the development of any country especially in developing countries. For example, the Impact Investor can invest their money for food production, preservation and food processing. In our world, there are many countries where sometimes food productions cross their needs and it is easy for develop country to export the excess foods or any other products in abroad. But it is not always possible for the developing and non developed country to export the excess foods or other products, because there are no sufficient and modern preservation and processing advantages, rather poor communication and transport system are also big problems. We know when production cross the demand then the prices decrease and many production wastes and the poor producer/manufacturer fail to get back their principal amount of money. If there, a big investor invest his/her money for food security and social good, willing to make little profit by his investment, then the scenarios must be changed. The producer and farmers can get financial benefits, improve their economic situation, some employment opportunities create, general people can buy those products in low price (because of little profits makes by the investor) and moreover, some positive social changes occur. Also, some investor can invest in health care to serve health service at free of cost or with very nominal cost for the poor. Lending Microfinance (Microcredit) and SME loan to the poor can play a vital role in poverty reduction if the lender really wants to make very little profits. In many countries many financial organizations are lending their finance to the people, but most of there, the investors have no intention to make little profit!!! In Bangladesh, Brac, Grameen bank, ASA, Palli Karma-Sahayak Foundation (PKSF) and many other organizations lend microcredit to the poor, but the interest rate of lending money and the process and time-frame of refund systems are not friendly for the poor to properly reduce their poverty, so the interest rate should reduce for bringing positive social changes. There are many products or area of work for impact investing. It is true that if anyone or organization wants to be a part of positive social change in any area, country or in the whole world, they should come with a positive mentality for mankind and with have no big desire for gaining big profit as traditional and commercial businessman. We know investment always brings profit or loss. Only except philanthropist, when anyone or any organization wants to invest money then he or she must desires some financial profit or outcomes from their investment. Some practitioner and Academic think or pursue their opinion that there should be no scope of financial profit by impact investing. But is it possible to continue and broadly spread this type investment opportunity in whole over the world.
Transcript of Impact investing what, why and how -pdf version
Impact Investing
What, Why & How
Suman Chowdhury [email protected]
Big investment,
little financial benefits,
more social impact...
We know investment always brings profit or loss. Only except philanthropist, when anyone or any organization wants to invest money then he or she must desires some financial profit or outcomes from their investment. Some practitioner and Academic think or pursue their opinion that there should be no scope of financial profit by impact investing. But is it possible to continue and broadly spread this type investment opportunity in whole over the world. Are the investors desire to invest for positive social changes when their investment will not bring financial profit for them rather it will be in a vulnerable position? May be not! Every traditional businessman works for profit. If the investors gain some profit then many investors will come forward to invest their more finance for positive social changes. If there are much positive social impact come by impact investing then everyone should encourage and talk about this. It helps more than traditional commercial investment. So there are no problems of gaining little profit or only principal through investment when major predicted social outcomes are coming and strengthening the economy, reducing poverty and inequality. And we can call it as ‘Positive Impact Investing’.
Impact Investing Primary Words...
A Presentation of Suman Chowdhury Mony
Impact Investing includes investments towards ideas that are based on innovative business models with
the objective to create positive social (and / or environmental) impact as well as (market-rate or even market-beating) financial returns of principal
capital.
"Impact investments are investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social and environmental impact
alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below-market to above-market rates, depending
upon the circumstances."[1]
1. Global Impact Investing Network (GIIN). http://www.thegiin.org/cgi-bin/iowa/resources/about/index.html#1
A Presentation of Suman Chowdhury Mony
What is Impact Investing
Impact Investing
Financial Outcomes
(+/- Returns of Principal Capital)
Positive Impact in Society
(Social and environmental
Benefits)
Impact Investing
A Presentation of Suman Chowdhury Mony
Earn little profit or get back only
principal, or give grants; do for positive social
changes...
Impact Investing Principle Objective
A Presentation of Suman Chowdhury Mony
Identify Targets
Feasible Study
Set Goals
Set
Plan
Invest
ment
Act
Out
comes
Develop
Impact Study
Impact Investing Life cycle
A Presentation of Suman Chowdhury Mony
9
Social Impact &
Financial
Outcomes/Returns
Study
8
Gain & Reserve
Social &
Financial Capital
7
Action /
Implementation5
Financial
and Human
Capital
Investment
4
Set
Action
Plan
3
Set Timeframe
& Objectives/
Establishing
the Goals
2
Provable
Impact/Outcomes
Study
1
Identify Targets
New Area,
Projects/Program
s/Product &
Beneficiaries
10
Develop &
Rebuild the
Plan
6
Action /
Implementation
Process of Impact Investing
A Presentation of Suman Chowdhury Mony
Plan Action Result
Process of Impact Investing
A Presentation of Suman Chowdhury Mony
Helps Government to do more development works for positive social changes and concentrate to do other development (infrastructural etc) works and regular governmental works2
Encouraging Philanthropists to do their charity works for effective and
positive social change4
Strengthening economic conditions of the society, also the country31
Building ability to combine capital in creative ways33
Gather Knowledge about effective solution of Social and Environmental
Challenges6
Strengthening the capacity of social enterprises to receive and
use capital8
Building good intension to some wealthy investors for generating both
financial and social returns35
Building Motivation for Social and Environment friendly Investment37
The great and effective impacts are – reducing poverty and inequality of the society and strengthening economy of the country
Impact of Impact Investing
A Presentation of Suman Chowdhury Mony
Social &
Environmental
Impact
Poverty Reduction
Decreasing inequality
Better living conditions
Community development (cooperatives, social finance, housing, health etc)
Building the leaders of the future
Impact of Impact Investing
Building Human Capital
Income generating activities expanded
Empowering Women & Local People
Proper & Equal Education and health care (by minimum cost or without cost)
Decreasing High unemployment
A Presentation of Suman Chowdhury Mony
Financial
Impact
Encourage trade and export
Economic diversification
Business Diversification
Government tax revenues
Domestic private investment
Socially driven business
Foreign direct investment
Overseas development assistance
Charitable grants
Other innovative finance instruments
Refining cost-effective impact-measurement tools
Impact of Impact Investing
A Presentation of Suman Chowdhury Mony
Food
Production &
Preservation
Food Security
Health
Care
Equal
Education
Project
Agriculture
and Rural
Development
Supply/Value
Chain
Management
Power
Sector
(Solar)
Renewable
Energy
Farming
Social
housing
projects
Tree
Plantation
Projects
Water
Purification &
Sanitation
Microfinance/
Microcredit for
the Poor
Small and
Medium
Enterprise/Bu
siness And various
types of poverty
alleviation programs
and
Income generating
programs
Impact Investing Product of Projects or Programs/Area of work
A Presentation of Suman Chowdhury Mony
Philanthropy/Grants
GovernmentNon Government Organization
Others
International Development Organization
Not for Profit Organization
NGOs
Business / Private Organization
Financial Institution
(Bank, Investment
Company, Co-operative etc)
Microfinance Institution
Several Ministries
Several Govt. Organizations
Govt. Financial
Institutions
Govt. Microfinance Institution
International Aid & Donor
Agencies
National/Local Aid & Donor
Agencies
Individual Philanthropist
Charity
Clubs
Trusty Organizations
Social capital
Public Private
Partnership
(PPP)
Individual Investor
Local Groups
Impact Investing Investors
A Presentation of
Suman Chowdhury Mony
Unfriendly Government regulations
Political Problems
Poor Infrastructural Development
Poor Road Transport and Communication Systems
Corruption and nepotism and deficiency of Accountability
Insufficient human capital
Uneducated and unaware people
Non co-operation and disturbances of traditional commercial businessman
Insufficient Investments/Funds
Governance Problem
Selecting wrong Targets
Unskilled Professionals
Imperfect information and Wrong or Problematic Action Plan
Selecting Wrong Implementing Organizations
Mischievous and weak Monitoring System
Wrong & Unjustified Impact Conception
Highly Business Professional Mentality
Desire for high financial profit
Impact Investing Risk and Threats/ Challenges
A Presentation of Suman Chowdhury Mony
• Proper products/projects,
• Feasible Study
• Good Objectives and 3 to 5 years timeframe
• Highly positive Social outcomes and Low profit margin,
• Strong leadership and human Capital
• Effective Action Plan
Ensure
• Investing Sufficient Financial Capital
• Effective Trainings for professionals & Beneficiaries
• Effective Monitoring and Evaluation Work plan
• Put option to create Capital for future Initiatives
Act
• Draw lessons for future investments and actions
• Develop and Rebuild the business plan
• Strengthen regulation and monitoring works
• Increase resources for monitoring, evaluation, regulation and mentoring
Develop
For a good Impact Investing Project
A Presentation of Suman Chowdhury Mony
What Government can do?
Government should take initiatives for encourage the
impact investing by reducing or subsiding the
tax and vat from those products which are related with the impact investing,
also from the earned profit.
Government can revise or upgrade the export & import and investment policies
for impact investing.
Government encourages the
investor by giving some advantage
and reward.
What development organizations and civil societies can do?
Development organizations and civil
societies can raise awareness for impact
investing
They can arrange workshop and meeting
with the investors encouraging them to
invest for social good, gain little financial profit
They raise their voices for Philanthropy and encourage
the businessmen and organizations.
They take initiatives to develop the Impact
Investing policies and process and scopes.
They demand to the government for giving
some related advantage to the impact investor.
Impact Investing What to do?
A Presentation of
Suman Chowdhury Mony
Impact Investing Last words...
So why not we encourage this types
of investment when it is doing good for society and environment? Every Government of every country, especially developing countries, should take initiatives and build awareness to encourage impact
investing. Its help the government to concentrate in their regular and other development works when the investors implement several types of development programs and play a vital role in empowering people, poverty alleviation, decreasing
inequality, employment creation, community development etc and of course in economic growth of the country. Government, development organizations, civil society, everyone should raise
awareness for the potential impact of this type of developmental tool.
A Presentation of Suman Chowdhury Mony
Suman Chowdhury Mony
Officer (MIS Analyst)MIS Department
Palli Karma- Sahayak Foundation (PKSF),Dhaka, Bangladesh
http://sumanchowdhurymony.blogspot.com
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Thank You...
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