Impact Investing Initiative—Launched in 2008
Why This Initiative
The question of how to create self-sustaining vehicles for positive social change is one of the central challenges in global development. One promising approach involves linking nonprofit and government development efforts with private investment capital. This approach, known as impact investing, provides ongoing capital flows to socially and environmentally beneficial activities while also harnessing the discipline of the marketplace. The emergence of this approach has coincided with a growing interest among the private sector investment community in finding ways to couple traditional investing with efforts that yield positive social and environmental outcomes.
Through our Impact Investing initiative, The Rockefeller Foundation provided funding to build the critical infrastructure needed to accelerate the growth of this new field. We also utilized our expertise and influence to engage the full market system and partner with the private sector, governments, and nonprofit development organizations in advancing this approach.
Implementing Market Systems Innovation for Positive Change
In order for impact investing to succeed on a large scale, all actors in the system—nonprofits, governments, and private sector actors—must work together to develop monitoring capabilities, financial mechanisms and other market infrastructure elements that support and facilitate the investment process. Over the past decade, The Rockefeller Foundation has been a global leader in designing and implementing these support systems.
While the Foundation and others had previously engaged in impact investing efforts, our leadership role in this area began in 2007–2008, when we convened two international conferences of socially oriented investors and other global actors at our Bellagio Center in Italy. During these gatherings, the term “impact investing” was coined and a strategic framework was developed that would guide the activities of the Foundation and our partners in catalyzing the impact investing field over the next half-dozen years.
The Rockefeller Foundation’s Impact Investing initiative was formally launched in 2008, when the Board approved $38 million in funding for the period of 2008–2011. The initiative was later extended through 2012 and then again through 2013, with total funding of $50 million over this time period. Its aim was to support the small but rapidly growing impact investing field by working with the private, government, and philanthropic sectors to: catalyze collective action platforms that would let impact investors collaborate more effectively; develop a supportive infrastructure, including standards and rating systems; support intermediary organizations that could serve as a bridge between investors and the impact enterprises themselves; and support research and advocacy around impact investing.
The initiative went on to disburse more than 100 grants in support of these goals. One early and important step was the publication, with J.P. Morgan, of a research paper outlining and defining impact investing as a set of new asset classes. With J.P. Morgan and The Rockefeller Foundation as lead investors, sending an important early market signal, the Global Impact Investing Network (GIIN) was established as a forum where impact investors around the world could share ideas and work together to shape impact investing policy and infrastructure. Today, the GIIN is an independent organization with some 200 members, including many of the world’s leading banks and asset managers, nonprofit foundations and government development arms.
In 2008, the Foundation teamed with the nonprofit global venture fund Acumen and B Lab to spearhead the development of Impact Reporting and Investment Standards (IRIS), which provide a common system for organizations to report their social and environmental performance. A year later, the management of IRIS was transferred to the GIIN. In 2009, The Rockefeller Foundation also began funding B Lab’s development of the Global Impact Investing Rating System (GIIRS)—a system for assessing the social and environmental impact of developed and emerging market companies and funds, with a ratings approach similar to Morningstar investment ratings. GIIRS has continued to be tested and refined in collaboration with a group of leading investment funds. Both GIIRS and IRIS are now essential analytic tools for establishing performance norms and measuring results in the impact investing field.
The Foundation also provided substantial funding through Program-Related Investments to impact investing intermediaries for the development of demonstration projects. These intermediaries include Acumen (which as of 2012 had raised more than $70 million for investments in some 65 enterprises in Africa and Asia that created or supported 55,000 jobs); Root Capital (which finances rural farmers’ cooperatives in Africa and the Americas); and the venture capital firm IGNIA (which supports projects such as developing affordable housing and phone service in Mexico). In addition, the initiative has collaborated on a number of influential research projects around impact investing, and its grantees and partners have helped inform supportive governmental policies in the U.S., the U.K., and other countries. These policy efforts included a Bellagio Center conference in 2011 which led to a global project on impact investing policy exchange and advocacy.
Finally, The Rockefeller Foundation has played a key role in influencing and shaping the field of impact investing globally. Our initiative team actively engaged and advised actors in all sectors around the world, and has presented at various global forums. In 2014, Wharton University Press published The Power of Impact Investing by Foundation President Judith Rodin and Margot Brandenburg, a former member of the Foundation’s impact investing initiative. The book is a resource for impact investors and draws from the Foundation’s experience to share stories of impact investors and the social enterprises and disadvantaged people benefiting from these investments. Today, the initiative’s $50 million investment continues to produce dividends, as evidenced by the ongoing, robust growth of the impact investing field—a growth supported in large part by the institutions that The Rockefeller Foundation helped establish over time.