Top Trends in Impact Investing 2012: #10- The U.S. Heats Up

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#10 Trend in Impact Investing in 2012: The U.S. Heats Up

Last year, we previewed what we thought the top trends in impact investing/social enterprise would be, and with a few glaring exceptions, we were pretty spot-on.  In the next 10 days, we’re going to take a crack at the upcoming year (though, with it almost being February, maybe we’re cheating a bit by having a sneak peek.  Too bad.)  Without any further delay, here’s trend #10:

Most of the press surrounding impact investing has been international; over 50% of the featured social entrepreneurs in Forbes’ “Impact30” are US-based, but operating abroad (e.g. Jacqueline Novogratz, Willy Foote).  In a survey we did of over 300 impact investing funds, fewer than 10% were U.S. focused, though over 50% were U.S. based.  While some major funds and entrepreneurs (e.g. RSF Social Finance, Calvert Foundation) have been active in the U.S., the bulk of activity hasn’t been concentrated in the States.

In 2012, that will change.  We see major moves towards impact investing in the U.S. on three fronts:

  • Impact investors with an increasing U.S. focus.  Brian Trelstad, Chief Investment Officer of the Acumen Fund, is taking lessons learned from Acumen Fund and applying them to the development of a U.S. fund; Kevin Jones, founder of Good Capital and SoCap is working on the launch of his second fund later this year; and Investor’s Circle has dropped its international companies to move to a 100% U.S. focus.  More impact funds are being started—2011 saw the scale-up of Cleveland-based JumpStart and the launch of the New Orleans Startup Fund, an Acumen-model impact fund focused on the greater New Orleans region.  And the Hub Cities Fund looks to seed an ambitious number of new Hubs in North America.
  • The nonprofit sector gets more active in impact investing.  In October, Antony Bugg-Levine, managing director of the impact investing initiative at the Rockefeller Foundation (and author of the term “impact investing), left to become CEO of the Nonprofit Finance Fund.  Many in impact investing were puzzled as to why one of the poster-boys of the impact investing movement would join the nonprofit world, but it’s indicative that nonprofits are getting more clever with how they use resources.  The Nonprofit Finance Fund has over $80 million in assets under management—larger than most impact funds in the world—and deals with organizations that most Americans come more regularly in contact with than “social enterprises”: churches, homeless shelters, and schools.  Similarly, Village Capital’s chair, Joy Anderson, is launching the Church as an Economic Being initiative in 2012 to look critically at how churches—America’s biggest nonprofits by a longshot—use their finances to generate impact.
  • City, state, and local governments get active.  In 2011, we saw the U.S. government get active in impact investing internationally, through USAID’s Development Innovation Ventures program and OPIC’s Call for Proposals on Impact Investing.  In 2012, we’re already seeing the U.S. government get more active in its backyard.  Nish Acharya, one of the most respected individuals in social enterprise as the director of the Deshpande Foundation, recently joined the U.S. Government as the Director of the Office of Innovation and Entrepreneurship in the Department of Commerce.  On a more local level, Detroit, Cincinnati, New Orleans, New Haven, and Atlanta are all launching local impact investing initiatives.  As governments are pushed to do more with less, impact investing is looking like an increasingly compelling policy tool.

Finally, the U.S. economy is not out of the woods, but is getting better.  With a bit more risk-tolerance, but still feeling the sting of an economic recession (and the hopes to avoid another one), those with capital in the U.S. are looking to take 2012 to do things a bit differently.

By Ross Baird.  Photo credit Hu Toya.


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