Impact Investing: A Tool for New Partnerships for Sustainable Development
At the 2017 World Bank annual meeting, an important theme was the call for new instruments and tools to mobilize private capital to fight poverty more effectively across the globe. Indeed, beyond available taxes and development assistance, it is estimated that $2.5 trillion in private financing is required annually to fully implement the Sustainable Development Goals (SDGs).
One potential funding pathway that could help address this significant financing gap lies in the impact investing industry. Defined as investments “made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return,” impact investing is a $120 billion industry practiced by many, including pension plan members, high-net worth families, corporations, governments, and universities.
While some international development NGOs have participated in investment funds or development impact bonds, most international volunteer cooperation organizations (IVCOs) are still assessing the potential of impact investing to advance their missions.
The purpose of this paper is to provide an overview of the field of impact investing and its potential for international volunteer cooperation organizations (IVCOs) to form new partnerships in order to advance sustainable development.
The paper defines impact investing and notes its significance, examines key strategies for undertaking impact investing, points to relevant cases involving development organizations, reviews some of the critical issues facing the field, and outlines five mission-aligned roles that IVCOs can play in relation to impact investing going forward.