Impact Investing - Emerging Trends

Enabling impact.

This was the focus for 250 leading incubators, entrepreneurs and accelerators of change this week in Amsterdam.  We gathered for the 3rd Annual PYMWYMIC (Put Your Money Where Your Meaning Is Community) Impact Days.

For me, the subject of impact is contextual.  And in today’s world -- the context is global.

It’s about humanity’s future. It’s about the prosperity of all life on earth.  It’s about getting to the root issues of our complex and stuck challenges.

We have choices to make and we have responsibilities to take – and this includes focusing our resources, energy and time where we are most likely to catalyse the greatest transformative change.

These choices and responsibilities are especially important for those accelerators of change – those who are in a unique and powerful position to lead humanity’s evolution - investors, family and private wealth, government, trusts and foundations and NGOs.

At this year’s conference I noticed several inspiring trends – here they are:

Supporting a systemic approach.

“It’s time to shift our approach to a systems based approach “ – these were the words of Paula Goldman from Omidyar Network.   Omidyar Network, established by Pierre and Pam Omidyar, founders of Ebay, is an investment firm which believes that every person has the potential to make a difference. 

Taking a systemic approach, requires us to challenge our embedded assumptions, beliefs and current behaviours– including how we invest.

Often we are attracted to supporting things that focus on a particular sexy idea
We are drawn to projects that show short- term results
It is easy for us to believe in ideas that are simple and clear
We want to back outcomes that can be attributed to our own contribution

However, the change that is needed in the world – requires us to do things much differently.     We need to tackle the root causes of our challenges.     This calls us to work with big abstract issues, to engage with the messiness of complexity, to take a long-term approach, to accept ambiguity and to serve a purpose beyond ourselves.    And this takes leadership, trust and willingness – as doing this goes against the grain of our societal norms.

Working with the bigger picture, means that we are likely to be more effective in the long run.   As highlighted by Paula, “Single firms die, industries prosper over time”.    This of course is of particular relevance to government funders who desire to create job opportunities, new markets and prosperous societies and economies.

Taking a broad and long-term approach, is also likely to be of interest for family trusts and foundations who want to leave a better world for their children, grand-children and great grandchildren.  What does it mean to catalyse impact investing for intergenerational issues – energy, food, education, finance, and housing systems?

Engaging with the ‘How’ and the ‘Why’ is just as important as the ‘What’.

So to work systemically, we need to focus on the ‘how’ and the ‘why’ as much as the ‘what’.        As Robert Jan Van Ogtrop, Founder of the Circle Economy and the Foundation for Natural Leadership, points out,  “Our global challenges are so big that no one person or organisation can do this alone – we have to collaborate”.   He goes on to explain this is no longer about the individual, it is about the collective, thus, we “need to learn to let go of our ego”.

 Doing things differently also includes thinking about ‘why’ we are doing what we are doing.   This is true at both a personal and organisational level.

We need to take a long deep look at ourselves in the broader spectrum of change.  ‘Why am I here, what am I passionate about, and where can I unlock my greatest potential?’    Robert spoke of his own awakening and discovery of his purpose.  This led him to move from senior leadership roles in the beverage industry to being leader of change for business and nature.

And for organisations such as family trusts, as Diane Van Maasdijk, Head of Philanthropy Advice at ABN AMRO Mees Pierson Private Bank explained,  “One of the most important things that people who have just inherited wealth can do – is to clarify your higher intention.”    From here everything will be clear and all of the decisions, relationships and investing will flow naturally.

Investing in Enabling Conditions.

Joe Ludlow, who leads venturing and investment at NESTA, shared recent research that there is no shortage of ‘willingness’ from impact investors to invest in particular companies.    However, NESTA’s research shows that in order to increase the supply of innovation and to develop new markets, it is essential that investors think about the infrastructure for enabling conditions such as creating market credibility and tax incentives.

Omidyar’s report, Priming the Pump**, has a fantastic visual which represents how investors can accelerate more transformative change for entire systems over time – including backing market policy framework and infrastructure shifts.

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Supporting  Core Costs.

Diane Maasdijk also talked about the importance of investing in the core operating costs of an organisation and not just projects or products.   She says’  “Healthy organisations are innovative organisations and this is what we need’.     Joe Ludow also encouraged investing in the leadership team’s capacity as a means to ‘unlock human delivery- this is not just about financing organisations per se’.

Take an Approach of Abundance– Leverage Assets and Talents.

There seems to be a shift from focussing on investing in what is ‘lacking’ or ‘the problem’ to one that is placing more attention on the ‘assets and talents’ of people and organisations.

For example, Dirk Muller Remus of Auticon talks about creating markets around leveraging the assets of people who have autism.   People who have autism have an incredible talent for ‘quality control’ of numbers and technology.   And, for example, instead of seeing the elderly as a burden to be taken care of, Adil Abrar of TheAmazings explains the benefits seeing the “wisdom of older people as a new asset class”.

Focussing on the Bigger and Deeper Need.

Impact investors can have great influence in supporting ‘disruptive innovators’ and in enabling the broader conditions for change.   Paula of Omidyar encouraged investors from all perspectives to focus on the real cutting edge need - ‘nurture and scale what wouldn’t have happened otherwise”.

So thanks to PYMWYMIC Impact Days for bringing us together this week.   It was fantastic to connect with so many inspiring people and to make visible these emerging trends that will help us all catalyse greater impact for transformative change for people and planet.

Jen Morgan- The Finance Innovation Lab- April 2013

**Priming the Pump By Omidyar Network

http://www.omidyar.com/sites/default/files/Priming%20the%20Pump_Omidyar%20Network_Sept_2012.pdf