Bugg-Levine and Emerson present a history, a contemporary look, and do some promotional forecasting about impact investing. They credit, appropriately and adequately, the decades of innovation from religious endowments to teachers' pension funds the idea of mixing investing with social returns. The simultaneous pursuit of financial return and social value lie at the heart of the tools now known as impact investing and the outcomes now described as blended value. They also credit the "boundary" systems on either side of Impact Investing - philanthropy and commercial finance. In their words:
"Without philanthropy, modern microfinance would not exist. But without ... integration into the global investment system, microfinance would likely not have exceeded so spectacularly ..." (p. 46)
The closing line of the above paragraph then asks the key question for the entire book: "But at what price?" Emerson and Bugg-Levine tackle the costs and losses that have resulted from the decades of experiments that bring impact investing to this moment. Money has been lost, reputations ruined, lives taken. It has not been a straight line to success and the way forward presents no guarantees. Like any good financial discussion, previous outcomes are no guarantee of future results.
The book comes at in important time for impact investors (and for Emerson and Bugg-Levine themselves, both of whom have just taken on new jobs). SoCAP 11, the fourth annual conference that has become almost synonymous with Impact Investing opens this week in San Francisco. The first SoCAP conference launched one month to the day after the 158 year old Lehman Brothers investment bank went bankrupt. The disarray, panic, and anger from that scary time have raised and ruined political careers, redrawn the global map of economic powerbases, and given rise to bestselling books and award winning movies. They've also opened wider the window of opportunity for new concepts of capitalism, new measures of profit, and more widespread conversations about sustainable enterprise.
Bugg-Levine and Emerson tell this story from the inside. Bugg-Levine led a grantmaking portfolio at The Rockefeller Foundation for several years that poured tens of millions of dollars into the infrastructure of impact investing. Emerson has staffed and consulted to several investor-side enterprises over the years. They present the historical roots of the ideas and give numerous examples from across the globe of the roles and permutations of development finance, microfinance, socially responsible investing and philanthropy that merge, as streams into a river and then as rivers into the sea (a favorite metaphor of theirs). Their direct involvement in building and promoting these tools and values are strong credentials for the two authors - and they tell a good story. There is (thankfully) no glorifying or covering up - people they know made mistakes and experiments went wrong. The authors are emphatic to this point, impact investing is not a silver bullet.
For my purposes, the more interesting section of the book comes in part two - what will the future hold? They address this in two ways - the practical and the predictive. They identify several sectors where impact investing opportunities are likely to grow and offer guidance for interested investors to pursue such opportunities.
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