Announcing the National Impact Initiative at the UK’s G8 Social Impact Investing Forum
Yesterday, at the UK’s G8 Social Impact Investing Forum in London, the Administration launched the National Impact Initiative (NII) to expand the use of impact investing as an element of the Administration’s strategies for economic growth and global development. In London, 150 top government officials, business executives, social entrepreneurs, philanthropists and academics who have been leaders in the burgeoning field of impact investing will discuss how to increase impact investing in order to both accelerate economic growth and job creation in G8 nations as well as leverage new capital flows toward the Millennium Development Goals. The U.S. has been at the forefront of this field.
Impact Investing is the practice of channeling capital toward businesses that intentionally generate economic return and public benefit. Such businesses openly track and measure social, environmental, and governance (ESG) considerations alongside their financial returns. These firms often are described as creating models of shared value or sometimes referred to as social enterprises. Impact investing often encompasses support for firms operating in target geographies, specific sectors, or employing specific populations.
Over the past four years, President Obama has worked to support impact investing with a series of domestic and international policies and programs including:
- The Regional Innovation Clusters funded by the Department of Commerce and the U.S. Small Business Administration (SBA) to spur innovation and job creation. In addition, as part of Start-Up America, the SBA also launched a $1 billion Impact Investment Fund and a $1 billion Early Stage Fund through its Small Business Investment Company (SBIC) Program;
- The Freshworks Fund invested in by the Treasury Department in 2011 as part of a strategy to invest in market-based models to tackle food deserts;
- The Overseas Private Investment Corporation (OPIC) has a long history of transforming private capital into solutions for common social and environmental challenges around the world and today is a leading impact investor in the U.S. Government, with $333 million committed to impact investing in 2012 in sectors including healthcare, education, renewable resources and water; and
- The Accelerating Market-Driven Partnerships initiative launched by the State Department in 2012, a public-private partnership that mobilizes innovation and investment around critical global challenges.
These efforts and dozens of others are part of the NII and will help the government to partner with business and to drive better results for citizens in the U.S. and around the world. Such a coordinated approach will create good jobs, drive sound financial returns and support positive societal outcomes.
As part of the NII, we announced important new initiatives at this week’s meeting in London:
- Global Development Innovation Ventures (GDIV): A joint initiative of the U.S. Agency for International Development (USAID) and the UK’s Department for International Development that will strengthen the impact investment pipeline by piloting, rigorously testing, and scaling cost-effective development solutions with the potential to reach millions of people without long-term donor support. GDIV builds on the cutting-edge Development Innovation Ventures program launched by USAID in 2010, adding even greater funding, flexibility, and reach. You can learn more here.
- Small Business Investment Company (SBIC) Early Stage Fund: Today, the SBA announced a new round of solicitation for the SBIC Early Stage Investment Fund that will increase the amount available for investment from $150 million to $200 million annually. In addition, the SBA announced that it has raised the amount of SBIC leverage from $80 million to $150 million that Impact Investing Funds can receive and recently expanded the definition of impact investing to include rural communities. You can learn more here.
Looking ahead, the Obama Administration will continue to expand the NII by advocating policies that support the continued growth of impact investment and social enterprises. Such efforts will be guided by a clear set of principles that combine a market-oriented approach with a strong focus on the public interest:
- Align incentives to catalyze impact investing;
- Create enabling regulatory frameworks for impact investing;
- Engage private institutions and stakeholders in active dialog around impact investing issues;
- Promote impact investing standards, transparency, and learning; and
- Allow impact investing to complement policy objectives.
Elizabeth Littlefield is President and CEO of the Overseas Private Investment Corporation (OPIC); Karen G. Mills is the Administrator of the U.S. Small Business Administration (SBA); and Rajiv Shah is the Administrator of the U.S. Agency for International Development (USAID).