Field Notes: Surveying the Field

The Global Impact Investing Network (GIIN) published their 2016 annual impact investor survey, underscoring financial performance, impact performance, new developments and landscape changes that occurred through 2015. A total of 158 organizations responded to this survey, including “a diverse group of impact investors spanning various geographies, organization types, and return philosophies.” Key takeaways include:

• About 80 percent of organizations in the sample are headquartered in developed markets.
   
• Nearly 60 percent of respondents are fund managers, with foundations (13 percent) as the next-largest category.
   
• The majority of respondents (60 percent) principally target risk-adjusted, market rate returns.
   
• Of the 158 organizations surveyed, 110 are active in private equity, 89 are active in private debt, 55 are active in equity-like debt, and 27 are active in real assets; 16 plan to assess allocating to Social Impact Bonds in 2016.
   
• The survey finds 89 percent of investors reported financial performance in line with or better than their expectations, and 99 percent reported impact performance in line with or better than expectations.
   
• Respondents were motivated by both financial and non-financial reasons for allocating capital to impact investments, driven by a commitment to responsible investment, a desire to meet impact goals and response to client demand.

Financial Performance

In total, respondents had $77.4 billion in impact investing assets under management (AUM), the average and median of which were $496 million and $75 million, respectively. 

The overwhelming majority of respondents’ investments met or exceeded both impact and financial performance expectations. The GIIN notes that “research is needed to understand performance across different market segments. Financial performance analysis will remain a priority on the GIIN’s research agenda in the years ahead.”

Impact Performance

Main social impact themes include: access to finance, employment generation, health, education, income/livelihoods and entrepreneurship. Main environmental themes include: renewable energy, energy efficiency and clean technology. IRIS metrics and other proprietary metrics were reportedly used by 65 percent of total respondents, while 56 percent reported using qualitative information.

Landscape

The survey found that 75 percent of respondents headquartered in emerging markets were fund managers, as opposed to 53 percent in developed markets and 112 respondents invest in growth-stage ventures, while 87 invest at venture-stage and 72 invest in seed/start-up stage.  The report also noted new regulatory changes:

In September, the U.S. Treasury Department issued guidance stating that private foundations may invest their endowments with an eye towards their own charitable purposes, even if doing so might sacrifice financial returns. In October, the U.S. Department of Labor (DoL) issued new guidance for pension funds interested in pursuing “economically targeted investments” (ETIs), a type of impact investment that seeks certain social or environmental goals alongside a market-rate financial return. The new DoL guidance is intended to encourage more ETIs.

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