Investing in Good Works

During last year’s G8 Summit hosted by the United Kingdom, Prime Minister David Cameron and social-finance pioneer Sir Ronald Cohen invited leaders in the impact-investing community to join a task force seeking ways to boost economic investment for the common good. The first-ever Social Impact Investment Task Force brought together hundreds of leaders in finance, philanthropy, social policy, and government, including Fuqua professor Cathy Clark, to share best practices and develop recommendations.

In September, the task force and its various advisory boards and working groups released a comprehensive international report, “Impact Investment: The Invisible Heart of Markets—Harnessing the power of entrepreneurship, innovation, and capital for public good.”

“There’s a demand now for investing in good works,” says Clark, director of Duke’s Center for the Advancement of Social Entrepreneurship Impact Investing Initiative (CASE i3) and one of twenty-seven members of the task force’s U.S. National Advisory Board. “And it is growing. Studies show an estimated 60 percent of the millennial generation will invest with impact in mind.”

World leaders, too, see the potential. The report features a quote from Pope Francis: “It is urgent that governments throughout the world commit themselves to developing an international framework capable of promoting a market of highimpact investments and thus to combating an economy which excludes and discards.”

Clark says no one has been more committed to the cause than Cohen, who chaired the task force. “The U.K. has done more in terms of government support for impact investing than any other country in the last five years,” she says. But, she adds, government involvement is only part of the solution.

The Europeans come to impact investing “assuming that much of it is going to be driven by government,” says Clark. “But in the U.S., we focused on identifying a strategic set of policy interventions, most budget-neutral, that can help unleash private impact-investment capital.” The diversity of perspectives among participants made for rich discussions: Some members in European countries wanted to put a cap on profits from social enterprises, for instance, or they wanted the profits to go back into the hands of the causes, rather than being reinvested in the businesses themselves. Clark pointed out that approach could limit both a company’s growth and potential influence on social and environmental problems.

“A major obstacle for impact-focused enterprises is accessing enough capital to grow to a scale that matters. We know from studying them for over twenty years that social enterprises often hit a plateau at years five to seven,” she says. “Whether it’s a venture working to improve education, health, financial access, or the environment, we want government policies that will support capital markets to help successful social enterprises reach their ultimate objective: scaling their impact to improve more people’s lives.”