In this issue

Winter 2011: Social Impact Investing

From the Editor

Governments, third sector organisations and business are all beginning to re-examine the way in which they each contribute to finding, implementing and participating in solutions to address social and environmental challenges faced by our local and global communities.  As philanthropic and government capital is increasingly insufficient to address these challenges discussion more often than not is turning to market-led approaches. One such approach under exploration and gaining momentum around the world is social impact investing which aims to solve social and environmental challenges while generating financial profit.

The articles and reports reviewed here seek to provide a range of views on social impact investing from diverse perspectives. We start by looking at the enabling role of governments in social impact investing as articulated by the framework developed by Thornley, with the practical application of the framework played out in the recommendations within the UK strategy for growing the social investment market. Closer to home, Burkett examines the potential for a not-for-profit capital market in Australia focusing primarily on the needs of the not-for-profit sector.  Social impact investing is not without its challenges however as explored in the article by Karnani examining recent criticisms directed at the microfinance industry triggered, in part, by the establishment of profit-seeking microfinance institutions that have attracted capital from social impact investors. Lastly, we look at a paper by Liebman examining social impact bonds, otherwise known as pay-for-success bonds, a promising new financing model to accelerate social innovation and improve government performance.

Andrew Tyndale, founder of Grace Mutual and past chair of Opportunity International, provides a pithy review of A Fistful of Rice, the autobiography of Vikram Akula, the founder of SKS Microfinance – one of the world’s largest microfinance institutions.

We have only started to scratch the surface of the literature becoming available on social impact investing. Indeed if the amount of literature was a leading indicator of a market boom we are nearly certainly approaching a time of increased acceptance of and activity in social impact investing.  Time will only tell whether or not this is the case. I am however confident to say the potential of social impact investing has captured the attention of many and it is certain that we will continue to see exploration, innovation and critical analysis of the successes and failures in the field over the years to come.

Links are provided to the full articles so that you can investigate those that interest you. We encourage you to add your comments to the site to add richness to the discussion Knowledge Connect seeks to stimulate within the social sector.

Kylie Charlton

Guest Editor, Knowledge Connect

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