What is Impact Investing?
Impact Investing is a particular type of investment made in organisations, companies and funds that have the purpose of creating social and environmental impact with a financial return on capital, responding to social needs not satisfied. The Third Sector needs of innovative model and of entrepreneurship to find new solutions for the distribution of existing services and also for the construction of new solutions of collective interest.
A distinctive characteristic of the Impact investing is the investor’s commitment to measure and report the social and environmental performance, helping to ensure transparency. The goal is to use economic resources and skills of private investors to promote solutions that resolve social needs not covered neither by the State nor the market.
The impact investing combines with success a few key factors: capitals, entrepreneurship, managerial and financial skills, focus on results, partnerships between investors and social entrepreneurs.
How does it work?
The Impact Investment is composed of several stages, similar to a business approach. The investor, usually represented by persons or institutions active in the economic world, will deliver to the organisation of Impact Investing – in addition to the donation of money – also entrepreneurial and strategic skills, typical of the world profit. This entity will invest these resources (financial and not financial) exclusively in projects and companies that have as their mission a real social change. These will be sustained for a long period, necessary to make these latter financially autonomous and independent, and to allow, then, a consecutive exit from investment in the Impact Investing organisation. The commitment in Impact Investing operations will attract and encourage additional investors to join in these social impact investments.
The pursuit of a social purpose does not preclude the possibility of obtaining a financial return for the investment, as long as the prerequisites of the social objective respect the economic purpose.
The EIIC, ambassador of Impact Investing within EBAN, aims to pave the way to setting impact investing as the new standard of excellence.
EBAN’s Impact Investment Committee (“EIIC”) has been created to:
- develop infrastructure for internal and external communication on the subject of Impact Investing;
- create synergies and collaborative efforts to define best practice and improvements for EBAN members interested in this field;
- develop a bridge between EBAN members and the Impact Investing Community, contributing input and research to the overall field;
- establish a constant dialogue with policy makers relevant to the impact investing industry;
- become leaders in the impact investing space in Europe.