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The Index: The New Lens

Rishi Malhotra August 19, 2010

impact_investing2This post was written by Kevin Jones, Co-Founder of SOCAP10 and Founder of Good Capital.
The second bridge, the index of the top 50 or so impact investment funds. The impact index is an intriguingly complex piece of infrastructure. It will create a bounded, comprehensible group of funds for investors wanting to figure out where to put their money that matters. It’s a tool to link passion (I care about women entrepreneurs and water) with geography, sector and a vetted pool of impact investment funds. And each fund has its own investment thesis and theory of change, which the index should also be able to put in coherent context.
It will make the huge universe of more than 1,200 entries in the GIIN database understandable by investors new to the field and to their wealth managers. By focusing at a basket of 50 impact investment funds and creating a base for doing analysis of a vetted group of comparable funds and their underlying portfolio companies. That will effectively size the supply of companies and funds, and track its growth over time in the same way an index of public companies does.
A companion financial services company to the “Impact 50” is being built targeting the sweet spot in the middle of the $120 billion impact investing appetite. That’s the $100 billion that’s in the hands of people with from $2 to $20 million to put to work. The impact index and the related for profit company will be led by Ron Cordes, along with support from Tim Freundlich and others. It will make the huge universe of more than 1,200 entries in the GIIN database understandable by investors new to the field and to their wealth managers.
If they succeed, they will greatly accelerate the flow of capital to good by giving investors a meaningful lens to link their hearts and their investment dollars in a way that honors motivations, financial return and scalable social and environmental impact. “It’s time to take impact investing to the fat middle of the market, not just the highest end or, as Calvert Foundation has done so effectively with its Community Investment Notes, the retail end.” Freundlich said. “It is time to create a funnel for billions of dollars to invest in impact.”
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