Catalyzing Capital, 1 of XX



We talk about how “impact” is becoming increasingly central to capital markets overall, as emerging markets come to the fore and as new technologies and new financial mechanisms open opportunities to provide affordable health care, education, water and energy to the global poor.

The inverse is also true as “investing” becomes increasingly attractive to philanthropists who have long been committed to the issues and are seeking new ways to make a difference, and to government agencies looking to leverage private capital for global development.

The Global Philanthropy Forum, starting today, is a case in point. The Forum is mixing its Silicon Valley tech types with Washington DC development officials to pursue “Social Good: By All (Private) Means Necessary,” as Elizabeth Littlefield, CEO of the Overseas Private Investment Corp., puts it in the title of her talk at the event. OPIC has committed $285 million to six impact investment funds in emerging markets, seeking to catalyze $875 million of investment.

Catalyzing capital for global change, not philanthropy per se, is the forum’s explicit goal.  Jane Wales, a former Clinton Administration and president of the World Affairs Council who is now also the Aspen Institute’s vice president for philanthropy and society, launched the Global Philanthropy Forum 11 years ago because she was struck at how little of Silicon Valley’s wealth was being strategically deployed for social change.

“I was operating on the theory that entrepreneurs were by their nature people who liked affecting change, so that wasn’t the problem,” Wales told me when we sat down at last year’s Forum. “I thought the problem was, they have no evidence that philanthropy works, so why do it? I picked international development … because we have a huge amount of data on what works and what doesn’t.”

The amount of such data is exploding, as is the ability to harness it (see “Beyond Connectivity,” my report from last year’s Global Philanthropy Forum). The Gates Foundation, for example, has invested more than $100 million in methods to evaluate progress in global health. “So all these family foundations that don’t have $100 million to spend on just that one area, they can piggy-back on that.”

That same data-driven approach is now guiding her members to impact investing. In India, for example, “The opportunity for social business is huge,” she says. “There’s such a tradition of entrepreneurship there.  You’ve got a talent base. Marry that with 40 percent of the population below the poverty line. India is leapfrogging philanthropy. They’re going from very traditional charity, to looking at social businesses, looking at all these new tools, without lingering in the middle.”

It may be the adult children of the Forum’s members who drive the shift, she says. Financial advisors are finding that the parents want to talk separately about their investments and their philanthropy. Their kids want to make their investments work for social change as well. They say, “’Bring us investments that make both a social and financial return,’” she says. “’We’re not only interested in financial return.’”

Wales’ optimism is contagious. “Problems are being solved that we thought were insoluable a few generations ago. The idea that we are truly eradicating diseases. The idea that it’s a small incremental investment to wipe out polio — that’s astounding. The same situation with meningitis — the vaccine got brought to market at a speed I’ve never heard of before.”

“I’m not sure the world is in worse shape than it used to be,” she says. “We have fewer civil wars than we used to, but we know about them now. We know about them and we care about them.  That’s just to say, we have a much different degree to which we are connected to the rest of world, not just economically or physically, through disease or terrorism, but morally.”

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