2030 Finance | September 21, 2017

Root Capital and Acumen to test social-impact incentives

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Social Impact Incentives, or more succinctly, SIINC, are financial payouts to organizations and social ventures that meet proven social performance targets. The SIINC model has been tested, with the Swiss development agency putting up the cash, with high-impact businesses in Latin America (see, “‘Social impact incentives’ introduced in Mexico and Honduras”). Now, Root Capital, the smallholder agribusiness lender, and Acumen, one of the first impact investment funds, could be in line for social-impact incentives themselves.

Root Capital is working with Roots of Impact, the German consulting firm behind SIINC, on a mechanism in which the lender would get financial payouts for hitting targets for livelihoods improvements and other impact milestones through its loans. The idea is that payments to lenders will get more funds interested in delivering social impact. “We’re attempting to capture the value of impact,” Root Capital’s Brian Milder told ImpactAlpha. “If we can, more capital can flow to early-stage agribusiness.”

With Acumen, Roots of Impact is designing a model to boost affordable energy access in developing countries. Both investors will look to development agencies, wealthy individuals or philanthropies to pool capital to make the SIINC payments.

“We are in the design phase of both funds,” says Roots of Impact’s Bjoern Struewer.