New impact investing report highlights emerging trend in financing for development

July 12, 2016

This week, Pact and the INGO Impact Investing Network release a new report, Amplify Impact Investing: The INGO Value Proposition for Impact Investing, an in-depth study of the current impact investing landscape among international nongovernmental organizations (INGOs) in the international development sector. The report, co-edited by Pact and InsideNGO, reveals that the development sector’s impact investing activity is growing, with INGO-managed or -founded impact investing funds encompassing more than $545 million in assets.

While the traditional development funding model has relied upon government grants and contracts, foundations, and philanthropic giving, the impact investing model seeks solutions to economic and social challenges that result in a financial return for the investors.

“The Amplifyii report highlights the important role INGOs are already playing in the impact investing space and identifies opportunities for growth,” said Stephanie Marienau Turpin, Pact’s director of social enterprise development. “The lessons from this report can help bring even more INGOs to the table, fill a critical gap in development funding, and connect investment partners looking to deepen their impact.”

The INGO Impact Investing Network was formed last year by Pact, the Aspen Network of Development Entrepreneurs, GOAL, InsideNGO, and Mercy Corps, as a consortium of more than 40 INGOs that are working together to gather and share knowledge about how INGOs are using private investment capital to advance their work in solving pressing global development challenges.

Network members collectively represent more than $8.5 billion in annual revenue and more than 100,000 employees. The new report is compiled from a survey of 31 member organizations conducted earlier this year. It provides a detailed self-assessment of the network’s impact investment activity, maps INGO approaches to making and receiving investments, explores the role INGOs are playing in providing training and support to social entrepreneurs and impact investors alike, and examines opportunities for future growth. Among the key findings:

  • Nearly a third of the NGOs surveyed are actively engaged in impact investing, with an established fund or approach with documented impact and performance. The remaining majority is studying opportunities and developing their engagement strategy.
  • The INGOs active in the sector tend to be “impact-first” investors—citing social and environmental returns as their primary goals, with financial returns a secondary consideration.
  • The average reported size of investment is just under $450,000.
  • Respondents are most actively involved in impact investing activities in South and Southeast Asia, East Africa, and West Africa, funding projects predominantly in livelihoods, agriculture, and financial inclusion.

Citing the current lack of research and literature on the assets that INGOs bring to impact investing, more than a dozen leading institutions in the impact investing arena, including Accenture Development Partnerships, Calvert Foundation, the Global Impact Investing Network, and the Overseas Private Investment Corporation, have formally endorsed the report, calling it a key first step toward increasing dialogue and engagement between potential investors and the NGO community.

Click here to download the report.