“The greatest thing that’s happened to me this year is that I got a job.”
The World Economic Forum released a new research paper titled, From the Margins to the Mainstream: Assessment of the Impact Investment Sector and Opportunities to Engage Mainstream Investors. (link)
In this paper, the WEF seeks to clarify the definition of Impact Investing as well as gives 5 main recommendations and findings surrounding the impact sector.
The definition of Impact Investing has been expanded to a general definition: “an investment approach that intentionally seeks to create both financial return and positive social or environmental impact that is actively measured.”
Key words there are "intentionally" and "actively measured." So if you want to make an impact investment, from the very first conversation, you must be clear on what you’ll be measuring and what expected impact it will have.
Without getting too convoluted with semantics and details, Impact Investing focuses on solving problems at the Base of the Pyramid—Maslow’s Hierarchy of Needs. So the basic life necessities: air, food, drink, shelter, warmth, sex, sleep, etc.
It takes a lot of resources and effort to tackle an issue at the bottom or base of the pyramid (BoP). We talk a lot about Philanthropic Investment. We use that term deliberately, because we believe Philanthropic Investment looks to take someone from the BoP up a rung on the ladder, or up a stage of the pyramid to stick with the analogy.
Solving the sewage issues in a slum in urban Zimbabwe is not an issue that we have the capability of tackling (not at this time at least). But helping an entrepreneur start a biowaste company to turn raw sewage into fuel and fertilizer is something we could tackle. Then empowering that local entrepreneur who grew up in Harare to be able to make a difference with the clean water and sewage infrastructure in the city.
Impact Investment calls for a direct measure of the impact. At first, this makes complete sense from the outside looking in. Yes you should be able to measure the impact, and on most things, you can to an extent with a little forethought. But measuring just to measure and tout those metrics is not the heart of what impact investment stands for. We want to see actual, sustainable change and difference happening in the lives of people impacted by a social venture or an initiative.
We definitely measure the impact that Gift’s dust suppression solution has in the mines that he works in, but we don’t overgeneralize and say that we’ve impacted every single person in the mines with this product. We have indirectly, certainly. The air is cleaner and purer, it’s easier to work on the mine flats. But directly, we can’t measure whether those mine employees would be healthy or not healthy with the solution or not. The cost to measure that is too great for a startup in Zimbabwe, much less anywhere.
What we can measure and take pride in is the fact that we hired a 19 year-old young man who was orphaned as a child and was born with HIV/AIDS. His name is Sean and he’s one of the hardest working guys you could meet.
To hire Sean, we partnered with Champions For Life, a local organization in Harare established to reach out to AIDS orphaned children by giving them a support network, education, and addresses the social stigmas placed on orphans—teaching them about each person’s individual value and purpose in life—and ultimately connecting to society via friends, job opportunities, and more.
At Champions’ end of the year event, the question was posed, “What’s the greatest thing that’s happened to you this year?”
Sean stood up proudly and declared, “The greatest thing that’s happened to me this year is that I got a job.”
He works sunup to sundown alongside Gift (CEO of Cotrade Industrial Solutions), and they’re making a difference in the mining community. Sean can provide for himself and his family, giving him a tangible purpose and opportunity to further himself financially and professionally in life.
That’s the heart behind Philanthropic Investment. It’s a marriage of philanthropy and investment to see a return. Sometimes the monetary return is little, if any at all. But we are always seeking a greater return by offering someone like Sean opportunity.
Philanthropic investment—taking a young, hardworking man like Sean and giving him a rope to climb up the pyramid. Empowering him to be a difference maker in his world and allowing him the capability to think outside the basic necessities and needs of the bottom of the pyramid.
Yeah, but what’s one job, you say? In a nation that has an estimated 95% unemployment, one job is massive. One job is a changed life. It’s a future entrepreneur who may solve the water issue in rural Zimbabwe. He may solve the biogas solution. One job is valuable and that’s what we are scaling in the coming months and years.
Turning an idea into a profitable company that hires and impacts people like Sean, empowering Sean to impact and empower others.
(photo via adam cohn)