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Impact investing what, why and how -pdf version

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Impact Investing is a growing developmental tool. It can play a good role in the development of any country especially in developing countries. For example, the Impact Investor can invest their money …

Impact Investing is a growing developmental tool. It can play a good role in the development of any country especially in developing countries. For example, the Impact Investor can invest their money for food production, preservation and food processing. In our world, there are many countries where sometimes food productions cross their needs and it is easy for develop country to export the excess foods or any other products in abroad. But it is not always possible for the developing and non developed country to export the excess foods or other products, because there are no sufficient and modern preservation and processing advantages, rather poor communication and transport system are also big problems. We know when production cross the demand then the prices decrease and many production wastes and the poor producer/manufacturer fail to get back their principal amount of money. If there, a big investor invest his/her money for food security and social good, willing to make little profit by his investment, then the scenarios must be changed. The producer and farmers can get financial benefits, improve their economic situation, some employment opportunities create, general people can buy those products in low price (because of little profits makes by the investor) and moreover, some positive social changes occur. Also, some investor can invest in health care to serve health service at free of cost or with very nominal cost for the poor. Lending Microfinance (Microcredit) and SME loan to the poor can play a vital role in poverty reduction if the lender really wants to make very little profits. In many countries many financial organizations are lending their finance to the people, but most of there, the investors have no intention to make little profit!!! In Bangladesh, Brac, Grameen bank, ASA, Palli Karma-Sahayak Foundation (PKSF) and many other organizations lend microcredit to the poor, but the interest rate of lending money and the process and time-frame of refund systems are not friendly for the poor to properly reduce their poverty, so the interest rate should reduce for bringing positive social changes.
There are many products or area of work for impact investing. It is true that if anyone or organization wants to be a part of positive social change in any area, country or in the whole world, they should come with a positive mentality for mankind and with have no big desire for gaining big profit as traditional and commercial businessman.
We know investment always brings profit or loss. Only except philanthropist, when anyone or any organization wants to invest money then he or she must desires some financial profit or outcomes from their investment. Some practitioner and Academic think or pursue their opinion that there should be no scope of financial profit by impact investing. But is it possible to continue and broadly spread this type investment opportunity in whole over the world.

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  • 1. What, Why & How Impact Investing Big investment, little financial benefits, more social impact... Suman Chowdhury Mony sumanmony@gmail.com
  • 2. Impact Investing Primary Words... We know investment always brings profit or loss. Only except philanthropist, when anyone or any organization wants to invest money then he or she must desires some financial profit or outcomes from their investment. Some practitioner and Academic think or pursue their opinion that there should be no scope of financial profit by impact investing. But is it possible to continue and broadly spread this type investment opportunity in whole over the world. Are the investors desire to invest for positive social changes when their investment will not bring financial profit for them rather it will be in a vulnerable position? May be not! Every traditional businessman works for profit. If the investors gain some profit then many investors will come forward to invest their more finance for positive social changes. If there are much positive social impact come by impact investing then everyone should encourage and talk about this. It helps more than traditional commercial investment. So there are no problems of gaining little profit or only principal through investment when major predicted social outcomes are coming and strengthening the economy, reducing poverty and inequality. And we can call it as ‘Positive Impact Investing’. A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 3. What is Impact Investing Impact Investing includes investments towards ideas that are based on innovative business models with the objective to create positive social (and / or environmental) impact as well as (market-rate or even market-beating) financial returns of principal capital. "Impact investments are investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets, and target a range of returns from below-market to above-market rates, depending upon the circumstances."[1] 1. Global Impact Investing Network (GIIN). http://www.thegiin.org/cgibin/iowa/resources/about/index.html#1 A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 4. Impact Investing Positive Impact in Society Impact Investing (Social and environmental Benefits) Financial Outcomes (+/- Returns of Principal Capital) A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 5. Principle Objective Impact Investing Earn little profit or get back only principal, or give grants; do for positive social changes... A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 6. Life cycle Impact Investing Identify Targets Feasible Study Impact Study Set Goals Develop Out comes Set Plan Act Invest ment A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 7. Process of Impact Investing 1 9 Social Impact & Financial Outcomes/Returns Study Identify Targets New Area, Projects/Program s/Product & Beneficiaries 2 Provable Impact/Outcomes Study 3 8 Set Timeframe & Objectives/ Establishing the Goals 10 Gain & Reserve Social & Financial Capital Develop & Rebuild the Plan 4 Set Action Plan 7 Action / Implementation 5 6 Action / Implementation Financial and Human Capital Investment A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 8. Process of Impact Investing Plan Action Result A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 9. Impact of Impact Investing 1 3 Strengthening economic conditions of the society, also the country 2 Helps Government to do more development works for positive social changes and concentrate to do other development (infrastructural etc) works and regular governmental works 3 4 Building ability to combine capital in creative ways Encouraging Philanthropists to do their charity works for effective and positive social change 5 3 Building good intension to some wealthy investors for generating both financial and social returns 6 Gather Knowledge about effective solution of Social and Environmental Challenges 3 7 Building Motivation for Social and Environment friendly Investment 8 Strengthening the capacity of social enterprises to receive and use capital The great and effective impacts are – reducing poverty and inequality of the society and strengthening economy of the country A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 10. Impact of Impact Investing Social & Environmental Impact Building Human Capital Income generating activities expanded Empowering Women & Local People Proper & Equal Education and health care (by minimum cost or without cost) Poverty Reduction Decreasing inequality Better living conditions Community development (cooperatives, social finance, housing, health etc) Building the leaders of the future Decreasing High unemployment A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 11. Impact of Impact Investing Financial Impact Encourage trade and export Foreign direct investment Economic diversification Overseas development assistance Business Diversification Government tax revenues Domestic private investment Socially driven business Charitable grants Other innovative finance instruments Refining cost-effective impact-measurement tools A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 12. Product of Projects or Programs/Area of work Impact Investing Food Security Food Production & Preservation Supply/Value Chain Management Agriculture and Rural Development Social housing projects Farming Equal Education Project Health Care Small and Medium Enterprise/Bu siness Microfinance/ Microcredit for the Poor Renewable Energy Power Sector (Solar) Water Purification & Sanitation Tree Plantation Projects And various types of poverty alleviation programs and Income generating programs A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 13. Investors Impact Investing Philanthropy /Grants Government International Aid & Donor Agencies National/Local Aid & Donor Agencies International Development Organization Several Ministries Several Govt. Organizations Individual Philanthropist Govt. Financial Institutions Charity Clubs Trusty Organizations Non Government Organization Govt. Microfinance Institution Not for Profit Organization NGOs Business / Private Organization Financial Institution (Bank, Investment Company, Cooperative etc) Microfinance Institution Others Social capital Public Private Partners hip (PPP) Individual Investor Local Groups A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 14. Impact Investing Implementers A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 15. Impact Investing Unfriendly Government regulations Risk and Threats/ Challenges Governance Problem Selecting wrong Targets Political Problems Poor Infrastructural Development Poor Road Transport and Communication Systems Corruption and nepotism and deficiency of Accountability Insufficient human capital Uneducated and unaware people Non co-operation and disturbances of traditional commercial businessman Insufficient Investments/Funds Unskilled Professionals Imperfect information and Wrong or Problematic Action Plan Selecting Wrong Implementing Organizations Mischievous and weak Monitoring System Wrong & Unjustified Impact Conception Highly Business Professional Mentality Desire for high financial profit A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 16. For a good Impact Investing Project • Proper products/projects, • Feasible Study • Good Objectives and 3 to 5 years timeframe • Highly positive Social outcomes and Low profit margin, • Strong leadership and human Capital • Effective Action Plan • Investing Sufficient Financial Capital • Effective Trainings for professionals & Beneficiaries • Effective Monitoring and Evaluation Work plan • Put option to create Capital for future Initiatives Ensure Act • Draw lessons for future investments and actions • Develop and Rebuild the business plan • Strengthen regulation and monitoring works • Increase resources for monitoring, evaluation, regulation and mentoring Develop A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 17. What to do? Impact Investing What development organizations and civil societies can do? What Government can do? Government should take initiatives for encourage the impact investing by reducing or subsiding the tax and vat from those products which are related with the impact investing, also from the earned profit. Government can revise or upgrade the export & import and investment policies for impact investing. Government encourages the investor by giving some advantage and reward. Development organizations and civil societies can raise awareness for impact investing They can arrange workshop and meeting with the investors encouraging them to invest for social good, gain little financial profit They raise their voices for Philanthropy and encourage the businessmen and organizations. They take initiatives to develop the Impact Investing policies and process and scopes. They demand to the government for giving some related advantage to the impact investor. A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 18. Impact Investing Last words... So why not we encourage this types of investment when it is doing good for society and environment? Every Government of every country, especially developing countries, should take initiatives and build awareness to encourage impact investing. Its help the government to concentrate in their regular and other development works when the investors implement several types of development programs and play a vital role in empowering people, poverty alleviation, decreasing inequality, employment creation, community development etc and of course in economic growth of the country. Government, development organizations, civil society, everyone should raise awareness for the potential impact of this type of developmental tool. A Presentation of Suman Chowdhury Mony sumanmony@gmail.com
  • 19. Thank You... http://sumanchowdhurymony.blogspot.com Suman Chowdhury Mony Officer (MIS Analyst) MIS Department Palli Karma- Sahayak Foundation (PKSF), Dhaka, Bangladesh http://www.linkedin.com/pub/sumanchowdhury-mony/37/883/99 http://www.facebook.com/sumanmony https://twitter.com/SumanChyMony sumanmony@gmail.com