NEXUS USA Summit was held on February 26-28, 2020 at the United States Institute of Peace in Washington, DC. The Summit brought social entrepreneurs, philanthropists and innovators together to share, inform and lead the change.
Several Atlas Corps fellows also had an opportunity to participate in the Summit. Special thanks to my host organization – Open Road Alliance for providing support for me to participate in the Summit and represent the organization.
My personal interest as I work with Open Road was to learn more about impact investing and philanthropy. While the main panel sessions were inspiring and engaging, there were two break-out sessions specifically dedicated to the topics I was curious about. These were: “Impact Investing: Innovation Across Asset Classes” and “Philanthropy & the SDGs: Putting Your Passion into Action”. My goal is to summarize the main take-aways from these two sessions.
Representatives and experts in impact investing from Social Finance, Blue like an Orange Sustainable Capital, Veris Wealth Partners, and Orrick led the session on impact investing. The main discussion points included the measurement of impact and defining outcomes. The innovative model of Social Impact Bonds was also presented during the session. Social Impact Bonds are also known as pay-for-success financing where the repayment comes from achieving set outcomes. Therefore, social impact bonds require working capital to provide quality services, hit multiple milestones to achieve the disbursement thresholds.
When investors make their investments, they must make sure that investments meet both commercial terms and impact standards. Impact measurement doesn’t have an audit function. The question was raised about whether there should be a penalty action when the projected impact is less than the actual impact. It was pointed out that in most times if impact is not achieved, investors do have a conversation with their investees. However, the penalty is not usually exercised unless the project produced a negative impact. In impact investing, defining outcomes and then finding ways to measure them is not easy based on the nature of the work. However, the panel agreed that the important part is to be transparent on how you measure your impact and what exactly are you measuring.
One of the major positive shifts in impact investing is getting classic private equity shops involved, focusing on doing something good rather than just avoiding doing harm. Responsibility in investing in projects that have social value has become a major trend among professional investors. Impact investing is also attracting more attention from pension funds.
And then, it all connects to the Sustainable Development Goals (SDGs). A 15-year plan with defined indicators and targets that should lead us to a better world. It’s about finding the right balance between philanthropists’ morals and values and the alignment with SDGs. We should all strive toward meeting those targets and contribute however we can.