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Impact Investing: Getting Financial Returns While Building A Better World

Imagine trillions of private sector dollars pouring into healthcare, affordable housing, education, agriculture, distributed utilities, and restructured social spending in emerging markets and here in the U.S.  No, not in the form of charity; rather, in the form of "impact investing." This is already beginning to happen, according to Antony Bugg-Levine, the newly named President and CEO of the Nonprofit Finance Fund (NFF).

"Impact investing is any investment that intends to produce a social and environmental good while receiving a positive financial return," Bugg-Levine says. Impact investment funds are springing from family offices, banks, institutional investors, financial services firms, and others, and Bugg-Levine says it’s just beginning. 

NFF was founded 30 years ago by Clara Miller, now President of the F.B. Heron Foundation. NFF has always been a pioneer in nonprofit, philanthropic, and social enterprise finance. Building on NFF's legacy, Bugg-Levine sees the organization as the intermediary between impact investors, the aspirations of a new group of social entrepreneurs, and traditional nonprofits looking to embrace financial innovation. Continuing to advance NFF as a pioneer, Bugg-Levine says that NFF will consider what it can do "to mobilize and deploy resources more effectively to solve social problems."

Bugg-Levine’s new book, co-authored by Jed Emerson, is being launched this week at SOCAP11. Impact Investing: Transforming How We Make Money While Making a Difference provides a thorough, thoughtful, and gripping discussion of impact investing, and the powerful role it will play in engaging businesses and nonprofits with each other in building long-term, sustainable value.  The authors write about industry leaders, including Omidyar Network, which I wrote about here (disclosure: ON is a client), BRAC, which I wrote about here, and Jacqueline Novogratz and the Acumen Fund, which I am blogging about this week. Read "Impact Investing" if you want to know what's happening now in select circles, what the next few years will look like in financial investing, philanthropy, NGOs/nonprofits, emerging markets, and all related jobs and careers.

As an associate adjunct professor at Columbia University, Bugg-Levine observes that "the bifurcated mentality of nonprofits versus businesses/for-profits is anachronistic among today's graduate students."  Evidence is right here on Fast Company, where business innovation and technology is blended with social and environmental good. According to Bugg-Levine, new jobs and careers in a broad variety of sectors will "require people with financial and analytical acumen who also have empathy, patience, and an interest in social good."

It was apparent to me from Bugg-Levine’s background and our conversation that he has just that combination.  Even his experience demonstrates the different facets of his interests and qualities.  He is just now exiting his position as a managing director at the Rockefeller Foundation; he also worked at McKinsey.  But he also ran and grew the new offices of the nonprofit, TechnoServe, in Uganda and Kenya, helping to develop and implement business solutions to rural poverty. To me, the latter experience truly distinguishes Bugg-Levine; he’s had to meet payroll, so he’s walked in the shoes of social entrepreneurs. He's exuberant about the work and at the same time humble.

If we are indeed shifting to a world where business and social values are balanced and longer-term sustainability is the prize, then the future looks very promising.

[Image: Flickr user Images_of_Money]