According to serial entrepreneur and investor, Morgan Simon, impact investment is the hottest national trend in social change that the average citizen has never heard of. Impact investment, the support of social and environmental projects with a financial return, is on the brink of surpassing traditional aid by ten times over the next decade, with over 1 trillion USD dedicated to the practice around the world.
We have to make sure there’s an interaction between the social issues of our time and the allocation of capital. Tweet This Quote
However, despite the buzz surrounding this burgeoning field, hardly any literature exists that documents what’s working, what’s not, and why. Simon sees this as an opportunity to shape impact investment in a way that bakes in accountability. To help the field reach its potential, she’s writing a book prospectively titled, REAL IMPACT: How Money Will Help or Destroy the World. This will be one of the first, more mainstream attempts to instigate a much-needed dialogue about this field.
“So much money is moving from philanthropy to impact investment that one, there’s a whole generation of MBAs and financiers who are seeking a social education to match the quality of their financial education, and two, there aren’t that many people prepared to hold those people accountable to making good choices,” said Simon. “We have to make sure there’s an interaction between the social movements and issues of our time, and the allocation of capital. My focus is providing that bridge between finance and social justice.”
Over the next decade, impact investment will surpass traditional aid, with over 1 trillion USD dedicated to the practice around the world. Tweet This Quote
Simon isn’t your average aspiring author. As the co-founder of three leading impact investment organizations—the Responsible Endowments Coalition, Toniic, and Transform Finance—she’s a prominent voice of experience and respect in the field she’s helped build over the past fifteen years. In the past decade alone, she’s influenced over 150 billion USD in capital.
These experiences have led her to the question, will impact investment empower millions of people worldwide, or just replicate the same challenges of the aid industry and other anti-poverty approaches? Consider microfinance, which showed immense promise initially. Then, scale and oversight in implementation led to several failed projects and negative externalities. With impact investment now on its way to scale, Simon believes we’re at a critical point to pay closer attention and figure out how to do it right.
“We as a field have been really focused on the idea that impact investment is fantastic and everyone should do it,” said Simon. “Now is the time to make sure we scale inclusive processes that help make sure we deliver the impact we want.”
Because we are all connected to financial institutions, we all have the potential to make real impact. Tweet This Quote
In REAL IMPACT, Simon will introduce Transform Finance and how, since launching its investor network in 2014, it’s already brought together over 1 billion USD to be invested with a community-centered and social justice approach. She will explain how and why she developed it along with co-founder Andrea Armeni, show where impact investment is working, and offer tangible guidelines for investors, entrepreneurs, activists, governments, students, and everyday people. Intended to be optimistic, not simply a critique of impact investment, roughly two-thirds of the book will offer these guidelines and solutions.
Over the years, Simon has seen that philanthropy is a necessary but insufficient driver of social change.
“We are in this David and Goliath fight between an economy that wreaks havoc on people and the planet, and foundations that give away the tiniest piece—5%—to try and fight back and create a better world,” said Simon. “If you have an army of 95 and an army of 5, it’s pretty clear who’s going to win.”
Philanthropy is a necessary but insufficient driver of social change. Tweet This Quote
Simon calls for better ways to engage with the broader economy. According to her, impact investment as it’s currently executed has emphasized palliative change as opposed to structural change. Meaning, the focus has been on alleviating problems without understanding their root causes.
To address this, Simon made sure the impact investing philosophy of Transform Finance centered on engaging with communities to design governance and ownership. The idea is that the return on investment balances between investors, entrepreneurs and the community. REAL IMPACT will provide mini-case studies of several enterprises, demonstrating how entrepreneurship can be used as a tool for social justice.
REAL IMPACT: How Money Will Help or Destroy the World will publish in 2017 by Nation Books/The Perseus Book Group. In the meantime, Simon wants us to know that because we are all connected to financial institutions, we all have the potential to make real impact.