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Friday, 10 April 2020

In search of ‘impact investing’

For the participants of a recent Cairo seminar, impact investing is becoming increasingly mainstream in the world of business, reports Khadija El-Rabti

Khadija El-Rabti , Tuesday 11 Feb 2020
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The advantages and disadvantages of impact investing were addressed at a seminar held earlier this week at the Egyptian Centre for Economic Studies (ECES), an NGO, in Cairo, indicating that both the term and the strategies associated with it are becoming increasingly mainstream.

According to the Global Impact Investing Network (GIIN), a US NGO, impact investing is about making investments “with the intention to generate positive, measurable, social and environmental impact alongside a financial return.”

Although impact investing shares some features with philanthropy, it is not on the same page even if it could be bound in the same book, said Ali Awni, director of the John D Gerhart Centre for Philanthropy at the American University in Cairo (AUC).

Morgan Simon, a founding partner of the Oakland-based Candide Group in the US and the author of Real Impact: the New Economics of Social Change, who has been working in impact investing for 18 years, told the participants at the seminar that part of the reason behind impact investing came from the perception that there were problems with standard philanthropy.

Some of these were explained in a book by a variety of activists and scholars called The Revolution Will Not Be Funded: Beyond the Non-profit Industrial Complex, she said.

“What percentage of philanthropy is funding social justice or real transformation? Only 12 per cent, and that means that most of that money is kind of maintaining the current social order. So, it is not a surprise that over the years we have more and more money, more and more billionaires in the US and globally, committing their money to philanthropy without a lot of change or with a lot more inequality as opposed to less,” Simon said, emphasising that philanthropy was not enough in bringing about sustainable social change.

A more effective approach would be not just to focus on “giving back”, but instead to prevent problems becoming institutionalised in the first place, she said. Corporates could make sure that their employees would not need to use food banks or hunt for affordable housing by paying them decent wages that covered their living expenses in the first place, she added.

According to Simon, experience over the past decade has shown that investments can be made in enterprises that have social and environmental values while being just as profitable as other businesses.

In Egypt, the idea of impact investing is relatively new. But a networking event that took place in Cairo last year entitled “Impact Investing and the Future of Startups” was part of several initiatives designed to apply impact investing to Egyptian investments.

*A version of this article appears in print in the 13 February, 2020 edition of Al-Ahram Weekly.

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