1. OECD Social Impact Investment initiative
HBS Alumni Webinar
April 17, 2018
Karen E. Wilson
Private Finance for Sustainable Development
Development Co-operation Directorate, OECD

2. Social/Impact Investment
Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.
Intentionality
The intent of the investor to generate social and/or environmental impact through investments is an essential component of impact investing. 
Investment with return expectations
Impact investments are expected to generate a financial return on capital and, at a minimum, a return of capital. 
Range of return expectations and asset classes
Impact investments generate returns that range from below market (sometimes called concessionary) to risk-adjusted market rate. 
Impact measurement
A hallmark of impact investing is the commitment of the investor to measure and report the social and environmental performance and progress of underlying investments.

3. The Spectrum of Capital
Social Impact investment
Source: Adapted from SIITF WGAA (2014) adapted from Bridges Ventures.

4. What is the role of Social Impact Investment?
New models are needed to fund, deliver and scale innovative solutions to social, environmental and economic challenges.
public funds in many countries have become depleted
social challenges have mounted
Social impact investment - the provision of finance with the explicit expectation, and measurement, of a social as well as financial return.
Spurs social innovation
Increases accountability (measurement of social outcomes)
Enables sustainability of organizations addressing SDGs
New financing models are developing at multiple levels and in parallel to traditional markets.
A growing range of social investment instruments have been developed, all with a different financial/social return profile.

5. Global Social Impact Investment Initiative: GSG
Taskforce established at G8 Social Impact Investment Summit in London in June 2013
Chaired by Sir Ronald Cohen, 2 representatives per country (public + private)
Initial mandate for one year, meeting every two months:
Four taskforce working groups
G7 (+ Australia) National Advisory Boards
Set of Taskforce reports published on September 15, 2014
Taskforce transformed into a Global Steering Group in July 2015
Several new countries joining each year, each creating a NAB
Annual plenary conference (London 2015, Lisbon 2016, Chicago 2017, India 2018)
For more information on the Global Steering Group activities
visit:

6. OECD Social Impact Investment Initiative
Phase I: Social Impact Investment: Building the Evidence Base
Phase II: Objectives
Measurement: Measure SII in the framework of private sector investment in the new SDGs.
Continue to convene international discussions on SII data collection and indicators.
Evidence base: Provide a more comprehensible and comparable view of SII across countries.
Increase understanding about social impact investment in the context of the broader financial markets in developed and developing countries.
Practice sharing: Further knowledge of social impact investment instruments and their applicability in a variety of sectors and across different country settings through the development of detailed case studies and workshops.
Policy: Identify, monitor and assess policy actions taken to further the SII market.
Platform for discussion with policy makers
Overview on Social Impact Investment
Social Impact Investment Framework
Characteristics and Attributes of Social Impact Investment
Context Setting: Differences in social needs and service delivery across selected countries
Social Impact Investment Market Data: Initial Findings
Policy Actions and Implications

7. Current OECD SII Work
OECD Phase II Report target publication date: January 2019 (at the OECD Private Finance for Sustainable Development Conference)
A set of principles on transparency as well as transaction and performance data (financial and social)
Data
Case Studies
Analysing investments in different countries, sectors and mix of financing instruments
Research and knowledge sharing workshops on the SII market
Regional Workshops
Policy
What governments can do to facilitate the SII market

8. Framing the Social Impact Investment Market

9. Research and Regional Workshops
Africa (Nairobi, Kenya)
Feb 22, 2017 (with IDRC & Intellecap, back-to-back with Sankalp Africa Summit)
Latin America (Mexico)
Feb 28, 2018 (back-to-back with FLII)
Asia (Singapore)
June 7, 2017 (back-to-back with the AVPN Annual Conference)
The goals of the regional workshops are to:
Increase understanding about impact investment in key regions within the broader context of private sector financing for the SDGs.
Further knowledge of private sector financing instruments and their applicability in a variety of sectors and across different country settings across the region.
Identify opportunities and challenges for private sector impact-focused investing in the region and outline some possible action items to be taken both by practitioners and policy makers.

10. Learning from practice - selected case studies
Social Purpose Organizations
Number of Investment Rounds
Instruments
Sector
Country
Clinicas del Azucar 1
Grants and equity
Healthcare
Mexico
Siembra Viva
Equity
Agriculture
Columbia
Tóhe 2
Grants and a convertible note
Culture/education
Vietnam
bKash
Grants and Equity
Mobile access to finance and financial services
Bangladesh
Waterlife
Water
India
DripTech
Convertible Note and Equity
India and China
Golden Lane Housing 3
Public debt, bank loans, concessional loan (from parent company)
Housing
England and Wales
Vaatsalya Healthcare 4
M-KOPA
Grants, Equity and Debt
Energy
Kenya, Tanzania and Uganda
Kinderzentren Kunterbunt
Grants, Debt, Equity
Education
Germany

11. Some initial lessons learned
Many social enterprises require some initial grant funding and/or technical assistance to help them develop and be able to later attract investment capital.
A mix of investors are engaging in social impact investing, including foundations, angel investors, venture philanthropists, social venture funds.
Financing instruments cover a broad range of debt and equity, reflecting both the needs of social enterprises at various stages of development as well as the preferences of investors.
The timeframe for these firms to reach sustainability and scale are often longer than the investors first expected and this needs to be taken into account in thinking about follow-on financing rounds.
Social impact measurement remains a key challenge.
More standardized ways of collecting social impact investment data is needed to capture information at a transaction level and contribute to building the evidence base about activity and approaches.
Investment climate and regulatory environment are key factors

12. The Data Work stream: A broader perspective
Goal: to move towards greater transparency in the SII market by increasing comparability of data
Deliverables
Initial global data standards
Transparency principles
Piloting the data standards
Longer term implementation plan
GSG in Chicago in July 2017
SII Phase II Report 2018

13. Draft OECD SII Policy Framework From policy making to market outcomes
Policy design
Where are the links/hooks from the policy cycle to the SII market?
Social Needs
Resource mobilisation
Supply side
Market intermediaries
Demand side
Agenda setting
Government capacity
Legislative and regulatory framework
Strategic Partnerships
Implementation
National Priorities
Problem definition
Impact evaluation
Sustainable Development Goals
Source: OECD, 2017

14. Draft OECD SII Policy Framework Three sets of policies at play
Domestic SII policy in developed countries
SII in Development cooperation
Domestic SII policy in emerging and developing countries
Policy makers in developed countries
Policy makers in emerging and developing countries
SII Community
Development Community
Source: OECD, 2017

15. Draft OECD SII Policy Framework Analytical dimensions of SII policies
POLICY DIMENSIONS
1. Market Target
Demand, supply, intermediaries, enabling environment
2.Government Role
Market regulator, Market participant, Market facilitator
3. Policy Type
4. Policy Instrument
Providing and sharing information
Research (Studies, Opinions, Data provision),
Awareness raising (Communication campaigns, Awards)
Setting and enforcing rules
Legislation (legal structure for Social Enterprises, Fiduciary responsibility, Unclaimed Assets, Pension regulation, Public Procurement regulation)
Fiscal incentives (tax relief, investment)
Levying and granting financial resources
Financial instruments: Outcome contracts (SIBs, other), Grants, Funds (Outcome Funds, investment readiness funds, venture capital, others), Loans, Guarantees
Technical Assistance
Intermediaries (Wholesale institutions, Social Stock Exchange)
Employing or reforming government structure and capacities
National strategy
Convening (gathering external stakeholders, internal consultation, collaboration with national SII platforms, public consultation)
Government function
Source: OECD, 2017

16. Challenges and Opportunities for the Social Investment Market
Building the evidence base
Improved transparency and standardization of data
Impact measurement
Setting appopriate return expectations
Further development of intermediaries
Creation of a broader range of financial instruments
Enhanced focus on the demand side
Further engagement of mainstream investors
Engaging governments and other stakeholders 

17. Thank you! Karen E. Wilson Karen.Wilson@oecd.org
Private Finance for Sustainable Development
Development Co-operation Directorate, OECD