By Dennis Shaughnessy
Impact investing, or investing for both financial return and social impact, is an emerging new interdisciplinary field, and one that we are dedicated to contributing to here at SEI.
Our third annual Impact Investing Program event was held on our Boston campus on December 4, 2013. This program and event are sponsored by SEI, the D’Amore-McKim School of Business, and the Honors Program. Nearly sixty undergraduates participated in identifying, evaluating and presenting eight social enterprises for investment from an initial pool of $20,000 in investment capital. The capital was provided by our three sponsoring organizations.
This unique Impact Investing Program is embedded in a freshman honors program seminar in the role of the private sector in global development, as well as a new business school course in social impact investing. In these classes, students study the “other side” of social enterprise, meaning the sector that provides capital to enterprises seeking to solve social problems using innovative and efficient new business models.
The investment theme for this year’s event was enterprise solutions to extreme poverty in the developing world, with a focus on new ventures that provide both solutions to social problems while providing employment or livelihood opportunities for women and youth. The “livelihood” space within social enterprise and impact investing is a new and exciting area that builds upon the successes of pioneering sectors, like microfinance, in creating opportunities for self-reliance.
A panel of judges evaluated the student investment proposals for eight organizations that are or plan to deliver livelihood opportunities in very poor communities while solving persistent social problems such as long-term unemployment, energy poverty, the disempowerment of women and the lack of affordable and accessible basic everyday products.
The judges included DMSB senior faculty and staff, SEI donors and impact investing experts: Professor Marc Meyer (DMSB), Professor Maureen Kelleher (Honors Program); Bob and Denise DiCenso and Alan Green (SEI donors); and Will Barker of The Barker Foundation and Miguel Granier of Invested Development.
Students evaluated nearly a hundred impact investing opportunities over the course of the semester, and from that large screen they arrived at their final eight organizations for consideration. These organizations were: LivingGoods (Uganda), Paradigm Project (Kenya), Afghan Institute for Learning (Pakistan, Afghanistan), Empower Generation (Nepal), Learn to Earn (South Africa), VisionSpring (US, India), Livelyhoods (Kenya) and Aakar Innovations (India).
During the course of panel deliberations, and additional $10,000 was pledged to the investment pool, increasing the total to $30,000.
The impact investment proposals developed by students were designed for program investments for new or development stage projects that evidence social innovation, financial sustainability and a commitment to impact measurement and evaluation. The investment, unlike a general donation to a charity, will be dedicated to accomplishing specific goals with defined intended outcomes and timelines.
From this group of promising investment candidates, the following organizations were selected for investment:
Aakar Innovations (India; $15,000)
Empower Generation (Nepal; $5,000)
Livelyhoods (Kenya; $5,000)
VisionSpring (Global; $5,000)
Aakar Innovations, featured in an earlier edition of the newsletter, is an early stage social enterprise located in Delhi, India that provides a unique and low-cost “mini-factory” model for manufacturing sanitary pads for the millions of women in rural India who do not use feminine hygiene products at an affordable price. The factory is based on a new, low cost production machine that stands at the center of an employee-ownership model. SEI also plans to place undergraduate “fellows” at Aakar to contribute to the development and scaling of this important new women empowerment model. $10,000 will be invested to finance two new mini-factories, with an additional $5,000 supporting SEI’s co-op fellows program.
Empower Generation is a start-up social enterprise in Nepal that enables poor women to begin micro-businesses selling clean energy products in their communities. The organization has a product development fund that will fund the creation of new products like solar lights and clean cook stoves, and a microfinance fund that will finance the creation of new micro-enterprises to sell these products at an affordable price. Empower Generation offered a matching investor, bringing this total investment to $10,000.
Livelyhoods is also a start-up social enterprise located in Nairobi with a mission to create livelihoods for youths in the urban slums. They use a branded door-to-door sales force made up of unemployed youth who develop the skills and experience that will enable them to succeed in the workplace. The $5,000 will be used to open and manage a new retail outlet in a Nairobi slum.
VisionSpring is a well-established social enterprise that provides affordable and high-quality glasses and other optical goods and services to poor people in the developing world. Their innovative “vision entrepreneurs” program supported by WarbyParker is a more thoughtful alternative to some of today’s popular “buy one give one” models. The funds will be dedicated to providing eyeglasses to a community where SEI has an existing field partner and student program.
We’re excited about the opportunity to invest in these innovative and compelling new social enterprises, as well as develop partnerships for learning and knowledge development in the social impact investing space.
We see impact investing as a rapidly growing and critically important segment of the financial world, and are pleased to be able to both teach young people about the theory and practice of this new field, and also support enterprises committed to improving the lives of the poor through the creation of opportunity.