SEATTLE — For two days during the last week of June, the Vatican held its second-annual Impact Investing Conference in Rome and was hosted by Catholic Relief Services (CRS). This year’s symposium titled, “Making the Year of Mercy a Year of Impact for the Poor,” drew business and political leaders from around the world to discuss how the Catholic entities can engage in impact investing.
What is impact investing?
Impact investing occurs when funds are given to a business with the intention of positively creating social change for those in need while simultaneously delivering a monetary return.
Why doesn’t the Church just make donations?
In an interview with Vatican Radio, Dr. Carolyn Y. Woo, President and CEO of CRS, explained that impact investing is more sustainable than conventional charity. Global social issues are extremely complex and require ample effort and money to be solved. While one-stop-shop donations are helpful to any cause, long-term giving can tackle social problems with the scale and resources necessary.
Some may also think it is wrong for the Catholic Church—the world’s largest religious institution—to make a profit. Woo disagrees. One of the main foundations of Franciscan monastic life was Ora et Labora, or “pray and work.” Thus, monasteries doubled as businesses and religious organizations.
Pope Francis, a strong proponent of the open market, supports using capitalism to assist the poor instead of exploiting them.
For Randall Kempner, executive director of the Aspen Network of Development Entrepreneurs, the Church’s reasoning for wanting to employ impact investing is as clear as a bell. The Church has the funds, following and the values associated with creating social change.
Therefore, the Church would venture to invest in areas that benefit the disadvantaged, such as East African medical provisions companies, smallholder Indian dairy farms, South American microfinance banks or South Asian artisan craft establishments.
For the Developed and Developing
Although the Church hopes to use impact investing in regions with high levels of extreme poverty, it can also be used to solve issues in the developed world as well.
“We actually see a lot of social problems in very rich countries…For example, prisoners who have been released: how do you help them really get a proper start, and where is the funding coming from?”, asked Woo.
The House of Representatives recently passed a bill, by unanimous vote, introducing social impact partnerships to the U.S. government. The measure, dubbed the “Social Impact Partnerships to Pay for Results Act,” was introduced by Rep. John Delaney (D-MD), a speaker at the Vatican conference, and Rep. Todd Young (R-IN).
This FY2017 White House Budget line-time priority aims to empower the creation of public-private partnerships that couple charitable and private investments to magnify and duplicate successful public health programs. When a laborious independent assessment verifies that anticipated results are met, government dollars are remunerated.
If the Senate passes this piece of legislation, it could set an example for governments everywhere and businesses—including in the developing world.
Impact investing only gained traction among entrepreneurs a few decades ago, but its achievements are copious.
For instance, d.light, a U.S. manufacturing company provides solar-powered light to those in the unindustrialized world without access to dependable electricity. D.light is currently delivering energy to 20 million people across the globe and is expected to increase its coverage by five times the amount.
Sari Miller, a New York venture capitalist, is one of the pioneers of impact investing. She was the first investor to put money into change-oriented organizations such as Leapfrog Investments, the Grassroots Business Fund, Purpose Global and Impact Republic. However, her most noteworthy achievement was helping Gigawatt Global install a $24 million solar field in Rwanda. This endeavor was the first under President Obama’s Power Africa Initiative.
Impact investing is becoming popular among public and private sectors around the world. The Catholic Church’s involvement in impact investing has the potential to advance the common good and offer a sustainable option for the poor and vulnerable.
– Kristina Evans