Think tanks and impact investing

The challenge

More and more investors are looking to impact investing, seeking long-term profitability while not only ‘doing no harm’ but ‘doing good’.

The impact investment industry is already worth more than USD 700 billion. 

The industry’s claims of impact are likely to attract more investment; as well as the attention of the broader research and policy community. As this movement grows and the private sector increases its explicit role in matters of public interest, new actors need to engage to avoid impact washing and ensure that the industry develops on the basis of sound evidence.

We propose that local think tanks are well-positioned to help nurture this young industry to grow in a sustainable manner, and to deliver impact by:

• Contributing to the development of evidence-informed national and international frameworks to promote an impact investing sector that can effectively plan for, measure and account for impact
• Complementing and strengthening the investment industry’s knowledge, skills and capacities
• Developing and adapting appropriate impact measurement methods and tools
• Acting as independent arbiters to the industry’s claim of impact
• Promoting a culture of collaboration and ongoing learning about the sector.

Local think tanks are national or sub-national organisations close to the investments and their stakeholders. They possess a wealth of sectorial and contextual knowledge that is critical to inform, ex-ante, investment decisions and can contribute to ensure that individual investments and portfolios are continuously informed by the best available evidence. To find a local think tank visit the Open Think Tank Directory

OTT is working with partners, IMPACTO Consulting, the International Development Research Center (IDRC), and FinDev Canada to generate the necessary evidence and building blocks for a long term initiative.

• Read our concept note: Think tanks and impact investing: is there an opportunity? (read the concept note summary)
• Read our report: Beyond a research agenda for think tanks and impact investing: fostering the impact investing ecosystems in emerging markets
• Read the summary of the project findings: A guide for greater engagement between think tanks and the impact investment – or a shorter version of the project findings
• Find out more about our project with IDRC

Our initiative

The objectives of this initiative are:

• Think tanks incorporate the policy framework for the impact investing sector as a subject of their research;
• Think tanks incorporate the impact investing sector as a key communication audience for their own work; and 
• Impact investors actively participate, consume and engage with local think tanks and their work.

OTT and IMPACTO Consulting believe that both think tanks and impact investors could benefit from a global initiative that supports this effort. Our proposed strategy involves supporting local think tanks to undertake learning driven pilots along for pillars based on the functions they fulfil:

• Knowledge and resources: Short and medium term efforts to provide an evidence base including:
  • Undertaking research on the policy frameworks that affect the impact investing industry at the national level and put forward practical recommendations for reform.
  • Undertaking national or even regional needs assessments of the impact investment sector that could help to determine future opportunities for think tanks to support and engage with impact investors.
  • Developing national and regional think tank maps to help impact investors identify local think tanks to collaborate with.
  • Identifying and developing useful resources such as industry specific monitoring and evaluation guidelines and tools for impact investors.
  • Developing a methodology and test the approach to assess the impact of investor portfolios.
  • Developing sector studies that assess the opportunities for impact investment.
  • Developing a mechanism to provide impact investors with ongoing -yet independent- advice.
  • Providing advice or a specific advice knowledge service to impact investors such as acting as third party evaluators, supporting impact reports preparations, or advising on how to engage local stakeholders, including design of methodology and implementation.

• Learning and capacity development: Short to medium term learning opportunities to:
  • Introduce think tanks to the impact investing sector – as well as impact investors to think tanks.
  • Develop the capacity of think tanks to better engage and communicate with impact investors including developing impact investor relevant research and communication strategies.
  • Develop the capacity of think tanks and/or impact investors on relevant and appropriate tools and methods to monitor and evaluate the impact of impact investment.
  • Develop the capacity of impact investors to reach out, access and use evidence from think tanks in their own decision making

• Engagement and convening: National and regional opportunities including:
  • Networking events for think tanks and impact investors to meet, learn about each other and explore opportunities for collaboration.
  • Focused communities of practice convened to address a specific challenge faced by the impact investment industry and for which think tanks may have or be able to find solutions.
  • Targeted match-making by maintaining and using a local database of think tanks and impact investors to facilitate connections.
  • Carefully incorporating impact investors into existing think tank spaces for engagement on issues/sectors of interest to the industry.
  • Creating and managing spaces or processes to facilitate evidence informed dialogue between impact investors and local stakeholders, including intended beneficiaries of the impact.

• Communicating and influencing: This could involve think tanks:
  • Developing a communications strategy to more effectively engage impact investors.
  • Repackaging and disseminating findings from existing studies relevant to impact investors.
  • Developing and delivering a communications campaign to seek to inform/influence policies that affect the impact investment industry on the basis of new or existing evidence.

In addition, the initiative itself will deliver a 5th stream of work to learn, communicate and share lessons with a wider audience.

• Learning, communication and sharing: Regional and global efforts to ensure that lessons learned by the initiative are shared with a wide audience within the field as well as in other fields. This will involve:
  • Ongoing monitoring of the pilots including a series of planned collaborative sense-making sessions and synthesis reports.
  • A microsite to host and link to all relevant knowledge and resources to impact investors and think tanks.
  • A suite of newsletters to keep different audiences informed about what is most relevant to them.
  • Publishing digital text based and multimedia communication outputs to ensure that lessons learned through the pilots are consumed by different audiences in their own preferred ways.
  • A social media strategy.
  • Partnerships with think tanks and think tank networks to ensure that they share lessons from the initiative with their own local, regional and global audiences.

Our plan

We propose an initial 3 year initiative building from the bottom-up, including:

• Year 1: A series of pilots at the national level in Latin America and Africa to provide proof of concept
• Year 2: Scale on the basis of lessons by expanding the intervention in one or two more countries in each region and introducing activities at the regional level
• Year 3: Consolidating lessons, expanding in more countries in each region, including a third region and introducing activities at the global level.  

Please contact us if you would like to support this initiative