Think tanks and impact investing

Impact investing has achieved important momentum, increasing to a $3 trillion market globally in just 10 years. Yet it is a relatively young sector and still faces many challenges. Such as its capacity to effectively plan for, measure and account for impact.

With an ecosystem-led approach, the aim is now to leverage the success to transform our markets into impact economies.

We advocate that local think tanks are well-positioned to help nurture this young industry to grow sustainably, and to deliver impact by:

  • contributing to the development of evidence-informed national and international impact investing frameworks;
  • 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; and
  • promoting a culture of collaboration and ongoing learning about the sector.

The evidence

OTT, in collaboration with IMPACTO Consulting, the International Development Research Center (IDRC), and Global Affairs Canada, is leading efforts to generate the necessary evidence and building blocks for a long-term initiative to strengthen the impact investing ecosystem.

Our initial investigation into the potential benefits and opportunities for think tank-impact investing collaboration resulted in a set of findings:

Following this, IDRC and Global Affairs Canada funded a two-year pilot project led by the Global Steering Group for Impact Investment (GSG) to partner local think tanks with four GSG-affiliated National Advisory Boards (NABs) in Colombia, Nigeria, Ghana and Peru. These NAB–think tank partnerships are working to generate a context-specific evidence base, designed to grow the impact investing ecosystem in their respective countries.

The pilot project has provided invaluable insights, affirming the important role of think tanks in supporting the impact investment sector. Indeed, these partnerships offer mutual benefits and value:

Thanks to this project, we now have a small evidence base to support the belief that think tanks have an important role to play in supporting the impact investing ecosystem. These collaborations offer a lot of mutual benefit and value:

Opportunities to advance this work 

We see three main areas for investment to build on these results and learning. 

Importantly, we advocate for think tanks to be the primary recipients of future investment, as they are well-placed to scan the impact investing landscape in their context and identify the right issues and actors to engage with.

We are inspired by think tanks’ own track record in developing and sustaining relationships with new actors in the policymaking field. 

1. Advocating for an evidence-informed policy framework

The impact investing policy, regulatory and fiduciary landscape is still young. There are opportunities to develop policy proposals and advocate for more favourable policies and think tanks are natural allies in this work. 

For example, in Colombia, one of the country’s leading public policy think tanks, Fedesarrollo, co-developed a research and advocacy strategy garnering input from diverse populations and regions of the country. 

2. Supporting sustainable and equitable market development

As a relatively young sector, the impact investing market is still developing and think tanks are well-placed to support sustainable and equitable growth. The pilot project funded by IDRC and GAC to partner local think tanks with NABs yielded positive results. There is an opportunity to build on and scale this model. As this work scales, there is a need to learn and exchange knowledge across contexts and experiences. Think tanks may also identify other potential collaborators and partners within the impact investing landscape to advance this agenda.

An example of research developed in the pilot partnerships: The Ghana Research and Industry Collaborative (GRIC) formed part of a multi-sector research team conducting a nationwide study on the Venture Capital/Private Equity industry, including how impact, gender and social equality have been advanced through VC/PE investment to encourage greater investment from institutional investors.

3. Ensuring sector integrity and accountability 

One of the challenges facing the impact investing sector is how to measure and account for impact. The Impact Management and Measurement (IMM) landscape for impact investment is fragmented and underdeveloped. 

Think tank experience in developing theories of change, indicators and MEL frameworks to understand the impact of complex programmes and systems could go a long way to building a more robust IMM system for impact investing, helping maintain the sector’s integrity.

With a strong IMM in place, think tanks could play an independent public watchdog function, generating analysis of the sector at the national or macro level.

Our initiative  

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, Africa and Asia to provide proof of concept.
  • Year 2: Scale based on 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 into more countries in each region, including a third region, and introducing activities at the global level.  

We plan to build on our past and current coalitions to advance this initiative.

Please contact us if you would like to support this initiative.

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