Charitable Foundations Moving Towards Impact Investing, Claims AAA

A growing number of charitable foundations are moving more towards the social enterprise/impact investing structure, according to AAA and a new report by Marketplace.org’s Business page.

Boston (I-Newswire) January 4, 2013 - A growing number of charitable foundations are moving more towards the social enterprise/impact investing structure, according to Alternative Asset Analysis (AAA) and a new report by Marketplace.org’s Business page.

The piece focuses on the founder of eBay, Pierre Omidyar, who started out his career in philanthropy by setting up a charitable trust, the Omidyar Family Foundation. He was providing grants and other funding for projects that needed support, but he soon felt that expanding into the role of a investment bank would make the very most of his cash.

AAA advocates the formation of social enterprises that help projects and small businesses in vulnerable communities or developing countries through the provision of loans, grants and other forms of financial support. “People living in poverty all over the world need a chance to work themselves out of their situation and start businesses of their own,” stated AAA’s analysis partner, Anthony Johnson. “Making sure they can access small business loans to start their projects off and even employ others in the community offers a real, long-term solution for many.”

Matt Bannick, who now runs the Omidyar Network, the new philanthropic organisation from Pierre Omidyar, explained why the decision was made to move away from the pure charitable trust approach. He stated, “I don’t think there’s inherently anything wrong with the foundation. I think what we’re arguing, what we’re doing is expanding beyond the typical grant-making approach to having positive social impact.”

This view was backed by Ashley Mills of the Council of Foundations, who told Marketplace that there had been an increase in the interest from charitable foundations in running for-profit investment funds that focus on impact investing.

AAA supports a range of alternative investment, with a focus on ethical and ecologically sound projects, such as sustainable plantation investment through firms like Greenwood Management.