Elizabeth Funk, CEO of The Dignity Fund, on the GIIN Roadmap

Impact investing is taking the finance world by storm. GIIN, the Global Impact Investing Network has created a roadmap for the resurgence. This roadmap helps to define success for impact investing, going beyond finding solutions for social and environmental challenges.

While impact investing has generated hundreds of billions of dollars into finding solutions for social and environmental change, the industry is only generating a fraction of the impact needed to further address these global challenges.

This five-to-seven year action plan revolves around putting in place some industry infrastructure that would allow investors to make investment decisions more efficiently and better informed about the impact.

Six Categories of Action

Strengthen identity
The GIIN will work to establish a set of principles that will guide future investments. Having set best practices and clarity on what role capital plays in relation to returns will encourage more people to get involved.

Shift the paradigm
GIIN wants to redefine what role capital plays in our society and update financial theory so that impact is included alongside risk and return. Investors should align their incentives so that impact is what drives allocation and compensation.

Expand the suite of products
Impact investing has created a demand for products to meet all of the needs and preferences of investors. More retail products need to be offered, in addition to institutional scale products. Investors should look at new fund managers and innovative finance vehicles.

Equip investors
The market is in need of third-party ratings of various investment products that include impact, so investors are more easily able to compare and choose investment opportunities. While there are some rating systems currently existing, they need to be built upon. The industry is also in need of investment banking services like deal origination and syndication.

Train professionals
The finance industry needs to put more training into mid-career financial advisors. Some financial advisors have difficulty translating the demand of clients to capital deployed to impact investments. The rise in impact investments also means accelerators, incubators and networks that are helping impact-oriented businesses.

Enact policy
Creating policy may entice more people to make impact investments. A few similar programs are already in place, like the Social Investment Tax Relief in the United Kingdom and New Markets Tax Credit in the United States. These programs promote impact investing by changing the financial return of qualifying investments.

This plan helps to promote a vision where impact investing takes the place of regular investing, which may seem ambitious, but the numbers seem to suggest it’s possible.

About Elizabeth Funk

Elizabeth Funk is the founder and CEO of Dignity Fund, an innovative social impact for-profit fund that provides capital for microfinance projects around the world to help impoverished entrepreneurs found their own businesses and bring themselves out of poverty. Elizabeth also serves as the General Partner for DevEquity, a company that provides funds for social enterprises throughout Latin America.

Elizabeth Funk graduated from Stanford University with honors in 1991. She then went on to earn her MBA from Harvard University in 1996 and was a Baker Scholar.

This article was originally published on ElizabethFunk.info.