Impact Investing in Asia

Though it was coined in 2007 at a Rockefeller Foundation meeting, the term “impact investing” wasn’t widely used until a 2010 J.P. Morgan report defined it as a distinct asset class. While definitions may vary slightly today, impact investments are understood to mean those “intended to create positive impact beyond financial return.”

They sit at the nexus between traditional donation-driven philanthropy and purely market- driven investment. As such, many observers welcome impact investing for its potential to usher in new money for innovation that is not yet commercially attractive to traditional funders.

Recently, this nascent field has garnered a considerable amount of attention across many outlets, including for-profit companies, NGOs, governments, the media, and prominent philanthropists. The Monitor Institute estimated that impact investments could, over the next five to ten years, grow to represent 1% of global assets under management in 2008 —a figure estimated at $500 billion.

In Asia, the field of impact investing is less mature than in Europe or the United States. Much of the social enterprise funding activity occurs as small direct investments, often through family and friends. Despite this late start, experts predict the region has strong potential to grow.

In terms of asset availability, Asia offers abundant opportunity. However, there remain a number of challenges to leveraging opportunities in Asia. These encompass cultural realities and weaknesses in civil society, social infrastructure, and government support.

Read the full report, Impact Investing – Trends and Outlook in Asia, published by Kordant Philanthropy Advisors.