Five Lessons on Investing for Impact
Tara Murphy Forde, Vice President of Impact and Strategic Initiatives at Global Partnerships, shares her view on the importance of industry engagement and highlights some of her high level takeaways from the Aspen Network of Development Entrepreneurs (ANDE) Metrics from the Ground Up conference.
By Tara Murphy Forde, Vice President for Impact and Strategic Initiatives
“As we approach nearly a decade of using the term ‘impact investing,’ what can the industry learn from microfinance, particularly when it comes to impact measurement, evidence, and expectations?” For those of you who are familiar with Aspen Network of Development Entrepreneurs (ANDE), it won’t surprise you to know that this was one of the questions posed during last week’s Metrics from the Ground Up Conference in Washington, D.C. It is this type of honest, critical, and forward-looking dialogue that motivates Global Partnerships’ (GP) participation in the network.
As a nonprofit impact investor, GP has been providing working capital loans to social enterprises for over 20 years. We got our start in microfinance, which taught us a thing or two about what it means to pivot and refine an investment strategy based on emerging results, evidence, and insights. We have called on that experience, and the experience of others, as we’ve refined our impact methodology and expanded into new sectors and geographies. In turn, it was a pleasure to sit on a panel at last week’s event with Kelly McCarthy from the Global Impact Investing Network and Laura Foose from the Social Performance Task Force to share learnings and discuss implications.
Two issues we discussed on the panel were alignment and transparency. Given the varied and complex nature of the problems we look to address, and the often nascent stage of the solutions we support, it is understandable that impact investors and practitioners alike will rely on “theories of change” versus clear and decisive evidence. That being said, we need to be honest about what we know and don’t know, and find strategic partners who share our desire to learn and improve over time. We also shared some concrete lessons about what impact investors can do better moving forward. We can:
Get clearer on what we can measure (often outputs), but not stop there. We need to define the outcomes and impacts we look to deliver and strive to measure them, even if only via directional data at first.
Be careful not to get too narrow, too fast. While definition is important, we need to remain open to, and employ methods for, capturing unintended and longer term outcomes.
Develop a deeper understanding of context, so when we analyze data, and evidence begins to emerge, we can interpret relevance and better understand outcomes.
Invest in the talent, systems, and practices that will increase our capacity to deliver the desired impact.
Remember to always keep the client at the center. If we use data to better understand client needs, behaviors, and motivations, we can protect against certain risks while gaining valuable insight into key impact and business drivers.
At Global Partnerships these lessons have manifested themselves in several concrete ways. We’ve developed an Impact and Research Team that is responsible for identifying high impact investment opportunities and evaluating the impact of existing ones. While monitoring and evaluation is an important part of our role, we do not operate in a silo. Our function is strategic. We are responsible for defining the impact we look to deliver, interpreting the emerging evidence base, identifying appropriate measures, screening investees, interpreting results, and informing portfolio strategy. In short, we are tasked with providing critical feedback loops to ensure that impact-related results and insights inform the allocation of capital.
While this may sound easy enough, putting the right tools, talent, and processes in place to execute on this vision remains a work in progress. It has meant investing resources, challenging previously held assumptions, and adopting an iterative approach to portfolio strategy. And we have not embarked on this endeavor alone. As a fund manager, we have invited our investors and investees alike to join us in putting impact at the center of impact investing.
Special thanks to Markets For Good for posting this original blog post which can be found here. To stay up to date with the latest Markets For Good articles and news, sign up for their newsletter and follow them on Twitter.
Investing in Women
This is the first of a two-part blog series from Global Partnerships about women and impact investing.
By KJ Zunigha, Impact Evaluation Officer, Global Partnerships
Women all over the developing world play vital roles in cash management, making daily decisions on how to spend their limited resources on food, healthcare, and other necessities. Studies continue to highlight that investing in women not only positively impacts the individual, but her family and community as well.
The unfortunate irony is that women are disproportionately excluded from access to vital opportunities, such as financial inclusion.
Global Partnerships is committed to expanding opportunities for people living in poverty and is particularly focused on investing in women.
Below are a few ways GP thoughtfully invests in women: ensuring partners are tailoring products and services for women, delivering products in an effective way, and making a tangible impact.
Tailored Products and Services
Global Partnerships seeks out investable partners that are not just reaching women, but that are also designing products and services specifically for women. These organizations work to understand the needs, habits, obstacles, and daily decisions faced by women living in poverty, and design their loan products and services to better reach and provide opportunities for women.
A critical product currently providing opportunities for women living in poverty is microcredit, allowing women to start or grow their own microenterprises. Microcredit on its own, however, is not always enough to help people overcome poverty – we believe that credit bundled with additional, value-added services is more impactful in the long-run.
Value-added services include access to health services, a savings account, as well as business and financial education. When evaluating education programs, GP looks at how topics will take into account the potential knowledge gaps, sensitivities, and information needs of women.
Additionally, GP’s investments aim to resolve issues of stigma, finances, or distance that might exclude women from health services. Some of our partners provide preventive health education as well as access to cervical cancer screenings, low-cost family health insurance products, and mobile medical and dental brigades for the whole family.
Tailored Delivery Method
GP seeks out social enterprises who understand how to deliver tailored products and services to women in effective ways. Many women in poverty are often outright excluded from access to key opportunities, but sometimes it is also a matter of poorly designed delivery methods.
For example, one way to reach women living in poverty is through a group lending platform. Village banks and solidarity groups are two such mechanisms to reach women previously excluded from traditional financial services. Village banks allow members to share risk with a group of 15-30 women from the same community and do not require collateral on the loan. Women who may not have control of household assets are thus able to enter into a village bank without collateral. Sharing risks with known community members and neighbors builds trust and accountability within the group. This is one reason why village banks have such high repayment rates.
As part of a group, women also have the opportunity to learn from their peers and support one another. The value of being part of a group also provides a sense of belonging, and an additional setting where their voice can be heard and valued, particularly in many cultures where discrimination against women occurs. Having a safe, welcoming place to talk about domestic abuse, gender-based prejudice, as well as dreams and successes can have a powerful, positive impact for these women.
Defining and Measuring Our Impact
The products and delivery methods described above result from thoughtful work behind the scenes to understand what impact GP is having on the lives of women. GP has invested in a commitment to women, with a mandate to ensure all work operates with a gender lens.
As part of this commitment, GP has a dedicated Impact & Research Team which ensures that investments are maximized, by determining what works, why, for whom, and under what circumstances. GP looks at the existing evidence base, industry and sector experts, and learns alongside its partners to inform and evolve strategy. This allows GP to better target investments and maximize impact. In addition to evolving current investments, GP also researches new products, services, delivery channels, and populations to expand impact in more inclusive and effective methods. From researching new initiatives to measuring existing initiatives, GP is constantly refining and expanding work based on this analysis.
Combined, these three strategies allow GP to reach more women, have a deeper impact, and continue to improve results. To see the social impact of GP investment initiatives, please view our Annual Impact Update.
Q&A: Impact on Women
This is the first of a two-part blog series from Global Partnerships about women and impact investing.
Interview with Tara Murphy Forde, Vice President of Impact and Research, Global Partnerships
What challenges do women face in the developing world?
Let me start by saying that poverty and the way that it is experienced by women is highly contextual. The challenges faced by a woman in rural Bolivia are quite different than those faced by a woman living in a slum on the outskirts of Nairobi. That being said, millions of women across the globe lack access to the products, services, and information they need to lift themselves and their families out of poverty. In other words, gender inequality is both a root cause and a consequence of poverty. Ironically, studies have shown time and again that when you put resources in the hands of women, not only do those women benefit, they invest those resources in the wellbeing of their families and communities.
How can impact investing be part of the solution?
Impact investing seeks to harness the positive power of markets to generate social or environmental impact alongside a financial return. In the case of Global Partnerships, we invest in enterprises that are overcoming critical obstacles like lack of infrastructure or financial incentive, in order to deliver high-impact products and services to people historically excluded. To do so successfully and sustainably, our partners need to develop a deep understanding of their clients and tailor their offerings to better meet their needs. This focus on inclusion and client-centric design lends itself to a gender sensitive approach. For example, our partners looking to deliver health services to rural women need to understand the current options, why they are failing women, and what it would take to improve not only access, but use of health services. You can’t answer these questions without applying what many call a “gender lens.”
How does Global Partnerships apply a “gender lens” in its investment strategy?
First, we conduct in-depth research to better understand not only whether a certain product or service works, but why that intervention works, for whom it works and under what circumstances. Through this rigorous research, which defines our investment initiatives, we gain a better understanding of whether a given intervention is targeting women living in poverty and, if so, how. We analyze how various aspects of a potential investment, such as payment terms, education curriculums, delivery mechanisms, and the quality of the product or service help women overcome gender barriers that have traditionally kept them excluded. We then look for partners that not only deliver the intervention outlined in the investment initiative, but do so in a way that we believe can reach more women living in poverty.
What do we measure and how do we know whether or not women are benefiting?
We, of course, ask our partners to report on how many clients they serve and what percent of those clients are women, but we also work alongside a select set of partners to better understand whether those clients experience the desired results. For example, in our Women-Centered Finance and Education Initiative, we work with partners like Friendship Bridge and CRECER, who use frequent feedback surveys and targeted studies to better understand their impact on women. By doing so, we can gain a better understanding of whether or not the women they serve are in fact feeling truly empowered, changing their income and consumption patterns and demonstrating stronger resilience in the face of economic shocks. Applying a gender lens in impact investing is about more than just a screening checklist or a set of quantitative data points. It is about using a variety of methods and frequent feedback to gain deeper insights into what women want and need in order to change their lives.
How has GP’s work evolved to better serve women?
As an impact-led investor, we have been focused on what products and services to invest in and why they are impactful. Over the years, we have learned that in order to answer these questions we need to also understand who is being served. By reframing the question, we have gained deeper insight into how women transform resources into economic opportunity. For example, we now understand that in order to capture the impact of financial services and education, we need to go beyond simply measuring changes in income and evaluate things that demonstrate economic resilience, like changes in how women decide to spend their income and how households deal with crises such as illness.
What about GP’s efforts to impact women most inspires you?
Throughout my career, I have been inspired by the women I have met and believe that their fortitude and ingenuity can move mountains. That being said, the systemic barriers women face remain real and will not be overcome until we tackle the link between poverty and inequality. But let me be clear, focusing on gender in impact investing isn’t just about making sure women benefit. The Stanford Social Innovation Review published an article entitled, “The Rise of Gender Capitalism.” The authors assert that by using a gender lens, investors can “gain new perspectives, highlight inequalities, uncover new opportunities, and find value where none was found before.” I am encouraged by the ways in which GP is applying a gender lens to challenge previously held assumptions, push for more client-centric solutions, and ultimately put resources in the hands of those who need them most.
Honoring Four Women on International Women’s Day
Every day, Global Partnerships strives to expand opportunity for women. International Women’s Day is an occasion to recognize that our world needs to do more to break down barriers that inhibit women from equal opportunity. Today, we honor women who are investing in their families, their businesses, their communities, and most importantly, themselves.
These four women are just a few of the millions of women who, through our partners, are turning opportunity into impact and lifting themselves out of poverty.
Ana Victoria Dubon is the president of her village bank in Panajachel, a rural town in Guatemala. A village bank is a group of women who not only receive business loans, but also receive financial education and technical training to help them make the most of their loan. Ana uses her loan to run a food stall business to provide for herself and her son and daughter. She is saving to one day fulfill her dream of going to school to become a registered nurse. Global Partnerships invests in partners like Friendship Bridge who support women entrepreneurs like Ana. In this 2-minute video, listen to Abner, Ana’s son, share her story of independence and success.
Maritza Jarquin, lives in a remote Nicaraguan town called El Aguacate, where there is no electricity, water or access to sanitation. She is married, and has 13 children, 27 grandchildren and four great-grandchildren. GP partners like MiCrédito and Greenlight Planet provide Maritza with access to clean, renewable and affordable solar lights to replace toxic and expensive kerosene lamps. Watch this video to hear from Maritza how solar lights have brightened her family’s and her community’s future.
Nerida Gutierrez Velasquez is a coffee farmer in Peru. In 2005, she joined our partner Crediflorida, which provides loans, access to markets and technical assistance for small farmers. Nerida used her loan to buy a plot of land to grow coffee. Today, she and her husband have grown their coffee business enough to expand to a larger plot of land. Nerida is so successful that other farmers in the area hire her to teach them how to plant and cultivate coffee. Learn more about our partners serving smallholder farmers.
Gilda Maribel Say Nimatuj runs a pharmacy in her community of Quetzaltenango in rural Guatemala. Most of her clients are women and children. Within her community there is a critical shortage of access to affordable medicine. Not only does Gilda sell affordable medicine at her pharmacy, she also provides health consultations for free. "It’s what I like to do more than anything else: to support the people in my community." Gilda is a client of Friendship Bridge in Guatemala, one of Global Partnerships’ 19 health partners who have delivered a combination of health education, basic screenings, essential medicines and affordable care to 1.1 million people living in poverty. Gilda’s story will be featured in next month’s newsletter. Sign up if you would like to subscribe to Global Partnerships’ newsletter.
We are inspired by what one woman can do with opportunity. Yet women continue to be the majority of the world’s poor. Global Partnerships will continue to seek out social enterprises who are dedicated to impacting the lives of women living in poverty around the world.
Ana, Gilda, Maritza, and Nerida are just a few of the millions of women who inspire us every day. We hope they inspire you as well.
Blog Tags: international women's day