Putting the Impact in Impact Investing
Posted by Bill Bynum on May 6, 2016
Impact investing is a popular idea that promises to channel the power of market capitalism into serving the common good. Broadly defined, impact investing is a way for individuals, philanthropies, institutions or governments to invest in enterprises that generate measurable, beneficial social or environmental impacts alongside financial returns.
While I agree with the premise of impact investing—that it is possible to do well while doing good—I am afraid that absent extraordinary diligence, its promise will not be realized in the most persistently impoverished places in America. My concern grows out of my two decades of experience in community development finance in the Mid South as the CEO of HOPE.
When it is suggested to me that impact investing is the tool that will direct capital into places like the Mississippi Delta, and into organizations like the community development financial institutions (CDFI) I lead, what I think about are the distinctive features of persistent poverty areas that make this avenue unlikely.
Impact investing, like the capitalist system it attempts to harness, rewards institutions and places with proximity to thriving economies, political power, and population density. Those are advantages we just do not have. Let me give you a few examples. Two government initiatives in impact investing with the best of intentions, and, certainly, with good measurable results, have not worked proportionately well here in the Mid South.
About the author more »
William (Bill) J. Bynum is CEO of HOPE (Hope Enterprise Corporation/Hope Credit Union), a regional community development financial institution and policy center that ensures access to responsible financial services for underserved communities across Arkansas, Louisiana, Mississippi and Tennessee. HOPE has generated more than $2 billion in financing that has benefited over 650,000 Mid-South residents and influenced community development policies and practices nationwide. Bill has advised Presidents Clinton, Bush and Obama on community development, small business and financial service matters, including serving for ten years as Chairman of the Treasury Department’s Community Development Advisory Board. He currently serves as Chairman of the Consumer Financial Protection Bureau’s Consumer Advisory Board. Other board/trustee service includes Corporation for Enterprise Development, NAACP Legal Defense Fund, Millsaps College, Mississippi Children’s Museum, and the William Winter Institute for Racial Reconciliation.