Impact Investing Most Promising for Global Philanthropists

Impact investing is seen as the most promising trend by the majority of global philanthropists, according to new figures.

The BNP Paribas Individual Philanthropy Index 2015 revealed that 52 per cent of global philanthropists nominated impact investment as the top way to contribute to society in the future.

The Individual Philanthropy Index by Forbes Insights measured the commitment of philanthropists in four regions – Europe, Asia, the Middle East and the United States and was derived from a survey of some 400 high net worth individuals in the four regions, each with investable assets valued at $5 million or more.

“While not strictly philanthropy, impact investing, which prioritises social and environmental returns before financial returns, is exciting to many people who care about philanthropy and social change,” the report said.

“It offers the potential of unleashing a huge base of capital to fund sustainable market solutions. By investing in companies that actively contribute to society, impact investing is contrasted with socially responsible investing, which aims to avoid certain companies, sectors or regions.”

After Impact Investing, collaboration and sharing was labelled the second most promising trend – understandable, the report asserted, considering the large number of organisations and the resulting fragmentation of the sector.

The third edition of the annual Index revealed that Philanthropy is growing worldwide, increasing by five points on average in the past year. Out of the four regions, Europe is now almost level with the USA, with a strong increase in current and projected giving.

The study acknowledged new opportunities available to donors in social finance that build on traditional models of philanthropy, noting the challenges of defining them and educating prospective donors on the options available.  

“The opportunities to make a contribution, from grant making to impact investing, venture philanthropy or social entrepreneurship, have also been evolving,” the report said.

“The definitions used for different types of philanthropy may have different meanings depending on the source. Sometimes it may be hard to figure out which are the age-old concepts with new names, and which are the truly new and innovative ideas.

“While keeping it simple is always desirable, it is, however, important to know what you don’t know when it comes to philanthropy. The opportunities have expanded, and few philanthropists can be expert at all types of giving they want to engage in.

“The opportunities to make a contribution, from grant making to impact investing, venture philanthropy or social entrepreneurship, have also been evolving. The definitions used for different types of philanthropy may have different meanings depending on the source.”

Among other findings:

• Philanthropists are embracing technology. The top uses of technology in philanthropy are currently promotion via social media (42 per cent), crowd evaluation (42 per cent) and crowdfunding/online fundraising platforms (41 per cent).

• A majority of respondents (67 per cent) believe that advisors are necessary to most effectively navigate the giving sector. After family (51 per cent), philanthropy advisors/agencies (39 per cent) and external experts in the area of focus (37 per cent) were the most often consulted resources for help with giving.

Read the full report here.