Impact Investing for Sustainable Development
Partners President Raymond Shonholtz recently finished his examination of the United States' approach to development and ways in which it can enter the 21st Century by focusing on impact investing.
The U.S. Agency for International Development (USAID) and the Department of State direct over 55% of U.S. foreign assistance, with an additional 26% managed by other U.S. Departments and agencies. These institutions apply 20th Century models and mechanisms to 21st Century development needs and lack an overarching philosophy consistent with American values. Systemic change is needed if the United States is to have a sustained reform impact in developing countries. Having a “voice” at the policy table equal to diplomacy and defense, which many development experts argue for, would achieve much. Yet, equally critical is reforming the philosophy and implementation of US development.
Our present development effort is:
-
Assistance-driven vs. investment-oriented.
-
Dependency based vs. aimed at achieving self-sufficiency
-
Project-based vs. focused at systemic reform.
-
Short term vs. long-term, lacking a maintenance-of-effort approach.
-
Designed for immediate returns vs. long term sustainability.
-
Delivering outputs (and maybe outcomes) vs. measurable impacts.
Moreover, our present implementation of development is:
-
Focused on US providers vs. global partners.
-
Hobbled by contract and procurement rules vs. governed by rules designed for success.
-
Expensive, with most resources remaining in the US vs. cost-effective with the majority of resources spent in-country.
-
Risk-averse vs. innovation-embracing.
-
Prone to stove-piping resources, knowledge and staff vs. leveraging expertise across thematic (governance, health, education, etc.) sectors.
-
Based on an inconsistent and short term allocation of resources vs. committed resources based on multi-year planning.
Impact Investing for Sustainable Development
This paper argues for re-conceptualizing U.S. allocation of human and financial resources towards making an investment in a country’s democratic, social and market sectors. We are not “assisting”, which most Americans see as charity, but investing in developing countries. It is in the US’s global and national interest to have stable, democratic, and economically secure nations in the developing world.
Impact Investing for Sustainable Development reframes our development rationale, allocation of resources, and success indicators. It proposes an innovative approach to achieving systemic governance, economic and social reforms in developing countries by investing in the country’s people and organizations.
Impact Investing is premised on the well developed concept and application of social entrepreneurship, investing in social entrepreneurs to initiate systemic change. By stressing sustainable development, Impact Investing extends social entrepreneurship to the dimension of organizational sustainability, enabling it to continue a programmatic mission with skilled staff beyond any specific grant period. Impact Investing provides to the recipient governments and societies an investment in their people and organizations, creating new professions, employment and recurring social capital, expertise, and professional development. Impact Investing addresses the dysfunctional assistance model and presents a development design that embraces American values and Congressional interests.
Impact Investing for Sustainable Development integrates entrepreneurship, sustainability and technology into a 21st Century social investment strategy.
For the full article Impact Investing for Sustainable Development.
News
