Investing In Impact

Over the last 30 years, the citizen sector has increasingly turned to the market to address social challenges. The breadth of the resulting innovations has been profound. Market-based innovations enable social entrepreneurs to break away from traditional funding models. Philanthropic and government funding are now complemented, and often replaced, by revenue-driven models that range from international license agreements to forward commodity contracts. 

The rise of market-based solutions is focusing attention on new possibilities for investing in social change. These innovations are mobilizing new pools of capital and engaging a new set of stakeholders in social change. While market-based innovations create great opportunities, these innovations also introduce new degrees of complexity. The emergence of social finance has been characterized by real growing pains as this sector has witnessed almost as many missteps as achievements. There are many cautionary tales. For instance, there are social entrepreneurs that have become small business owners, social businesses that have abandoned their mission to pursue profit, and financial services organizations that have left their clients poorer and more indebted than when they began.

We have much to learn in order to successfully harness the power of markets to address social challenges at scale. Social entrepreneurs, investors, and other participants of social finance are adeptly recognizing historical mistakes and are building on the lessons of the past. But these are still the early days. As a sector, we need to move beyond ill-fitting comparisons with the private sector, deepen our understanding of how and when we can use the market to address social challenges, and develop the competencies to do so effectively. 

Fortunately, the sector is evolving quickly, attracting new thinkers, innovations, and entrepreneurs. Social finance has grown from a few pioneers to a nascent industry at the intersection of commercial finance and social action.

Stories


Investing In Impact: A Look At Market-Based Systems Change (2013 Report)

Like many of our colleagues in the citizen sector, we believe that social finance can significantly increase the impact of innovative solutions. And, like many others, we believe that social investing has not reached the realm of what is possible.

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Ensuring Farmers Receive A "Fair Price": Ashoka Fellow Paul Rice

By developing the market for Fair Trade USA-labeled products throughout the United States, Paul Rice is enabling millions of farmers worldwide to obtain higher and fairer prices for their products.

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Catalyzing Rural Prosperity through Affordable Financing: Ashoka Fellow Willy Foote

Root Capital has invested over $600 million in more than 400 small agricultural businesses to lift people out of poverty in environmentally vulnerable locations in Africa and Latin America.

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Providing Access to Financial Services through Alternative Data: Ashoka Fellow Michael Turner

Michael Turner is addressing the pitfalls of the traditional credit rating system, which excludes billions of people from the financial sector. By helping financial instructions rethink how they gauge risk, Michael has added over 5 million accounts to credit reporting systems worldwide.

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Empowering Independent Workers with the Benefits They Deserve: Ashoka Fellow Sara Horowitz

Recognizing a gap in the United States’ social support system for independent workers, Sara Horowitz has spent the last 30 years working to provide freelancers affordable benefits and advocating for their improved labor rights.

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Increasing Value Capture through IP Rights: Ashoka Fellow Ron Layton

Ron Layton is enabling small, struggling producers around the world to secure higher prices by creating and using intellectual property rights in innovative ways.

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From Subsistence Farming to Fair Trade - Empowering Women in Burkina Faso: Ashoka Fellow Marceline Ouedraogo

By improving the quality of Shea Butter production in Burkina Faso, Marcelline Ouedraogo has enabled a significant increase in income to more than 3,000 women across the country. 

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Fighting Disease Through Affordable Nutrition: Ashoka Fellow Basil Kransdorff

Through the more than 120 million sales of e’Pap in 15 countries, Basil Kransdorff is helping people who suffer from chronic illnesses and malnutrition live longer, healthier lives.

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