The Obama Administration has announced an initiative to spur economic growth and job creation through enterprises that reflect the triple bottom line of social, economic and environmental performance.
While the field has thrived in the private sector over the past 30 years, the new National Impact Initiative (NII) marks the US’ first formal foray into specific support for social enterprises.
Impact investing invests in enterprises and infrastructure that create public benefits in addition to profits in order to alleviate poverty and improve the environment.
Two main programmes
NII offers two main programmes of support for social enterprises:
- Global Development Innovation Ventures (GDIV): This is a joint $25 million per year initiative of the U.S. Agency for International Development (USAID) and the UK’s Department for International Development. The GDIV complements the Overseas Private Investment Corporation, which allocated $333 million last year to bolster private capital solutions by companies.
- Small Business Investment Company (SBIC) Early Stage Fund: A new round of solicitation for the SBIC Early Stage Investment Fund increases the amount available for investment from $150 million to $200 million annually. The Small Business Administration also raised the amount of SBIC leverage that Impact Investing Funds can receive from $80 million to $150 million and recently expanded the definition of impact investing to include rural communities.
These new initiatives build on the administration’s first-term public-private partnership efforts, including the:
- Freshworks Fund
- $15 million Regional Innovation Cluster initiative
- $1 billion Impact Investment Fund
- Accelerating Market-Driven Partnerships
These efforts are now folded into NII and will help the government partner with business and drive better results. Such a coordinated approach will create good jobs, drive sound financial returns and support positive societal outcomes through the establishment of incentives, regulations, education, standards and transparency around the process and outcomes of impact investing.
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