[youtube=http://www.youtube.com/watch?v=iZQSMY5Va38&feature=player_embedded] The most interesting point of many in one of several panels on Impact Investing at the recent Milken Institute Global Conference originated with an audience question at minute 62. The participant asked whether perhaps risk in the impact investing category is misunderstood, implying that it’s seen to be higher than it actually is and therefore expectations for return on impact investments are overstated.
Ron Cordes, of the Cordes Foundation and Impact Assets, agreed with the question’s suggestion, observing thatwhat is unfamiliar is seen to be inherently risky, whether that be investing in charter schools or SMEs in Africa. Similarly, he cited the huge promise of Social Impact Bonds, which will likely not be realized by most investors for some time because of the newness of the instrument.
Bobby Turner and Jean Case agreed that most investors overestimate the level of risk of many ‘impact investments’ because of their lack of knowledge about the sector, geography, or financial instrument(s) involved. They agreed on the importance of presenting these investments appropriately in order to get closer to an accurate interpretation of their risk and corresponding expected return.
Jean Case’s message throughout the panel was that we as early adopters have a responsibility to educate and inspire investors about the opportunities for scalable social change and personal satisfaction as a result of strategic and thoughtful impact investing.