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The Microfinance Catalyst

CAMBRIDGE – So-called “impact investors” – providers of capital to businesses that solve social challenges while generating a profit – are the current rage in economic development. US President Barack Obama’s Office for Social Innovation and Civic Participation recently convened more than 100 practitioners to discuss how impact investing could be unleashed in the United States and the developing world. The United Nations Foundation and the US State Department have launched a $50 million public-private partnership to promote clean cooking stoves in poor countries. In the United Kingdom, the Netherlands, and France, development agencies are looking to reposition some of their funding to businesses serving the poor.

According to the World Bank, roughly 1.4 billion people live in extreme poverty (earning less than $1.25/day), and 2.6 billion in moderate poverty (less than $2/day). More than a billion of the moderately poor – a number that exceeds Africa’s total population – live in South Asia. Can impact investing do more to reduce global poverty than so many previous efforts, all of which have struggled to have any impact at all?