Development finance topics

The OECD Social Impact Investment Initiative

 

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Social impact investment is an innovative approach to further drive economic development and achieving social outcomes. Social impact investing provides finance to organizations addressing social and/or environmental needs with the explicit expectation of a measurable social, as well as financial, return.

What is at stake?

Social impact investment responds to the need for a new sophisticated financing strategy in order to deliver on the Sustainable Development Goals (SDGs) and the Addis Ababa Agenda for development finance. The SDGs apply to developed and developing countries alike and require new approaches and financing to address economic, social and environmental challenges. A strong emphasis will be needed on using public resources more strategically to catalyse private resources targeted towards achieving the sustainable development goals. While these innovative new financing approaches will not replace the core role of the public sector or the need for philanthropy, they can provide models for leveraging existing capital using market-based approaches with potential to have greater impact.

Current work

The OECD’s work on social impact investment (SII) is complementary to the blended finance work. Originally launched during the G8 Social Impact Investment Summit in 2013, it has expanded to include a broader set of countries with a particular focus on developing countries, and will provide valuable insights on the global financing for development strategy going forward. The OECD Phase I report was published in 2015, focused on building the evidence base in the social impact investment market.

The 2018 work program focuses on building the evidence base through global data standards to enable the collection of internationally comparable data, development of case studies of actual transactions that can shed light on various financing approaches and instruments, practices and policy issues in key regions and a mapping and assessment of existing policies in developed and developing countries.

Six expert meetings held in 2016-17 led to the definition of a roadmap towards an internationally comparable data framework, including:

(1) a set of principles about transparency and data sharing,

(2) an initial data reporting framework,

(3) a database of databases of relevant existing,

(4) publically available data, coordination between major initiatives on impact management and measurement.

The 2018 work program includes hosting regional workshops on the status, actors and business models of impact investing and conducting case studies on social and inclusive businesses to better understand financing patterns and needs. Two regional workshops for experience sharing amongst local practitioners have been organised in Africa (March 2017) and Latin America (February 2018). At these occasions, an initial set of a dozen case studies have also been identified, which shall lead to a better understanding of SII practices, fostering more effective policy approaches. The next one shall take place at the Asian Venture Philanthropy Network conference in June 2018.
 
The OECD policy framework on Social Impact Investing is intended as the analytical basis for international comparison in the OECD policy mapping exercise, but shall also provide guidance to policy makers as they engage in SII-related policy design, implementation and review.  A series of country studies is being conducted to test the validity of the OECD policy framework and wider analytical approach, on both domestic or development cooperation initiatives.

The forthcoming OECD Phase II report shall include:

(1) development of a framework for internationally comparable SII data,

(2) creation of a set of case studies focused on investment patterns and financing instruments,

(3) research and regional workshops mapping the SII market in developed and developing countries and

(4) mapping and review of policies to facilitate social impact investment.

This publication, and particularly the global data reporting framework, will support global growth of the SII market by increasing transparency, thereby incentivising the mobilisation of private investment.

Publications

Events