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How does Impact Investing contribute to development?

Impact investing has attracted the attention of mainstream investors from around the world; several institutional investors, family offices, asset management firms, high net worth individuals and faith-based investors, among others, have expressed their interest in including socially responsible assets in their investment portfolios. In other cases some traditionally philanthropic donors have become attracted to impact investing as a way to maximize the impact of their contributions because they realize that their investment will not be limited to a one-time contribution.

Even though investors are attracted to impact investing for diverse reasons,, it is quite clear that there is growing interest. This means that impact investing has the potential to mobilize considerable resources to support the scaling and strengthening of the organizations that are directly trying to solve some of the world's most pressing challenges through market-based solutions.

In addition to the growing interest from investors, the field of impact investing is becoming an attractive alternative for governments. Looking ahead, as governments face increased pressure to cut back on spending and to show the concrete results or impacts of their social programs, it is likely that the role of impact investing will become more important for global development. In the governmental sphere we can already see some great innovations (e.g. social impact bonds in the UK and vaccination bonds in Japan), and significant resource allocation (e.g. OPIC in the United States). There is a clear growth trend in the allocation of resources to impact investing, therefore -as the sector becomes more sophisticated and gains experience- there will be greater potential for positive social impact going forward.