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Bill Gates Donate World Economic ForumThe Bill and Melinda Gates Foundation gave (RED), an organization that fights AIDS, the best 10th-anniversary gift ever: a $50 million match for all Global Fund donations in 2016.

The foundation announced its pledge at the 2016 World Economic Forum in Switzerland according to Look to the Stars.

“Over the past decade, (RED) has enrolled millions of people and dozens of brands in the global fight against AIDS,” said Bill Gates, co-founder of the Bill & Melinda Gates Foundation, in a statement at the 2016 World Economic Forum.

“Today’s match will provide the Global Fund with up to $100 million to help save 60,000 lives, prevent 2.3 million new infections and generate more than $2 billion in economic gains for developing countries,” he said. “That’s an amazing return on investment.”

The Bill and Melinda Gates Foundation and the (RED) campaign has actively supported the Global Fund over the years.

Since its inception in 2006, (RED) has raised $350 million thanks to partners, events and products sold according to the organization’s website.

“We owe a debt of gratitude to all the companies, the creative collaborators and the activists who step-up to fight AIDS with (RED),” said (RED) CEO Deborah Dugan in a statement in January 2016.

A portion of the profits from (RED) branded products, like Beats by Dr. Dre Solo 2 headphones, Apple iPods and GAP clothing, benefit the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The Global Fund was established in 2002 to end AIDS, malaria and tuberculosis as epidemics through government, civil society and private sector partnerships according to its website.

To date, the Gates Foundation has contributed a total of $1.4 billion to the Global Fund, which includes the issuance of the long term promissory note of $750 million according to the Global Fund’s website.

“The Global Fund is one of the most effective ways we invest our money in every year,” said Bill Gates at the 2012 World Economic Forum. “By supporting the Global Fund, we can help to change the fortunes of the poorest countries in the world. I can’t think of more important work.”

The Bill and Melinda Gates Foundation and the (RED) campaign even partnered together through Snapchat in honor of World AIDS Day 2015.

Every time a user sent a Snapchat message using a (RED) filter, the Bill and Melinda Gates Foundation agreed to donate $3 to the organization’s fight against AIDS according to Re/code.

Summer Jackson

Photo: CNN

New Report Reveals Dramatic Growth in Impact Investments
Socially Responsible Investments (SRI), those that pay attention to the environmental and social impacts of what they fund while still turning a profit, have ballooned. The Forum for Sustainable and Responsible Investment, an association for professionals and organizations engaged in sustainable, responsible, and impact investing, recently released a report detailing the growth of SRI in the United States, showing huge increases in funding.

Coming in at over $6.5 trillion in 2014, the Socially Responsible Investments market in the United States has shown a 76 percent increase since 2012 and has grown nearly tenfold from 1995. “These assets account for more than one out of every six dollars under professional management in the United States,” the report states. The dollar amount is over 200 times larger than the annual flow of Official Development Assistance from the United States.

The growth in SRI is not limited to the United States. The Global Sustainable Investment Alliance, a worldwide collaboration of sustainable investment organizations takes a broader view, looking at the amount of money invested in SRI around the world by region.

In 2014, $21.4 trillion was tied up in SRI around the globe, an increase of $8.1 trillion from two years previously. Europe leads the pack, with 63.7 percent of the total, more than doubling the amount held by the United States. Canada contributes 4.4 of the share, an impressive number considering its relatively small population. In fact, per capita SRI in Canada is higher than the United States. These three regions contribute 99 percent of the total, with Asia and Australia/New Zealand taking .2 and .8 percent respectively.

Europe also has the highest proportion of SRI to total managed assets, with 58.8 percent of all investments channeled towards socially beneficial growth. The global average is just over 30 percent and has grown nearly 50 percent in the last two years.

To be sure, foreign investment by governments to aid developing nations must also be strong. “The global challenges are so complex and the size of the funding that’s needed is so large, traditional funding sources like philanthropy are probably not going to be sufficient to meet it,” said Anna Kearney, associate director for corporate social responsibility at the Bank of New York Mellon (BNY Mellon), in July.

In addition, the issue of how much of SRI ends up aiding environmental and social development in the developing world is unclear.

However, the Global Impact Investing Network — a nonprofit working to scale up impact investing — sheds some light on the answer. The group surveyed 146 SRI firms around the globe and found that 48 percent of the $60 billion under management by these firms was invested in emerging markets. That may be a proxy for the ratio of the $21.4 trillion in SRI that is invested in developing economies.

The trajectory for SRI remains promising. As more consumers look to put their money toward helping the planet and the poor while earning a profit, a growth in investment options that offer this will follow.

John Wachter

Sources: Forum for Sustainable and Responsible Investment 1, Forum for Sustainable and Responsible Investment 2, Global Impact Investing Network, Global Sustainable Investment Alliance, The Guardian, Organization for Economic Cooperation and Development
Photo: Flickr

Development Impact Bonds for Investing in Poverty Reduction- BORGEN
A relatively new strategy in guiding private money toward poverty reduction are deemed Development Impact Bonds, or DIBs. DIBs differ from traditional financing for poverty reduction in a few key ways.

First, rather than an aid agency or philanthropist giving money for a certain goal, like increasing educational attainment for girls in a developing country, private investors provide the money with an expectation to make a profit. As with any investment, risks are an inherent part of the equation.

The way that the investors recoup their investment is the principle of outcome-based returns. If a certain project hits its goals, then the investors get their initial money plus whatever interest was agreed upon in the contract.

For example, a program that trains job seekers would not get money for the number of people trained but by the number of people that graduated from the program and held jobs for a certain amount of time. If successful, investors’ profit comes from a philanthropic organization, aid agency or the government that received the benefits of the program.

What this does — and the second way DIBs differ from traditional development program financing — is to take the risk off the hands of the constrained budgets of aid agencies. If, unfortunately, the program fails, then the aid agency or government responsible for repayment is off the hook and the investors are left empty handed. However, this risk sharing allows for more programs to have a chance.

Thirdly, the outcome-based principle allows allows for more flexibility in meeting program goals. Rather than be burdened with a predetermined process imposed by the donor, the program can be innovative and work within the context of the local environment.

This allows frees up space for local entrepreneurs. They know the area, the culture, and have a better idea of what will and will not work best. The flexibility in meeting targets not only incubates different and novel ideas, it incorporates locals and their knowledge better than traditional funding.

While these differences make DIBs attractive, the management and transaction costs may be prohibitively high. The novelty of the mechanism and uniqueness of each contract, together with the infant stage that this industry is in are what contributes to these costs. If successful, over time, a streamlined process and proven results will reduce the costs and increase the uptake.

DIBs have potential in the areas of global health, education, agriculture, water and sanitation, housing and the environment.

Investors interested in creating a positive social impact with their money now have a new option. Savvy investors may also view these investments as laying the groundwork for future business opportunities in the developing economy.

John Wachter

Sources: Conscious Company Magazine, EcoEnterprises Fund, The Guardian 1, The Guardian 2, Instiglio, JP Morgan Chase
Photo: Flickr

china_poverty_investment_stock_share_global_poverty_developmnet_gdh_economy_inernational_aid_opt
By 2030, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, which is less than one-third of today’s capital. Countries in East Asia and Latin America account for the largest shares of this stock, says the latest edition of the World Bank’s Global Development Horizons (GDH) report, which explores patterns of investment, saving and capital flows as they are likely to evolve.

Developing countries’ share in global investment is projected to triple to three-fifths from one-fifth in 2000, says the report, titled “Capital for the Future: Saving and Investment in an Interdependent World.” With world population set to rise from 7 billion in 2010 to 8.5 billion 2030 and rapid aging in the advanced countries, demographic changes will profoundly influence these shifts.

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping to speed growth and create massive investment opportunities, which in turn are spurring a shift in global economic weight to developing countries. A further boost is being provided by the youth bulge, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

The good news is, unlike in the past developing countries will likely have the resources needed to finance massive future investments for infrastructure and services, including education and health care. Strong saving rates in developing countries are expected to peak at 34% of national income in 2014 and will average 32% annually until 2030. In aggregate terms, the developing world will account for 62 to 64% of global savings of $25 to 27 trillion by 2030, up from 45% in 2010.

Saving will continue to be dominated by Asia and the Middle East. One projection from the report claims that in 2030, China will save far more than any other developing country – $9 trillion in 2010 dollars – with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, China will account for 30% of global investment in 2030, with Brazil, India and Russia together accounting for another 13%. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. China and India will account for almost half of all global manufacturing investment.

Maurizio Bussolo, lead economist and lead author of the report, notes that although wealth will be more evenly distributed across countries, it does not mean everyone within the countries will benefit.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap. “Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

– Maria Caluag
Sources: Nation.com, World Bank
Photo: Hope for China