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Research Report

Harnessing Social Impact Investing in Latin America:: Private Capital for the Public Good

Gabriel Sánchez Zinny
Copyright Date: May. 1, 2015
Published by: Atlantic Council
Pages: 27
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Table of Contents

  1. (pp. 1-1)
    Peter Schechter and Jason Marczak

    The core of our mission at the Atlantic Council’s Adrienne Arsht Latin America Center is to show that Latin America is no longer about the subjects that tend to dominate policy discussions about the region: transnational crime, terrorism, corruption, violence, and drugs. Rather, Latin America is about game changing, global trends. Social impact investment and entrepreneurship is one of these areas. Business leaders and policymakers are at the forefront of working to make financially sound investments to transform their societies’ ability to confront important social challenges, such as opening access to education, improving health care, and reducing inequality.

    Social impact...

  2. (pp. 4-6)

    A number of factors are motivating social impact investors to increasingly invest in developing markets. As of 2013, 19 percent of impact investments were directed toward firms and organizations in Latin America and the Caribbean. Though Sub-Saharan Africa remains the most popular destination for impact investments, Latin American investments and regional-based funds are both quickly accelerating.⁶

    One reason for this shift is the unprecedented growth of the region’s middle class, with more than seventy million new entrants since 2000. This has opened up new market opportunities with increased demand for better services.

    While the rise of a more robust middle...

  3. (pp. 7-15)

    The diversity of Latin America’s impact investing experience—ranging from markets as big as Brazil or as small as Honduras—provides useful crossnational comparisons and gives crucial insight into how the impact investment model fares in different contexts.

    A new generation of middle class, tech savvy, and engaged citizens both drives and feeds off of the spread of social entrepreneurship and impact investing. But the next phase of impact investing requires taking stock of where we are today and charting a course forward based on what has and hasn’t worked.

    The following case studies are divided into private sector, government,...

  4. (pp. 16-17)

    The case studies demonstrate a number of commonalities for successful impact investment ventures. The “mainstreaming” or systematization of the sector is well underway, as groups such as university endowments and pension funds are beginning to diversify portfolios to include mission-driven investments.

    At the same time, the very growth of impact investing has revealed a number of persistent challenges that must be overcome if the goal is to influence social outcomes on a broader scale. These challenges include a persistent lack of applicable metrics and meaningful standards to measure success, a dearth of data to measure program effectiveness, immense difficulty finding...

  5. (pp. 18-20)

    Latin America is facing a decisive moment in impact investing. A sector still in its infancy, Latin America’s impact investment market has nonetheless begun to grow rapidly. The next few years are critical to building the foundations for both a sustainable and inclusive innovation ecosystem.

    Given the region’s history of weak entrepreneurship and underdeveloped capital markets, the practice will undoubtedly encounter significant challenges to maintaining the positive momentum that it has so far generated. Expansion of Latin America’s impact investment sector must focus on incentives that can attract a greater quantity of investors and entrepreneurs. This ecosystem must work in...