Philanthropy can be an essential catalyst for inclusive business and impact investing, opening doors for current and future players by providing needed support in a burgeoning market to allowing the progress that others can then replicate.
This report was published by the Monitor Group (now Monitor Deloitte) in partnership with Acumen in April 2012 under the research and authorship of Harvey Koh, Ashish Karamchandani, and Robert Katz. It is licensed under the Creative Commons Attribution-ShareAlike 3.0 Unported License.
- Despite the tremendous excitement around impact investing to support inclusive models, few impact investors are willing to invest in the early stages of businesses targeting the poor. This has created the problem of the “pioneer gap” in funding and support for firms pioneering new models of inclusive business.
- Philanthropic support can play a catalytic role in helping these innovative models successfully cross the pioneer gap through the practice of enterprise philanthropy.
- Enterprise philanthropy helps pioneers firms to develop, validate, and establish new business models, and even build new markets to serve the poor.
It can take a broad view of impact beyond the individual firm to encompass whole markets, and provide funding to build the right demand- and supply-side conditions in these markets so that pioneer firms—and those that follow them—can truly scale their activities and impact.