Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
Appendix II: Glossary and acronyms
• Angel investor: An affluent individual who provides capital for a start-up
enterprise, usually in exchange for some stake in ownership equity.
• BoP: The “Base of the pyramid” describes groups of people in emerging markets
who earn less than $3,000 a year (2002 PPP) (World Resource institute.).
• BoP+: Population with incomes exceeding BoP definition, but who can still
benefit from impact investments that expand their access to services and
opportunities.
• BoP Penalty: The BoP often pay higher prices for basic goods and services than
do wealthier consumers, either in financial or transaction cost, and often receive
lower quality (World Resource Institute.).
• Development finance institution (“DFI”): DFIs are government-controlled
institutions that invest in private sector projects with a double bottom line
objective of spurring development in emerging countries while remaining
financially viable institutions.
• Community development finance institution (“CDFI”): CDFIs are financial
institutions created to reduce poverty in economically depressed areas, typically
through providing credit, financial and other services to underserved markets or
populations, mainly in the U.S. and U.K.
• Double (or triple) bottom line: The simultaneous pursuit of a social enterprise
or business to achieve financial, social and/or environmental returns on
investment.
• Invested capital: For non financial companies the sum of total shareholders
equity and net debt. For microfinance total assets minus total deposits.
• Mission-related investment (“MRI”): An investment capitalized with assets
from the endowment of a foundation that seeks to create social impact as well as
typically market-rate, risk-adjusted financial returns.
• Plus Population: The population of people that are included in the BoP+
classification but not in the BoP.
• Program-related investment (“PRI”): An investment made by a US-based
foundation that qualifies as a charitable expense under the tax code, allowing the
foundation to include the investment as part of the 5% of assets it must distribute
philanthropically each year.
• Small and Medium Enterprises (“SME”): Many institutions and countries
define SME differently, but often the size of an enterprise is determined by the
number of employees or the annual sales generated by the business. The World
Bank defines enterprises meeting two out of the following three criteria -:
minimum 50 employees, under $3m in each assets and sales – as SMEs.
• Social Entrepreneur/Enterprise: An entrepreneur or organization that pursues a
double or triple bottom line business model, either alone (as a social sector
business) or as part of a mixed revenue stream that includes charitable
contributions and public sector subsidies.
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