An international survey of the impact financing market conducted by AlphaMundi and commissioned by the European Impact Financing Luxembourg initiative has just been published. Around 60 promoters and investors, including the Rockefeller Foundation, Blue Orchard and SEAF participated in the survey, whose aim was to shed light on the challenges facing impact financing, and how the financial world, and specifically the Luxembourg financial centre, could respond to these challenges.

Challenges of a fast expanding market

The development of the sector is currently hampered by factors such as market infrastructure and a lack of understanding by many investors about the concept of impact financing. The survey, conducted between March and June 2010, also specifically brought to light the following points:

• Impact Finance is a segment of specialists; most product promoters are exclusively dedicated to this industry segment.
• Investment screening and monitoring is the costliest component of impact investing.
• Investment opportunities are mostly identified through strategic partners and field visits.
• Slightly less than half of the respondents measure their investment impact systematically.
• One of the major challenges for the growth of the industry is access to seed capital.

Potential for the Luxembourg financial centre

The findings of the survey were used by the European Impact Financing Luxembourg to make a series of proposals to the Luxembourg government to promote the role of financial centre in the development of this market. The main recommendations concern:

• Research and training
• Harmonisation of the regulatory framework
• Setting up new structures designed to promote impact financing