A Development Mechanism where Traditional Aid Fails

• Traditional development aid and philanthropy often falls short of its goals due to the “Samaritan’s Dilemma” – receipts stating to rely on charity as a means of survival
• Development projects often fail after the sponsor withdraws, as there is no economic incentive or skilled management to sustain operations
• Aid has an irreplaceable role in extreme situations such as famine or disaster relief, but is not enough to foster long-term economic and social development in frontier markets

The benefits of investment over traditional aid:

• Impact investment solves the problem of sustainability by focusing on creating self-sustaining enterprises that deliver a positive economic, social, and environmental impact.
• Impact businesses are profit-generating and do not require continuous capital inflow after initial investments
• Targeting market-rate or above market-rate returns, impact investment incentivizes capital allocation. Investors can utilize recuperated principal and returns from one investment to fund new impact projects.