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The interplay between impact investing and philanthropy


Impact investment is a key complementary funding source in emerging markets like Nigeria, concludes a report by the Centre for Strategic Philanthropy at Cambridge Judge Business School, in collaboration with SME.NG and the Impact Investors Foundation. 

Simple graphic of three wavy lines on a teal background.
Elena Christodoulou.
Elena Christodoulou
Shonali Banerjee.
Dr Shonali Banerjee

Impact investing can serve as in important complementary funding source to traditional grants or finance models, finds a comprehensive study of impact investing in Nigeria by the Centre for Strategic Philanthropy at Cambridge Judge Business School, which worked with Nigerian impact investment platform SME.NG and the Impact Investors Foundation. 

The report is based on findings from more than 750 Nigerian entrepreneurs with an emphasis on more than 50 social entrepreneurs with experience in impact investing, which is investment made to achieve positive social and environmental effect alongside financial returns. The report finds that there is “considerable space for impact investing to grow in the local Nigerian ecosystem”. 

When Two Rivers Cross: implications far beyond Nigeria 

Entitled When Two Rivers Cross: Impact Investing and Philanthropy in Nigeria, the 34-page report contains lessons for emerging markets far beyond Nigeria. The report is co-authored by Elena Christodoulou, a Visiting Associate at Cambridge Judge Business School, and Dr Shonali Banerjee, Senior Research Associate at the Centre for Strategic Philanthropy at Cambridge Judge.

“This report serves as a foundational tool for investors, social entrepreneurs, philanthropy and international development practitioners, and economic policymakers in emerging markets to learn from the experiences of investees and develop tailored, effective best practice for the future of both impact investing and philanthropy,” the report says. 

The report, based on a digital survey combined with interviews and focus group discussions, underlines the promise of impact investing in Nigeria while also showcasing challenges that social entrepreneurs continue to face despite diversifying from traditional philanthropic models.  

Five recommendations on best practice in impact investing and philanthropy 

The report also provides recommendations in 5 key categories on how to advance best practice in impact investing and philanthropy: 

  • Impact investing must fill, not exacerbate, gaps left by other financing models.
  • Non-financial support from investors is often just as valuable as financing. 
  • Impact investors and sectoral stakeholders must increase the visibility of impact investments and ensure alignment of expectations. 
  • Impact investing should deliver true partnership and increased experimentation. 
  • There remains a persistent need for inter-sectoral collaboration, hybrid models, and more inclusive research on emerging markets. 

The report recommends further investigation to assess structural questions such as: what constitutes “social” entrepreneurship in an emerging market context, how inequity in the distribution of impact investments can be sustainably addressed, and to what extent the role of impact investing can promote the achievement of global benchmarks like the UN’s Sustainable Development Goals. 

Looking forward: collaboration, scaling up and equality 

In a final chapter entitled “Concluding by Looking Forward”, the report asks important questions that policymakers and researchers should explore regarding Nigeria and other emerging markets. 

These include:

  • How philanthropists and those in the impact investing space can collaborate more closely to support local entrepreneurs
  • The prospect of scaling innovative hybrid financing like the debt-grant model
  • Mechanisms to address equity issues arising in impact investing, including gender equality and geographic distribution.

“The Centre for Strategic Philanthropy looks forward to playing a role in future research on and within this space, and once again expresses its deepest thanks to the research partners and hundreds of participants whose insights and lived experiences have been shared in this report,” the document concludes.

The report

The report – entitled When Two Rivers Cross: Impact Investing and Philanthropy in Nigeria – is co-authored by Elena Christodoulou and Shonali Banerjee of Cambridge Judge Business School, University of Cambridge.