Impact investing into funds capitalizes on personal part investors who are looking for a positive communal impact, as well as an economic gain. Normally, these capitals invest in sectors/businesses that can develop some earnings (even if negligible) while supplying health or social gain.
The investors supplying the capital might be “high share worth individuals”, corporations or institutional investors (foundations, funds). Because there is no direct source of earnings from immunization (except with a user-pays system), in this case the return of captial would have to arrive from government capital. This could be founded on a simple debt-financing model (i.e. the government borrows from the impact investment finance and repays a fixed rate of return). Alternatively, financing can be obtained via the social impact bond form; this is when a government buys a return founded on results, and the risk to the fund are partially underwritten by a philanthropic donor. In either case, the form would supply capital upfront for vaccine purchase and roll-out.
This approach only boasts an advantage to the government if the cost of paying little earnings to the finance investors is less than the developed by immunization (compared to existing treatment and prevention allowances, and to the costs of delayed immunization due to budgetary constraints).
Pros of impact investment
1. Potentially large revenue base (impact investing currently has momentum)
One of the advantages of impact investments is the large revenue one is likely to earn from it. This is because it follows the market and as such will have momentum. This makes it a good choice of an investment option for people looking for a profitable investment.
2. New funding (previously untapped source)
It is a relatively new concept, and as such, many people have yet to exploit it. This makes it a good source of funding for other investments. When investing, finding untapped sources of finances is one of the greatest things that can happen to a person. This is because the new sources assist in achieving investment goals without much strain.
3. One of the few mechanisms to use private sector capital
For people willing to venture into the private sector impact investment will help in accumulating profits. This is because it is geared towards supporting private sector.
4. Can be implemented at a national level
The fact that one can implement it at a national level makes it even better than most investment options. This is because if one invests at a national level, chances of making losses are very minimal as compared with other local investment options.
Cons of impact investment
1. Difficulty in convincing OECD private investors (early reports of GHIF supporting this)
2. The investor base for impact investment is fragmented, and only a few investment funds or vehicles have been able to achieve large scale results. Result-based payment models may require more accurate disease surveillance data than currently exists.
3. Monetary incentives could risk distorting health priorities, programs or evaluations
Overall, impact investment is a good choice of investment for any risk taker. This is because it has more advantages than the disadvantages.