IIX Founder Delivers Keynote Address at India’s Stree Shakti Awards

Durreen Shahnaz, founder and chairperson of Impact Investment Exchange Asia, was the keynote speaker on December 12 at the Annual Stree Shakti Awards and book launch by Minister of Tourism Kumari Selja in New Delhi, India.

Stree Shakti-The Parallel Force, is a platform for the convergence of grassroots efforts, scientific research, creative ideas and enterprise and a collective voice of women seeking justice and equality.

The event was co-sponsored by the International Women’s Centre, whose mission is women’s empowerment through promotion of art, culture, and communication to resolve social, economic, and political issues and bring women from all over the world on a common platform for world peace.

Excerpt from Keynote Speech: Women’s Role in Social Enterprise

I am in a unique position to be standing in front of you today to discuss today’s topic. I am the youngest of four daughters of a Muslim family. After I was born, my mother had to bear the shame of giving birth to a fourth daughter. My father was encouraged to marry again. My mother eventually recovered from the depression of giving birth to me, and my father did not remarry. Instead, they put their parental energy into our education.  Although we had our social boundaries, nevertheless, we four girls became a doctor, a teacher, a development worker, and an entrepreneur.

My entrepreneurial spirit has never been based on a desire to make lots of money but on a desire to fight social injustice. Whatever the source of ones entrepreneurial spirit, it propels a person – especially a woman – to new heights of innovation and opportunity.  Thus, I hope you will all go away from the talk today and do your part – whether nurturing your own entrepreneurial spirit or encouraging another woman entrepreneur in your own way – both because they truly hold the key to the success of the next generation and to make each of our countries a better place.

I was fortunate to have a career that spanned the full spectrum of private to public sector.  I began my career as an investment banker at Morgan Stanley in New York.  I was young and excited about being at the heart of the capital markets that made the financial system of this world work. However, when I arrived what struck me was what a small role women played in influencing and defining the capital markets of the world. During those days, in the entire staff of Morgan Stanley (which was then several thousand), there were less than 30 women bankers.  And I have to say, from my Wall Street experience, I have to agree with the recent observations that some have made that the financial meltdown of the last 12 months could have been avoided if the large financial institutions were run by women.

I left Morgan Stanley to join Grameen Bank in Bangladesh. Similar to Morgan Stanley, Grameen offices in both the city and the villages were staffed largely with men.  The difference was that almost all of the clients (at that point, around 2 lakh) were women. The women were clients not because anyone was doing them a favor but because they were better clients – they had better repayment rates than their male counterparts and they shared their income with their families. During that time, I was fortunate to meet thousands of these incredible women entrepreneurs who were fueling the engine of the rural economy and at the same time building Grameen into one of the most incredible success stories of social enterprise.

I was humbled and impressed by the women entrepreneurs I met in the villages. Because the system did not work for them, they were forced to innovate to survive in the system.  More than 80% of the women I met while at Grameen were illiterate, and yet they were smart enough to figure out complicated concepts such as interest rate arbitrage (where at time some were becoming lenders themselves) and innovative management practices – like the woman who had her husband marry three more times and then hired those other wives into her growing weaving business.

These women neither saw themselves as heroines nor as hand-out cases – but simply as human beings who at last had the opportunity to stand on their own feet. And, every single woman I met, as soon as they saved some money they sent their children to school. And, every single one of these women told me that they did not want their daughters to have the same life as theirs.

Today, microfinance all over the world is one of the sexiest ‘asset classes’ and has become an essential fuel of the economy in many developing countries. I meet investment bankers who talk about the high financial returns of the MFIs and are creating sophisticated financial instruments around the MFIs. Sadly, I have not met a single banker who for a second talks about these millions of women across the globe who are fueling the MFIs and playing their role in nation building.

What are we doing for these women other than giving them small loans? Sadly, the answer is “not much.” And yet, we are creating and fueling fancy financial institutions on their back.

A recent article in the The Economist magazine said, ‘forget China, India and the Internet. Economic growth is driven by women.’ The article goes on to say that an increase in women’s employment, in both the developing and developed world, has been the biggest engine of global growth in recent decades.

And, as I have seen with my own eyes, experts are also pointing to the clear evidence that helping women to develop their skills and join the labor market boosts incomes and the well-being of society as a whole.  It is now an established fact that educating girls boosts prosperity. The multiplier effect of that is – more productivity, income generation, healthier and better educated children – thus raising the welfare of the entire family and in turn nation.

Sadly, despite all this evidence, women remain perhaps the world’s most underutilized and under-recognized resource. Equal opportunity in the economic sphere is not a reality, and its absence is a drag on growth, development and poverty alleviation.

Globally, women are most heavily represented in micro and small businesses. That is not a surprise. This is due to legal, social and cultural forces which guide and in some way constrain their business decisions.

What do the women themselves perceive as their biggest obstacle? In Bangladeshi villages when I asked this question, the answer was access to capital, education, culture and support system. When this question was asked in the US, the answers were very similar, and to the list above the American women added trade, affordable health care, taxes, government policies, and media exposure.

Interestingly, if you look at these issues, they are concerns about accessing the capital and markets needed to grow profitable and sustainable business. And, they are about securing essential social protection. These concerns are common to all entrepreneurs in many countries, whether men or women. These are small business issues, not particularly women’s issues. However, because most representation in these small and micro businesses is from women, they become women’s issue.  And women’s entrepreneurship needs special recognition because it constitutes an important untapped source of economic growth and societal wellbeing.

One group of entities which is trying to assist, among others, the disadvantaged, women and small businesses are Social Enterprises. Thousands of Social Enterprises (which can be defined as Social mission-oriented for-profit companies OR business-oriented non-profit entities) across the globe are working relentlessly to bring better livelihood, education, healthcare, sanitation and income opportunities to the poor and make this world a more equitable place. However, many of these entities struggle themselves to get sufficient capital and recognition for the work they are doing.

In response to this need, and to support these Social Enterprises and assist them in growing their impact, I founded Impact Investment Exchange, a social stock exchange for social enterprises in Asia. I was audacious enough to think that we can make investors care about more than just a financial return for their investment. And we did. I have been receiving resounding support from the financial sector and the public in creating this exchange, which will in essence assist social enterprises to increase their social impact and in effect assist millions of women and disadvantaged across the globe.

So, what is IIX? IIX will be Asia’s first social stock exchange, providing a trading platform and an efficient capital raising mechanism for Asian Social Enterprises (SEs), including both for-profit and not-for-profit entities with a social mission. IIX will connect these SEs with Impact Investors seeking to achieve both a social return and an economic return on their investment while providing capital to fund innovative social businesses.

In Asia (especially in South Asia) we face the gravest of the world’s challenges covering a whole spectrum of issues, including women’s empowerment, poverty alleviation, and environmental protection. It is SEs like Grameen Bank, BRAC, SEWA, BWDA, and Selco that are playing a leading role in confronting these challenges.

What can we do to assist them? What can we do to help them expand their impact? The answer is simple: to provide access to capital. Just as microcredit has given access to millions of individuals and given them an opportunity to create a new life, IIX will give access to capital to the SEs that assist millions. These SEs will be judged for the social and financial sustainability that they attain and they will help us broaden the definition of a ‘successful enterprise’.

We need many social enterprises, impact investment exchanges, private sector initiatives and public sector support to listen to the voices of women entrepreneurs.  Gender specific constraints to entrepreneurship require well-supported specific policy responses.

These responses need to be financial, political and most importantly practical. Women need targeted training in how to start, manage, and grow businesses. Just as they need the entities like social enterprises to give them the structure to grow and sustain their businesses. Women and these social enterprises must lend their voices to efforts to identify and address laws and policies that do not adequately address their needs.

Now why is all this relevant to you? It is because you each have an important role to play in bringing about this positive social change.

As Ghandiji said, “We must be the change we wish to see”. If we want our nations to develop, if we want our children to be educated, if we want our environment to be clean, we will need to leverage the vast capabilities of the women in our society.  Women in the audience: you have the power to change the world for the better…each in your own way — as an entrepreneur, or a social entrepreneur; as a government policy maker, or one who influences government policy; as a leader and as an example.  Everyone in the audience: we each need to support the women in our society; and, we need to support the entities that support these women…Women are the key to the future.

There is a saying that women must do twice as well as men to be thought half as good. Luckily, that is not so difficult.  Just give us the chance, and we will show you what an incredible force we are.

IIX Founder Durreen Shahnaz Selected as TED Fellow

Durreen Shahnaz, the founder and chairperson of Impact Investment Exchange Asia, was named a 2010 TED Fellow  in recognition of her work with IIX. TED is a nonprofit organization devoted to “Ideas Worth Spreading.”

Shahnaz is among the 25 global TED Fellows who will participate in TED2010, the annual conference Feb. 9-13, in Long Beach, California, which invites the world’s leading thinkers and doers to speak and then makes their talks available at

TED Fellows demonstrate remarkable achievement in their field of innovation and excel in the technology, entertainment, design, science, film, art, music, entrepreneurship and nonprofit worlds.

Impact Investment Exchange Asia (IIX) will be a stock exchange for social enterprises to raise growth capital and broaden their impact on poverty alleviation and development.

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Programme on Social Innovation and Change Presents “Measuring Social Impact” Research Project

The Programme on Social Innovation and Change (PSIC), headed by Professor Durreen Shahnaz, introduced a research project on “Measuring Social Impact” on October 7, 2009. The workshop included  the ecosystem of social investing — a group of investors, lawyers, government officials, academics, and representatives from rating agencies and social enterprises.

This is the first of several such workshops PSIC will arrange in the coming months. PSIC is part of the Centre on Asia and Globalisation at the Lee Kuan Yew School of Public Policy, National University of Singapore.

PSIC’s research aims to determine an effective social impact measurement methodology for sustainable Social Enterprises (SEs) in Asia, and to engage relevant players to embrace such a methodology to assist further growth in the field.

For more on the workshop:

A place in society

Sep 25th 2009 | NEW YORK From The Economist print edition

You might suppose that financial innovation had done enough damage. But bankers, investors and philanthropists believe it can help the world’s poor

MANY nodded when Lord Turner, the City of London’s chief regulator, said recently that the financial industry had grown “beyond its socially useful size”. The idea that devices such as collateralised debt obligations and credit-default swaps have been a blessing, not least by allowing the less well-off to buy houses, is in tatters: lots of those new homeowners have lost their houses as well as their jobs. It is remarkable, then, that the crisis should have given fresh impetus to “social finance”, a movement based on the belief that financial innovation can be used directly to help society’s neediest people.

Two events this month should give believers in social finance a lift. On September 1st nearly 900 people, from institutional investors to social entrepreneurs, gathered in San Francisco for SoCap09, a conference dedicated to building “social capital markets”. The event was abuzz with novel ideas such as a “social stock exchange” and “sustainable hedge funds”.

And on September 25th, at the meeting of the Clinton Global Initiative in New York, the Global Impact Investing Network (GIIN) was due to be launched. This is, in effect, a commitment to create a new asset class—impact investing—yielding a financial return alongside a social or environmental benefit. The network’s 20 or so members include big banks (Citigroup, Deutsche Bank, JPMorgan), philanthropic institutions (such as the Bill & Melinda Gates Foundation and the Rockefeller Foundation), the Acumen Fund, which invests charitable donations in firms supplying health care, clean water and so forth in Africa and India, and Generation Investment Management, a green-tinged fund manager co-founded by Al Gore.

GIIN and tonic
The GIIN’s goal is to share information on what works and what does not, to agree on common language and measures of performance, and to lobby for helpful laws and regulations. The creation of just such an organisation was a priority set out earlier this year in a report by the Monitor Institute, the research arm of Monitor, a firm of management consultants. If this group succeeds, the report argued, within five to ten years impact investing could grow to $500 billion, around 1% of the world’s total assets under management in 2008.

The rising interest in social finance is the product of several trends. First, the financial industry and its clients spy a way of making money and doing good at the same time. Many impact investments are in emerging economies, which are expected to grow faster than developed ones. They may be uncorrelated with other assets and thus offer diversification and reduced risk. Impact investments such as the Calvert Community Investment Note (a bond) have performed relatively well during the recent crisis, fuelling demand for them. Bankers also detect a chance to give their image a badly needed polish. Philanthropy plays a part too—especially, it seems, for super-rich investors.

Second, more people want to do well by doing good. Specialised intermediaries have sprung up, including several “social investment banks”, such as Total Impact Advisors, which is supported by Calvert Foundation, a pioneer of impact investing, and Social Finance, recently founded in Britain. Social-enterprise clubs are now among the biggest student organisations in leading business schools.

Third, there is a growing demand for private capital and skills to be tapped to supply the basics of life and to get small businesses going. Government spending and philanthropy are not enough. Fourth, governments are providing encouragement. America’s controversial Community Reinvestment Act stimulated investment in poor neighbourhoods (too much, critics say). The State Department is expected to give financial support for the GIIN’s efforts to create useful measures of social impact. The British government has given tax breaks and introduced more helpful regulations for private investment in social projects, as recommended by the Social Investment Task Force it established in 2000. In the Netherlands legislation has encouraged green investing.

Social investing is not new. People have been practising it for years. Perhaps the commonest form has been to apply an ethical screen to a portfolio, filtering out the securities of tobacco firms, arms companies, casinos, big polluters and other sinners. The merits of this are disputed; it may do more to make investors feel good than to make companies do good. But according to the Monitor Institute, almost $7 trillion of assets are screened in some way.

The other main forms of social investment have been “community development” (especially low-cost housing), microfinance (loans and other financial services for the poor) and “clean” technology. Community investment grew at an annual rate of 22% in America in 2001-07, reaching $26 billion. It has been picking up in Europe, too. Microfinance has grown even faster. The total volume of microloans went up by 44% a year in 2001-06, to $25 billion. Clean-tech investment soared by 60% in 2007 alone, to $148 billion—although it has since slipped because of the financial crisis and because cheaper oil made alternative energy less alluring.

What is new is the interest of mainstream financial institutions and investors. Microfinance has been a particular inspiration to the GIIN set, because what was once a charitable activity has become, in some instances, a highly profitable business. More and more microfinance institutions are tapping conventional capital markets through securitisation, arranged by banks such as Citigroup, and even share offerings. Compartamos Banco, a Mexican microfinance firm that became a for-profit company after starting as a charity, had a hugely successful initial public offering in 2007. Sequoia Capital, a prominent Silicon Valley venture-capital firm, is likely to profit handsomely from its investment in SKS, an Indian microfinance company that is expected to float shares soon.

A growing number of investors are trying to repeat the microfinanciers’ success, but in equity rather than loans. One example is IGNIA, an investment firm founded in 2007 by Alvaro Rodriguez Arregui, a former chairman of Accion, a non-profit network of microfinance institutions that did nicely from its stake in Compartamos Banco, and Michael Chu, formerly of Kohlberg, Kravis & Roberts, a blue-chip private-equity firm. IGNIA is raising a $75m fund, which it plans to invest in for-profit businesses in areas such as basic health care (it has already backed Primedic, a Mexican clinic chain), organic food, housing, water purification and energy. Another example is GroFin, which invests mostly in African small businesses. It was incubated by the philanthropic arm of Royal Dutch Shell, a giant oil company, but has since turned commercial. In 2008 it established its biggest fund by far, which had $170m at final closing.

Acumen Fund

Tapping social finance
A more innovative idea, perhaps, is the “social impact bond”, the brainchild of Social Finance. The idea is to attract private capital into solving a deep-rooted problem that is soaking up public money. Take, for example, reoffending by released prisoners, which costs the British government millions of pounds a year. A social-impact bond could raise money to pay for the expansion of organisations with the expertise to reduce reoffending rates. The more money the organisations save the government, the higher the return the bond would pay investors. This goes beyond a standard public-private partnership, which is expected to provide the same service as the state, but more cheaply. The social-impact bond would reward better social outcomes and not merely cut costs.

Social Finance thinks that the social-impact bond could be tried out in several public services. Besides being used to tackle reoffending, it could reduce the need for children to be put in residential care, or improve community-based health care, easing the strain on hospitals. The key is to measure performance clearly, so that contracts can be enforced. “With government budgets increasingly tight, this could be a major innovation,” says Sir Ronald Cohen, who made his money in private equity before chairing the Social Investment Task Force as well as the commission, backed by charities, that proposed the creation of Social Finance.

Similar ideas are getting attention around the world. Notably, several efforts are under way to replicate an international finance facility for immunisation known as the GAVI bond. This was created in 2006 to allow the Global Alliance for Vaccines and Immunisation, a partnership of public and private sectors, to borrow against government promises of future aid to fund vaccination programmes. So far it has raised more than $2 billion. The World Sanitation Financing Facility has been created to devise financial structures to enlist private investment in seven areas from public toilets to fertiliser production.

The financial industry may be providing the rocket science, but the backing of rich philanthropists is an essential source of fuel. The Rockefeller Foundation has been the principal force behind the creation of the GIIN. Meanwhile, the Gates Foundation, a keen supporter of the GIIN, has begun an experiment in using financial innovation to generate extra investment in its favoured causes. The foundation has created a $400m facility to see if various innovations can entice considerably larger sums (two to five times as much) from governments and private investors to help the organisations to which it gives grants. These innovations do not count as conventional gifts or as loans. They are contingent liabilities against the foundation’s balance-sheet, which in effect cost nothing except in some worst cases.

One idea is to provide a guarantee to charter schools issuing bonds, helping other investors overcome what may be excessive risk aversion. Or the foundation might provide insurance against the non-payment of aid promised by a donor, so that a government will know that, one way or another, the money will come. It is also looking for innovative ways to encourage private-equity and venture-capital investments in, say, infrastructure projects in countries where it is making grants.

The foundation hopes this will encourage other providers of capital to overcome their fears and put their money at risk. Alex Friedman, its chief financial officer, says: “We want to show the private capital markets that there is money in this, that it is a sustainable business.” The new approach will “let the foundation operate almost like a merchant bank for the poor”, a model it believes can be widely imitated.

Whether this idea and the GIIN initiative will succeed remains to be seen. Measuring social impact, for instance, is difficult but necessary. Some investors have naive expectations of the sorts of risks and financial returns of investing in, say, small and medium enterprises in developing countries, says Shari Berenbach, the chief executive of Calvert Foundation—though she sees potential in impact investing.

Sir Ronald is optimistic. “This reminds me of private equity in the early 1980s, just before it started to grow,” he says. It was only when the disparate private-equity firms got together and formed a network that things really took off, not least because they began to standardise and speak with one voice to regulators about what the industry needed to thrive. He hopes the same will now be true of impact investing. As a participant in the GIIN puts it, the real test will be “whether people put their money where their mouth is. Will you see deals done together?”

IIX Asia Presents Plans for Asian Social Stock Exchange at SoCap09

Impact Investment Exchange Asia (IIX) introduced its plans to create Asia’s first social stock exchange at SoCap09, the pioneering global conference for the social capital markets held September 1-3 in San Francisco.

More than 800 delegates representing all aspects of the emerging social capital markets attended the conference. They included social venture capitalists, foundations, investment advisors, social enterprises, community organizations and government agencies. Sonal Shah, who was appointed this year by US President Barack Obama as director of the newly created White House Office of Social Innovation, gave the keynote address.

IIX Managing Director Robert Kraybill discussed the company’s plans in a panel on social stock exchanges, which was moderated by Tamzin Ratcliffe, founder of the Global Federation of Social Investment Exchanges. The panel also included IIX’s partner Mark Campanale of the Social Stock Exchange Ltd. in London, Michael van Patten of NeXii, and Ines Tofalo of UNDP’s Special Unit for South-South Cooperation. After a great deal of interest and a lively discussion, panellists followed up with a “participant-led session” on the third day of the conference, which allowed them to explore the issues around establishing a social stock exchange in more detail.

The conference was a great opportunity to get the message out about IIX and to meet and connect with many of the important players in the social capital markets ecosystem. We came away from the 3-day event more convinced than ever about the power of impact investing and the prospects for its continued rapid growth.

You can learn more about SoCap09 at
See an interview with Antony Bugg-Levine of The Rockefeller Foundation on Impact Investing and SoCap at