Impact Investing is an increasingly important financial tool that seeks to leverage private capital to address the world’s critical development challenges. The movement is gaining more recognition as a promising, sustainable means of achieving both financial and social impact goals. OPIC has long been a leader in the impact investing sector, and uses its core development finance tools of project financing, political risk insurance, and capitalization of private equity funds to support impact investments.
OPIC today is the largest impact investor in the U.S. government, and most of the projects that OPIC supports are in high-impact sectors such as agriculture, education, access to finance, housing for the poor, small and medium enterprise finance, healthcare, renewable energy, water and sanitation.
In recent years, OPIC has strengthened its support for impact investing by developing financing tools and tailored processes designed to meet the dynamic needs of impact investors. This suite of OPIC tools bridges gaps in available financing to support the full range of impact projects of different sizes, growth stages and business approaches, from small development-minded social entrepreneurs to the largest institutional investors working in U.S. capital markets.
Some of these OPIC innovations include:
- Aligned Capital. A pilot program designed to connect projects that apply for OPIC financing with other U.S. investors and grant providers who are looking to deploy capital in high impact sectors and developing regions. Learn more.
- Portfolio for Impact (PI), a pilot program to provide financing to impact investing projects that offer significant potential for positive social impact but may face challenges obtaining financing because they are small or early stage. Learn more.
- The Africa Clean Energy Finance (ACEF) initiative, a program in which OPIC, together with the U.S. Trade and Development Agency and the U.S. Department of State, provides small amounts of early-stage funding for technical support to help promising projects get off the ground. Learn more
- Working Capital Finance - OPIC's traditional project finance approach may not cover all expenses of businesses providing consumer products for low-income customers, like LED lights, single-family solar systems, or cook stoves. Such businesses require working capital to build inventory and grow. To meet these needs, OPIC offers working capital finance - either a loan or a revolving line of credit meant to support expansion working capital or validated, temporary working capital shortfalls.
- The Innovative Financial Intermediaries Program (IFIP), a program for investment vehicles and project sponsors that are smaller than those typically supported by OPIC, and which may apply innovative approaches to address specific development challenges. The program considers different structures and emerging fund managers with impactful business ideas. IFIP will respond more effectively, while leveraging expertise and best practices within OPIC’s finance and investment funds departments. Learn more
- Political Risk Insurance for Social Impact Bonds and Social Development Bonds, which allow investors to support private and public sector projects whose repayment is performance based. OPIC insurance to the bonds in emerging market gives investors the confidence to tackle complex social problems in international development. OPIC coverage can also enhance the credit of the paying party and strengthen the appeal and financial viability of these mechanisms, opening the door for greater impact.
- Green Guaranties, U.S. government-guaranteed certificates of participation that adhere to the Green Bond principles of 2014, recognizing several broad categories of potential eligible projects including renewable energy, energy efficiency, sustainable waste management and clean water. OPIC introduced these guaranties in 2014 to give mainstream investors and institutional financial portfolios an opportunity to invest in these sectors.