Impact investing is an increasingly important financial tool that seeks to leverage private capital to address the world’s critical development challenges. OPIC has long been a leader in impact investing, and uses its core development finance tools of project financing, political risk insurance, and capitalization of private equity funds to support impact investments. In fiscal year 2017 OPIC committed $1.7 billion to 52 deals 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. These high impact sectors can generate both social and financial returns.
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.
Recent OPIC Impact Investing innovations
- Portfolio for Impact (PI), a 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
- 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.
- Innovative Financial Intermediaries Program (IFIP), a program designed to facilitate capital flows to emerging markets through financing to small debt funds, small equity funds, and unconventional deal structures that combine debt and equity. The program is 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. IFIP leverages 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 for the bonds in emerging markets 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.
Learn more about OPIC's support for Impact Investing around the world