Investment: The ultimate impact – systems change

News and opinion on finance

Impact investment had its annual gathering at the Social Capital Markets conference in San Francisco in October. 

Thousands of attendees sipped kombucha, were encouraged to hug their neighbours and search their souls in the midst of serious discussions on how to direct the world’s trillions of dollars towards solving social and environmental problems. This year’s over-arching themes were gender equality, agriculture, indigenous rights and refugee finance. 

Neville Crawley,

One would be forgiven for thinking that this is how all finance is now, so integrated has the word ‘impact’ become in the financial lexicon, but it’s worth remembering it is still niche. 

The Global Impact Investment Network estimated in April that the impact investment market is just $500 billion in size. For comparison, consider that BlackRock alone manages $6.84 trillion. 

As one impact investment head at a large asset manager pointed out to me at the event: “We invest $500 million in impact. It sounds a lot – but that’s just 0.5% of our entire portfolio.” 

For as long as I’ve been covering the impact investment industry – about eight years – there have been two challenges that have still to be figured out: standardizing the definition of ‘impact’; and scaling up.

It is rare to find examples that have overcome these issues, but Kiva is such an example and it has lessons for the whole financial industry. 


Set up in 2005, Kiva launched as a crowdfunding platform directing funds to individuals and small entrepreneurs chiefly in developing countries. 

It works through partnerships with hundreds of microfinance institutions and borrowers’ stories to make crowdlending more personal by asking questions such as: do you want to contribute to a loan of $750 to help Dennis in Honduras purchase a sustainable package of solar products to help him in his business? Or to Saleh in Palestine, a refugee seeking to pay for his wife’s education?

Through loans as small as $25, Kiva has now directed $1.4 billion in capital to 3.4 million borrowers – more than 80% of whom are women.

Two years ago, Neville Crawley was brought in as chief executive to expand Kiva’s impact by both building on the strength of the crowdfunding platform and through the creation of new engines of growth. 

Kiva has shown a path from crowd finance through institutional, large-scale finance and finally to something the impact investment community has yet to fully embrace: complete systems change 

Crawley wasn’t a typical non-profit chief executive: he had previously written trading algorithms for a quant hedge fund and run a big data analytics company. 

Kiva’s expansion in a short period of time shows how impact can be scaled. In addition to the crowdfunding platform, Kiva has launched Kiva Capital to use its data on borrowers and repayment rates to create investable and institutional-sized funds for loans. 

It uses the increasingly common approach of blended finance: government development agencies have agreed to be the anchor investors in Kiva Capital’s initial fund for refugee borrowers that will launch in the first quarter of next year. 

Through Kiva Capital the firm has essentially created a new asset class – financial inclusion – and one that can be also be sliced up into sectors such as refugees, women or farmers to meet impact investors’ specific areas of focus. 

Whereas many impact projects take the approach of build a project and investors will come, Kiva has instead recognized that investable projects need to be built to meet investor needs.


The last part of Kiva’s impact expansion is by the far the most ambitious. Kiva Protocol, developed with the help of the UN and UN agencies, is a digital identity platform that allows individuals to manage their formal identity and to build a credit history and control their credit information using the blockchain. 

The ultimate goal for Protocol is to bring hundreds of millions of unbanked into the banking system.

The first roll-out was in Sierra Leone. The country’s 5.3 million adult citizens have been assigned digital wallets using fingerprints and other biometric data collected in recent years by Sierra Leone’s government. With Protocol, everyone in the country can open a bank account and everyone can have a permanent record of their credit history – enabling access to cheaper financing.

It has been described as the credit bureau of the future. In addition to bringing millions of people access to financing, it also will better support cross-border migration – which is expected to rise as climate change and conflict increase. 

Kiva is in advanced discussions with two more countries to implement Kiva Protocol, with a dozen others also in early-stage talks.

If the initial problem Kiva was looking to solve was a lack of cheap funding for millions of people in developing countries, then the answer may be in Protocol, which does so in its entirety thanks to technology and government collaboration. 

Indeed, across the spectrum of impact, Kiva has shown a path from crowd finance through institutional, large-scale finance and finally to something the impact investment community has yet to fully embrace: complete systems change.

And that is arguably the ultimate impact.