SBA Administrator Maria Contreras-Sweet today announced a new initiative with Global Impact Investing Rating System (GIIRS), an innovative rating system that evaluates the operational and business model impact of private funds and companies. Under the terms of the understanding, OII will use GIIRS ratings as one factor to rate and authenticate the influx of Impact Small Business Investment Companies it will review and license in fiscal year 2017. Additionally, GIIRS will begin to offer geographic mapping for further evaluation of impact in low-to-moderate income (LMI) investment, which is a critical metric to ensure that the regions and cities of America who need investment the most are being served.
In making the announcement, SBA Administrator and a member of President Obama’s cabinet, Maria Contreras-Sweet said: “SBICs are among SBA’s most important programs to increase investments in the most promising and socially impactful small businesses. I am pleased that GIIRS is following SBA’s lead in including LMI communities when evaluating impact investments. Tracking how these investment dollars are distributed in LMI areas will bring important attention to those American cities, towns and rural areas suffering the most economically. This new initiative with GIIRs will deepen our coordination and provide a valuable new tool for private investors to evaluate and validate where their investment dollars are directed."
Andrew Kassoy, Co-Founder of B Lab, the non-profit developer of GIIRS, added: “The SBA’s Office of Investment and Innovation is one of the most important players in the impact investing arena. This partnership and their utilization of GIIRS to measure and understand the impact across the SBIC program supports the growth of the impact investing sector in many ways.”
GIIRS will be customized for all SBIC funds to make it efficient to produce SBA-required data. Under the agreement, GIIRS will offer geographic mapping to SBICs of low-to-moderate income (LMI) investment, as well as a profile of the companies where SBIC has made an investment. LMI is an accepted government and social impact yardstick to measure the focus of invested funds on areas in American cities and regions that have citizen-income levels below average. This mapping will add another level of analysis and assessment of the SBIC’s impact and social value.
SBA’s Small Business Investment Companies (SBIC) program licenses professionally managed private equity, venture capital and business development funds to receive debt-leverage to invest in American small businesses. The SBIC program has 315 active licensees. With partner funds, SBA oversees a “fund of funds” with almost $24 billion in assets under management. Several of these licensees include investment strategies aimed at sustainability, low and moderate income community investing, and demographic diversity investing, among others.
GIIRS verifies and validates the positive impact funds have through their investments, helps external investors understand and trust that impact, and engages portfolio companies in improving their ability to create high quality jobs and improve communities. Nearly half of the SBIC Impact funds have used GIIRS to meet their impact reporting requirements. More than 90 funds have been rated since GIIRS launched in 2011.
To initiate the relationship, OII, in collaboration with B Lab’s GIIRS team, will offer webinars and other instructional sessions for all of its SBIC licenses about how fund managers can effectively measure and manage the social and environmental impact of their portfolios, the GIIRS ratings, and other elements of the program. It will include educational material on its website, and coordinate outreach with GIIRS personnel for new SBIC license applications. B Lab will provide information on the GIIRS website about SBIC financial leverage to all funds using the ratings. Each partner participates in a non-exclusive way, and future enhanced relationships may be announced shortly.
Global Impact Investing Rating System (GIIRS)
GIIRS Ratings are the gold standard for funds that manage their portfolio’s impact with the same rigor as their financial performance. GIIRS provides a comprehensive, credible, and verified evaluation of a fund’s impact performance. Since GIIRS was launched in 2011, 90 funds covering 1000 companies in 50 countries and across 100 industries have received a GIIRS rating. GIIRS Ratings are a product of B Lab, a nonprofit organization that serves a global movement of people using business as a force for good. B lab’s vision is that one day all companies compete not only to be the best in the world, but the best for the world and society will enjoy prosperity for all for the long term.
About the Small Business Investment Company Program
The Small Business Investment Company (SBIC) program is a multi-billion dollar, government-sponsored investment fund created in 1958 to bridge the gap between entrepreneurs’ need for capital and traditional sources of financing. SBA invests long-term capital in privately-owned and managed investment firms licensed as Small Business Investment Companies (SBICs). Once capitalized, SBICs make debt and equity investments in some of America’s most promising small businesses, helping them grow. Since the program was created in 1958, over $80 billion has been invested, helping finance 170,000 American small businesses, including companies like COSTCO, Amgen, Apple, FedEx, Staples, Intel, and Tesla.
About the Small Business Administration (SBA)
The U.S. Small Business Administration (SBA) was created in 1953 and since January 13, 2012, has served as a Cabinet-level agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, the SBA delivers its services to people throughout the United States, Puerto Rico, the U.S. Virgin Islands and Guam. www.sba.gov.
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