Can investors do more good than donors?

When I was in my 20s, I taught street children in a town in Kenya who couldn’t afford a normal school. My roommate was a British researcher on tropical diseases. We were idealists, trying to make the world better. I think we did. But I stayed in that little town long enough to notice an institution that was probably helping more poor people than we were: a Coca-Cola bottling plant, where unskilled women made $3 a day washing bottles. They had no job security or possibly of advancement. But the money was enough to send their children to school and buy malaria medicine. The jobs gave them dignity and kept the need for charity at bay.

So it is exciting, all these years later, to watch the growth of a trend called “impact investing.” People have started to notice that private enterprise can help the poor as much as charities can. Sometimes even more. Wealthy do-gooders who want a “social return” on their investments, not just a financial one, support companies that hire the poor.

Pioneered by nonprofits like Cambridge-based Root Capital, the idea has gone mainstream. Citibank and JPMorgan Chase are getting in on it. Some researchers suggest that “impact investing” could attract $500 billion in assets over the next ten years.

But before you stop writing those checks to your favorite nonprofit, consider this: Most impact investors still expect a financial return. And a majority are unwilling to bet on the riskiest places where people need help the most.

Consider the case of World Hope International, a nonprofit relief and development organization founded in 1996 by Jo Anne Lyon, a minister with the Wesleyan Church. It started off as a traditional Christian relief agency, sending supplies to Haiti and rescuing Cambodian children who had been trafficked. But in 2008, it ventured into “impact investing” in Sierra Leone, where it already had a successful microfinance project. It enlisted Jo Anne’s son, John Lyon, then a lawyer at WilmerHale, to set up a commercial subsidiary to stimulate private investment.

WilmerHale sent a pro bono team of lawyers — including partner Richard Johnston — to Freetown to hammer out a deal with the government for a “special economic zone” that gives tax breaks, arbitration rights, and other legal protections to small- and medium-sized manufacturers that move there.

But the zone was not enough. It was still difficult to attract companies to Sierra Leone. World Hope International had to work harder. Finally, it found Africa Felix Juice, a British juice manufacturer that agreed to build a factory that could process 3 tons of raw fruit an hour. The charity organized 160 villages to provide mangoes to Felix Juice, creating 2,500 jobs for small farmers.

It seemed a perfect solution.

“A lot of what we were dealing with was poverty,” recalled John Lyon, 38, who has since become CEO of World Hope International.

But the story of a church that gave birth to a charity that gave birth to a company isn’t a simple one.

The project faces all the same obstacles in Sierra Leone that keep other businesses away. The first year, it faced a logistical nightmare to collect mangoes from all the remote villages before they rotted. The second year, they worked out the kinks. Then a part of the factory broke down. Felix Juice has yet to make a profit.

Keep in mind, mango season is only a few months long. So for much of the year, the factory sits idle. So they got busy on another solution: Pineapples, which grow all year round.

But planting pineapples is expensive. What farmer would make that investment, without cold storage and an export market? And what company would build cold storage and an export infrastructure without a ready supply of pineapples?

“It’s a real chicken and egg problem,” John Lyon said.

So he plans to lend baby pineapple plants to farmers, on the condition that they will eventually give some baby plants back once their farms are thriving. That way, the group can scale up, helping other farmers.

It’s a gamble, and one that few private companies would make without the prospect of huge returns at the end. If it succeeds, World Hope International won’t stick around to reap the profits.

“We don’t want to do this forever,” John Lyon says. If the pineapple business starts booming in Sierra Leone, they’ll invest somewhere else.