By Simone Schenkel

President Barack Obama and Indian Prime Minister Narendra Modi greet attendees of the U.S.-India CEO Forum  in New Delhi, India. Photo Courtesy of the White House Photo via Pete Souza.

In a recent trip to India, President Obama announced the creation of the Indian Diaspora Investment Initiative, a U.S. Agency for International Development (USAID) and Calvert Foundation partnership that allows Indian-Americans to use would-be remittances to support key sectors such as financial inclusion, health, education, and agriculture.

While remittances have long been viewed as critical to supporting low-income countries, most funds are transmitted directly to households rather than to community resources. Through this public-private partnership, investors large and small will be able purchase Community Investment Notes later this year through the Calvert Foundation to fund a variety of social enterprise projects.

The Note has a 20-year track record of performance and Calvert hopes to raise up to $10 million through this vehicle. For its part, USAID will also offer Development Credit Guarantees for at least $50 million to support Indian financial institutions that lend to emerging Indian-owned small and medium enterprises (SMEs).

A recent World Bank report estimates that if one person out of every ten diaspora members were to invest $1,000 in their home country, developing countries could raise $20 billion annually.

There are roughly 2.6 million Indian-Americans living in the United States, and they represent one of the highest earning diaspora groups in the country. Of the estimated $71 billion total of remittances sent to India in 2014, roughly $13 billion came from the United States.

The initiative represents growing donor efforts to find creative ways to leverage private flows, including diaspora direct investments, amid falling aid dollars. For example, in 2011 the State Department and Calvert Foundation sponsored the International diaspora Engagement Alliance, IdEA to facilitate partnership between diaspora communities and the private sector to invest in social enterprise projects. One such initiative is the African Diaspora Marketplace, which provides between $50,000 to $100,000 in grants and technical assistance for entrepreneurs in Sub-Saharan Africa engaged in renewable energy and information and communications technology (ICT).

In an increasingly globalized world, diaspora members in the United States and other wealthy nations can play an even bigger role as they mobilize resources and support innovative partnerships with impactful ventures back home.

Simone Schenkel is a researcher with the Project on Prosperity and Development.