Investors of all types are aligning values for social outcomes with needs for financial returns and recycling of capital. The result is driving a transformational shift in how we invest and address social challenges in our communities.

By investing new forms of capital into innovative initiatives that seek to leverage business practices to achieve a social purpose, impact investing attempts to achieve a more sustainable and scalable solution to environmental and social challenges. This blending of proven commercial practices with social aspirations is attracting greater amounts of capital from a growing number of investor types, such as large national foundations, institutional investors, endowments, municipalities, venture funds and angel networks. At the same time, philanthropists of all kinds are utilizing both their base of invested assets and grant capital to drive impact through impact investing. The combined effect is producing a new age of innovation among entrepreneurs, business models and capital structures that seek a dual purpose (a “double bottom line”).


According to the Global Impact Investing Network impact investments are defined as investments made with the intention of generating measurable social and environmental impact alongside financial return. Such investments can provide capital to a range of businesses and funds that generate sustainable and scalable solutions to problems that cannot be realized by negative screen investments or philanthropy alone.

Started in 2015 by the G8, the Global Social Impact Investment Steering Group (GSG) was established to catalyze the global social impact investment market. Below is their introductory video on impact investing.

The Case Foundation, created by digital pioneers Jean and Steve Case, “create programs and invest in people and organizations that harness the best impulses of entrepreneurship, innovation, technology and collaboration to drive exponential impact.”  Their efforts to drive social change are focused on three key pillars: revolutionizing philanthropy, unleashing entrepreneurs and igniting civic engagement. To learn more about their current work, click here.

There is a range of investor mindsets. The mindset of the impact investor is focused on intentionally setting out to deliver positive social or environmental impact and financial return. However, many social impact investors are likely to start out with either a traditional financial capital or philanthropic mindset.

Traditional investments are usually made without consideration of social or environmental impact, and philanthropic contributions are generally made without regard to financial returns. Impact investing incorporates “both/and” thinking.

Impact investing lives on a continuum of investing opportunities. Understanding the primary driver and the underlying business model will help you better gauge your place on the continuum. It is not uncommon for investors to fluctuate across the spectrum based on specific or unique opportunities to achieve revenue and social impact goals.


Social impact investing aspires to generate a meaningful social or environmental impact alongside a financial return

Though “Impact investing” has existed in various forms for many years, the concept has gained substantial momentum in the past decade. Investors of all types – private and public sector, philanthropic and for-profit – are seeking solutions that achieve both a social impact and a positive return by investing in initiatives that are more sustainable and efficient. Many of these solutions are leveraging proven business practices, such as growing an earned revenue stream, in order to enhance sustainability and scale in new ways.

Environmental, Social and Governance (ESG)/Socially Responsible Investing (SRI)

The term “impact investing” is broad and encompasses a wide range of investor types and asset classes. Among many endowments, institutional investors and investment funds, the concept of impact investing generally refers to “Socially Responsible Investing” (SRI), or the aligning of investment dollars with a given organization’s ideals around Environmental, Social and Governance (ESG) practices. SRI typically places the importance of financial returns above or equal to the desire for social or environmental impacts, which often are achieved by various forms of either selective investment strategies (i.e., a fund focused on energy efficiency) or negative screening (i.e., omitting investments in tobacco, firearms and mountaintop mining). SRI practices are also increasingly stretching across asset classes, to include private equity, venture capital and alternatives in addition to traditional equities and fixed-income investments.

Place-based, or Community-based, Impact Investing

In contrast to SRI and ESG, place-based impact investing prioritizes generating a measurable social impact over obtaining a market-rate financial return. Many private angel and venture investors, community foundations, private and family foundations and public sector officials are approaching local social challenges through investing debt or equity capital, along with traditional forms such as grants. Many of these investments are subsidized, or below-market, and also range across all asset classes. The result is influencing a transformational shift in how local social challenges are addressed at the community level.

Investors are actively investing in a range of business models that represent a continuum of strategies for achieving impact. The various models employed offer investors solutions to social issues that fit various levels of risk tolerance and return expectation.


Environmental, Social and Governance (ESG) and Socially Responsible Investing (SRI) are tools to influence private companies by shareholders. ESG and SRI investors use several tools – such as negative screening to avoid industries harmful to society (e.g., non-renewables) and positive screening to seek industries net beneficial to society (e.g., renewables) – to influence their investment portfolio. ESG and SRI are not place-based impact investment tools, but they have deeply influenced the philosophy behind impact investing. According to a recent Vanguard report, global ESG and SRI assets under management total $22.9 trillion and are growing.