What Is Impact Investing?
Impact investing is the act of investing capital with the deliberate intention of achieving both financial value (return on capital) and social value (positive impact on social and environmental problems). Impact investing is a recently coined term, but the practice has been around for decades. Impact investments can be found at every stage and across most asset classes, and the desire to invest with impact can be implemented in both public and private market portfolios. Impact investing encompasses a broad range of activity from microfinance and community development finance, to investments in renewable energy, global health, education and international development. This values-based approach to investing is now being seen by some as a mainstream option for all investors. The World Economic Forum recently released “From the Margins to the Mainstream”, part of their ongoing work in analyzing impact investing for the institutional market. JP Morgan estimated in 2011 that in ten years the impact investing marketplace could be worth $400 billion to $1 trillion. According to the Global Impact Investing Network, over $4.4 billion was invested in 2011 alone.
The Toniic network has come together around this interest in global impact investing. Toniic members see early-stage impact investing as an important part of an overall investment strategy. Many members point out that a portfolio approach to impact investing complements seed-stage investing with investments in other classes and later-stage investments.
- For a primer on how to connect impact investments to an overall investment strategy, see Rockefeller Philanthropy Advisors’ Solutions for Impact Investors: From Strategy to Implementation.