Impact investing is the practice of investing in for-profit companies with the intention of generating both financial returns and social impact. The theory is that impact investing can increase the capital available to a company, allowing it to generate more positive social outcomes than would otherwise have occurred.

For impact investing to do good, it has to provide a company with more capital than it would have otherwise received. This is often difficult unless the investment is concessionary (sacrifices some level of financial return against the market rate), or takes place in a private market which other investors are unable or unwilling to invest in.[1]

Impact investing is one form of socially responsible investing.

Further reading

Hillebrandt, Hauke & John Halstead (2018) Impact Investing Report, Founders Pledge.

Karnofsky, Holden (2009) Acumen Fund and social enterprise investment, GiveWell, November 25.
GiveWell’s shallow investigation into impact investing.

funding high-impact for-profits | investing | markets for altruism | socially responsible investing

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    Brest, Paul & Kelly Born (2013) When can impact investing create real impact?, Stanford Social Innovation Review, vol. 11, pp. 22–31.