Research history

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**Impact investing** puts capital into companies, funds or projects with the aim of doing good as well as earning a return. The Global Impact Investing Network (GIIN) defines impact investments as those made to generate positive, measurable social or environmental impact alongside a financial return. It names four core characteristics: an intention to contribute to measurable benefits, the use of evidence and impact data in designing investments, managing toward the impact intended, and sharing lessons so the field can grow.

## Origins and size

The term was coined at a Rockefeller Foundation gathering at its Bellagio Center in Italy, which Wharton Magazine dates to 2007. The convening led to the Global Impact Investing Network, whose formation the foundation announced in 2009. In its 2024 market sizing, the GIIN estimated that more than 3,900 organizations managed about $1.57 trillion in impact investments worldwide.

## Returns

The GIIN says impact investments can target anything from below-market to above-market financial returns. Some investors accept less money back in exchange for more good. Most of the investors the GIIN has surveyed target risk-adjusted, market-rate returns.

Foundations have a tool of their own. A **program-related investment**, in IRS terms, is one made primarily for charitable purposes, where income is not a significant purpose. The IRS’s examples include low-interest loans to needy students and high-risk investments in nonprofit low-income housing.

## The counterfactual question

The hardest question in impact investing is the one at the heart of [counterfactual impact](/record/encyclopedia/counterfactual-impact/): would the good have happened anyway? If an investment earns full market returns, an ordinary investor might have made it too, and the impact investor’s money changed little. If it accepts lower returns, or takes risks others won’t, it is more likely to have made a difference. Measured outcomes matter too: an investment that reports outputs, such as loans made, has not yet shown [outcomes](/record/encyclopedia/outputs-and-outcomes/), such as incomes raised.

## In the charity system

Impact investing sits beside the charity system rather than inside it, but it competes for the same intentions. A foundation choosing between a grant and an investment, or a donor between a gift and an impact fund, is making a depth and counterfactual decision. Charitology describes both kinds of capital with the same questions from the [Giver’s Checklist](/method/#checklist).

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    "body": "\n**Impact investing** puts capital into companies, funds or projects with the aim of doing good as well as earning a return. The Global Impact Investing Network (GIIN) defines impact investments as those made to generate positive, measurable social or environmental impact alongside a financial return. It names four core characteristics: an intention to contribute to measurable benefits, the use of evidence and impact data in designing investments, managing toward the impact intended, and sharing lessons so the field can grow.\n\n## Origins and size\n\nThe term was coined at a Rockefeller Foundation gathering at its Bellagio Center in Italy, which Wharton Magazine dates to 2007. The convening led to the Global Impact Investing Network, whose formation the foundation announced in 2009. In its 2024 market sizing, the GIIN estimated that more than 3,900 organizations managed about $1.57 trillion in impact investments worldwide.\n\n## Returns\n\nThe GIIN says impact investments can target anything from below-market to above-market financial returns. Some investors accept less money back in exchange for more good. Most of the investors the GIIN has surveyed target risk-adjusted, market-rate returns.\n\nFoundations have a tool of their own. A **program-related investment**, in IRS terms, is one made primarily for charitable purposes, where income is not a significant purpose. The IRS’s examples include low-interest loans to needy students and high-risk investments in nonprofit low-income housing.\n\n## The counterfactual question\n\nThe hardest question in impact investing is the one at the heart of [counterfactual impact](/record/encyclopedia/counterfactual-impact/): would the good have happened anyway? If an investment earns full market returns, an ordinary investor might have made it too, and the impact investor’s money changed little. If it accepts lower returns, or takes risks others won’t, it is more likely to have made a difference. Measured outcomes matter too: an investment that reports outputs, such as loans made, has not yet shown [outcomes](/record/encyclopedia/outputs-and-outcomes/), such as incomes raised.\n\n## In the charity system\n\nImpact investing sits beside the charity system rather than inside it, but it competes for the same intentions. A foundation choosing between a grant and an investment, or a donor between a gift and an impact fund, is making a depth and counterfactual decision. Charitology describes both kinds of capital with the same questions from the [Giver’s Checklist](/method/#checklist).\n",
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          "note": null,
          "publisher": "Global Impact Investing Network (GIIN)",
          "title": "What you need to know about impact investing",
          "url": "https://thegiin.org/publication/post/about-impact-investing/",
          "year": null
        },
        {
          "note": null,
          "publisher": "Dean Hand, Maddie Ulanow, Hongyu Pan and Kelly Xiao, Global Impact Investing Network",
          "title": "Sizing the Impact Investing Market 2024",
          "url": "https://thegiin.org/publication/research/sizing-the-impact-investing-market-2024/",
          "year": 2024
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          "publisher": "Jem Hudson, Wharton Magazine",
          "title": "The State of Impact Investing",
          "url": "https://magazine.wharton.upenn.edu/digital/the-state-of-impact-investing/",
          "year": 2014
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        {
          "note": null,
          "publisher": "The Rockefeller Foundation",
          "title": "Many Paths to One Mountaintop – Antony Bugg-Levine on Building Movements That Shift Systems",
          "url": "https://www.rockefellerfoundation.org/bellagio-breakthroughs/many-paths-to-one-mountaintop-antony-bugg-levine-on-building-movements-that-shift-systems/",
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          "publisher": "Internal Revenue Service",
          "title": "Program-related investments",
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      "summary": "Investing with the intention of producing measurable social or environmental good alongside a financial return. It brings investment capital, not only gifts, to bear on social problems, and it raises a sharp counterfactual question.",
      "title": "Impact investing"
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