Impact Investing: A Primer and Review of the Literature

Abstract

Once viewed at opposite ends of a spectrum, financial investment and philanthropy are becoming partners in social enterprise development. Impact investing (II) is one of the most innovative ways to bring the resources of the world’s financial markets to the world’s seemingly intractable problems. Since its emergence from the socially responsible investment field, interest in II has grown substantially among a wide variety of practitioners and service providers throughout the world, although scholarly work in the field is scarce. To stimulate interest in this topic, this paper provides a primer and review of the current knowledge base in II. Our wide search of resources on the topic revealed potential contributions from the legal, financial, social entrepreneurship, and project management literature. We found several themes in our synthesis of the reports, articles and surveys included in our study, and several areas where gaps were evident. In general, practitioners focused on the opportunities of II and its potential, while few studies addressed the challenges associated with its implementation. Because II is not a panacea and is inappropriate for many social enterprises, opportunities exist for studies that rigorously examine the applicability and efficacy of II initiatives. This review of the literature provides scholars with an overview of II and a large number of potential resources to aid in their efforts to advance the knowledge base in the field.

The Evolution of Crowdfunding Towards an Impact Investing Logic: The Case of Paulownia Social Project

“…Impact investing is a rather new phenomenon whose definition is strongly related to the capability to create a social impact as well as a financial return on investment (Clarkin & Cangioni, 2016) by matching philanthropic aims, government action, and profit-seeking investment (Freireich & Fulton, 2009). There is a trait d'union between social impact and impact investing, because the second aims to reach goals in both economical and social fields, using financial models of investment with a social responsible peculiarity and focusing on creating positive social or environmental impact.…”

“…The current literature (Freireich & Fulton, 2009;Nicholls, 2010;Harji & Jackson, 2012;Louche et al, 2012;Martin, 2013;Clarkin & Cangioni, 2016;Höchstädter & Scheck, 2015) is positioning under the definition of impact investing different manifestations known as social finance, social impact investing, or blended value investing, and all the financing instruments created to gain both social and financial returns (Bagwell, 2012). Short, Moss, and Lumpkin (2009) identified the opportunities reserved by impact investing in the research to expand the role of financing and in the research to find a new way to finance social ventures.…”

“…Short, Moss, and Lumpkin (2009) identified the opportunities reserved by impact investing in the research to expand the role of financing and in the research to find a new way to finance social ventures. In fact, following the evolution from social responsibility to social innovation, the growth of social entrepreneurship, in the meaning of an organized effort to address solution to social issues, is going through a maturation phase that opens new frontiers for the financing community (Clarkin & Cangioni, 2016). This is strongly linked to "the change in capitalism", described by Porter and Kramer (2011) in their "creating sharing value" study, which shows a new way to approach a profit-oriented firm that should be socially and environmentally driven.…”

“…Thus, this new emerging industry has started to create network and metrics to measure its value through the measurement of the social impact, which is usually seen as a qualitative variable (Jackson, 2013;Clarkin & Cangioni, 2016). The need for a measure of impact investing through the social impact measurement has been shortly satisfied by the Impact Reporting and Investment Standards (IRIS), which offers a common set of definitions, and the Global Impact Investing Rating System (GIIRS), an analogue of the Standard and Poor's or Morningstar rating systems, uses a common set of indicators to measure the social performance (Jackson, 2013).…”

Financiación al Desarrollo Sostenible a través de Inversiones de Impacto (II): Hacia la Construcción de un Framework Teórico

“…Finalmente, se deduce que un reto transversal de las II es lograr frente a todos los actores involucrados, la legitimidad adecuada del mismo campo de estudio en particular (Clarkin & Cangioni, 2016) y del concepto del emprendimiento social en general (Nicholls, 2010). El momento de promover su estudio y su aplicación desde todos los puntos de vista, es ahora y representa una oportunidad de oro que no se puede desperdiciar, en favor de apuntarle a un futuro genuinamente sostenible ( Jackson & Harji, 2014).…”