Impact Investing
Impact investing directs capital toward enterprises and funds that generate measurable social or environmental benefits alongside financial returns.
Impact investing is the practice of making investments that intentionally generate positive, measurable social or environmental impact alongside a financial return. Unlike pure philanthropy (which expects no financial return) or traditional investing (which focuses solely on financial return), impact investing sits at the intersection.
Why It Matters for Fundraising
Impact investing is reshaping how capital flows to social causes. While it's not direct charitable giving, it creates a broader ecosystem of support for mission-driven organizations. Some nonprofits access impact investment capital through social enterprise ventures or program-related investments from foundations. Understanding impact investing helps nonprofits engage with a growing pool of donors and investors who want their money to do double duty.
How It Connects to Nonprofits
Nonprofits engage with impact investing primarily through program-related investments (PRIs) from foundations, social impact bonds, revenue-generating social enterprises, and community development financial institutions (CDFIs). These vehicles provide capital for programs that have measurable outcomes and some ability to generate returns.