What Is Impact Investing and Why Should You Care?

The Bridgespan Group asks, "Why Do We Care About Impact Investing?" In a recent discussion, Bridgespan shares The Global Impact Investing Network (GIIN)'s definition of impact investing as investment into companies, organizations, and funds with the intention of generating social or environmental impact alongside a financial return.

There are three takeaways why private capital is important for impact investing:

1. Solving our biggest social problems requires private capital
   
2. Private capital has played an important role in social impact success stories
   
3. Now is a critical moment for the impact investing field
   

The discussion also plots different investment types based on expected financial return and the approach to impact, including Expected financial return and approach to impact. This impact exists on a spectrum from passive to evidence-based: passive, intentional, evidence-based, and none.

Many different stakeholder types are involved in impact investing. These include the following: asset owners and managers, enterprises, intermediaries, and communities.

Bridgespan believes enterprises with these types of characteristics tend to be well-positioned for an impact investment: mission-driven, impact is connected to a benefit, and the proposed impact or solution must be feasible and actionable.

Bridgespan also discusses how investors measure impact and provides examples of intentional and evidence-based impact investments, such as Rise Fund investment in Dodla Dairy, Investment in D. Light, Bridges Social Impact Bond Fund investment in West London Zone, and Root Capital.

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