January 11, 2013

Impact Investors Report Satisfaction—and Cite Challenges

Most foundations and other institutions that make investments that seek both social and financial returns say the approach is meeting their expectations on both counts, according to a new report published by JPMorgan and the Global Impact Investing Network.

In the survey of 99 organizations that each manage at least $10-million in so-called impact investments, 84 percent said that those investments were meeting their expectations when it comes to social and environmental benefits. Fourteen percent said the investments’ social returns were outperforming their expectations, while only 2 percent said they were underperforming.

When it came to financial performance, 68 percent said their impact investments were meeting their expectations and 21 percent said they were exceeding expectations. Eleven percent said the investments failed to meet their financial expectations.

Spectrum of Investors

“Impact investing is a field that is developing a considerable head of steam,” says Luther Ragin Jr., chief executive of the Global Impact Investing Network. He says that while the term “impact investing” is relatively new, pursuing financial returns while seeking social benefits dates back at least two decades.

What’s different today is the broad spectrum of investors adopting the approach, says Mr. Ragin.

“It’s not only foundations and banks, but you're also seeing high-net-worth individuals,” he says. “You're seeing family offices, development finance institutions, pension plans, insurance companies. You're seeing a wide range of institutional investors of the type that have not traditionally been active.”

People managing the investments said they did have some concerns: In particular, they cited a lack of enough of the right kinds of investment capital and a shortage of high-quality projects in which to invest.

The organizations together had committed $8-billion to impact investments in 2012 and plan to commit an additional $9-billion in 2013.

Dig deeper: Read how foundations are increasing their impact investments in an article from our latest endowment report.

Send an e-mail to Nicole Wallace.