Why Impact Investing is an Emerging Paradigm Shift in Philanthropy

Impact investing is a frequently featured topic of conversation at forums or conferences on philanthropy today.  Its popularity is linked to the potential for impact investing to cause a paradigm shift in the way philanthropy is approached—targeting investment capital as a complementary resource for achieving the social and environmental changes typically pursued by philanthropic organizations. The central theme underpinning the potential of impact investing is the creation of economic value and social value being, not necessarily, mutually exclusive.

Market-based approaches to critical social and environmental challenges do exist or can be developed, and those interventions can attract private sector capital. This provides a significantly larger, complementary source of capital alongside of philanthropic budgets and increasingly limited public sector resources. All in all, financeable interventions can satisfy a range of objectives—from mitigating climate change to creating jobs in agricultural communities to providing health care for underserved people—attracting a broad population of investors interested in creating change.

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