What is motivating the interest in impact investing?

Impact investing - the practice of actively investing in organizations or companies that seek social returns along with financial ones - is growing at a tremendous pace. At the recent Council on Philanthropy Annual Meeting, the sessions devoted to impact investing were so full I had to sit on the floor in between tables. 

Today's leading foundations - Rockefeller, Ford, MacArthur, Silicon Valley Community Foundation, Omidyar - have all come out loudly in support of impact investing. And it's not just the big dog philanthropists, everyday investors and charities alike are getting in the game. (see the 2015 report on impact investing from the Global Impact Investors Network for the data)

What drives the groups interested in impact investing? We've noticed the following themes from talking with interested parties across various sectors: 

  • Foundations: Large public foundations want to put the corpus of the foundation to work for good, not just rely on the 5% income for grants.
  • Capitalists: This group believes better, faster impact comes from purpose-driven businesses. We shouldn't expect philanthropy and government intervention to solve the intractable problems of our day.
  • Ministries: Demographic forces are making fundraising harder, especially for traditional evangelical nonprofits. Revenue generation that funds and furthers the mission is becoming an imperative.
  • Donors: Tired of repeatedly funding the same charitable organizations and wondering if things are really getting better, donors are looking for ways to build sustainable transformation in the causes they care about.
  • Advisors of donor advised funds: Returns on traditional investments have been less than desired, prompting many donors to request the ability to direct their fund into specific investments

What about you? What most intrigues you about impact investing?