Impact investing and new social funding: History, actors and promise

This chapter introduces readers to the idea of impact investing and how its definition has evolved in the literature. It also introduces the organizational actors involved and the instruments they use. Asset owners, such as retail investors, private foundations or sovereign wealth funds, hold the capital and decide about its allocation along the impact capital chain, thus deciding the impact orientation of the capital. All the actors belong to an ecosystem, where each member plays a critical role in trying to mitigate the risk of impact investments and expand the pipeline of investable opportunities. The analysis of the business model is, thus, a driving factor in understanding the organizational actors targeted by impact investing capital providers and in differentiating them in respect to those targeted by other types of social finance. The chapter concludes with a discussion of delivering on the promise of impact investing.