Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
2. OVERVIEW OF SOCIAL IMPACT INVESTMENT
This chapter provides an overview of social impact investment highlighting its policy
relevance in today’s economic and social environment. It starts by discussing the
growing need for new approaches for solving economic and social challenges and the
role that social impact investment can play in that respect. It then provides an
overview of current trends, opportunities and challenges in the social impact
investment market. It also shows how the market is evolving and compares that to
parallels in the evolution of the capital markets.
2.1. The need for new approaches to address social and economic challenges
2.1 Social impact investment (SII) is the provision of finance to organisations with the explicit
expectation of a measurable social, as well as financial, return. Social impact investment has become
increasingly relevant in today’s economic setting as social challenges have mounted while public funds in
many countries are under pressure. New approaches are needed for addressing social and economic
challenges, including new models of public and private partnership which can fund, deliver and scale
innovative solutions from the ground up.
2.2 SII involves private investment that contributes to the public benefit. Investors can range
from those who are willing to provide funding for organizations that are not able to generate market returns
to more traditional investors but with an interest in also having a social impact.
Figure 2.1. A Spectrum of Capital
Source: SIITF WGAA (2014).
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