Social Impact Investing

Program-related investments (PRIs) or other concessionary (below-market rate)
investments are primarily made to achieve programmatic rather than financial
objectives. This category includes grant support, equity (stock), subordinated
loans, senior loans, below-market cash deposits and loan guarantees. For
private foundations, PRIs count towards the required 5 percent annual payout.
Market-rate investments (MRIs) expected to generate a market-rate financial
return on investment comparable to an ordinary investment of a similar type and
risk profile. They are designed to have a positive impact while contributing to the
foundation’s long-term financial stability and growth. This category includes
market-rate cash deposits, fixed income (bond), private equity and public equity
(stocks).
Impact Investing by Individuals
Impact investing historically took place through mechanisms aimed at institutional
investors. However, there are ways for individuals to participate in providing early stage
or growth funding to such ventures.
Exchange-Traded Funds
Exchange-traded funds like the SPDR Gender Diversity ETF (NYSE Arca: SHE) from
State Street are publicly traded and hence available to anyone with a stock brokerage
account. MSCI offers 11 environmental, social and governance index ETFs, including
popular low-carbon and sustainability indexes.
Syndicate or Pooled Investing
Groups of angel investors focused on impact, where individuals invest as a syndicate
also exist. Examples include Investors' Circle in the US, Clearly Social Angels in the UK
and Toniic in Europe.
Digital Microfinance Platforms
Web-based investing platforms, which offer lower-cost investing services, also exists.
As equity deals can be prohibitively expensive for small-scale transactions,
microfinance loans, rather than equity investment, are prevalent in these platforms.
MyC4, founded in 2006, allows retail investors to loan to small businesses in African
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