Impact investing is on the rise. It has grown from a nascent concept into a sizable and sophisticated sector with more than $228 billion invested, representing a fourfold increase since 2014. More generally, the Global Sustainable Investing Alliance reports nearly $23 trillion in assets using socially responsible investment strategies.

The trend is clear: Everyone from high-net-worth families to foundations, pension funds to insurance companies, is seeking to align investments to values.

And this growth has affected the philanthropic sector as well. Foundations are thinking more creatively about how to best use impact investing to advance their missions and looking beyond program-related investments to leverage the other 95 percent of their assets for mission-related investments. High-net-worth individuals are also increasingly setting up philanthropic vehicles that allow them more flexibility in pursuing for-profit investing alongside nonprofit grants.

Omidyar Network is extremely excited about the future of the industry — but this potential is significantly hindered by an increasingly polarized debate about whether impact investing requires a trade-off between financial return and social or environmental impact.

One perspective claims that there is always a trade-off between return and impact and that all true impact investing therefore involves concessionary, or subcommercial, returns. The opposing perspective is that there is never a trade-off, and thus that all smart impact investments should achieve full commercial, market-rate returns. Combined with the rapid growth in size and diversity of impact investments, these competing claims fuel confusion that threatens to leave critical capital on the sidelines. While the first perspective may scare off commercial capital that is essential to scaling promising solutions, the second risks dismissing as “bad deals” rigorous subcommercial investments generating types of impact that are possible only with more flexible capital. The reality is far more nuanced.

With nearly 15 years of experience, we believe the entire continuum of capital has a vital role to play — and we are not alone. In Beyond Trade-Offs, our new series published on The Economist’s digital platform (, a chorus of leading impact investors make the case that the full spectrum of impact investing capital is essential to achieve bold and lasting change. As such, we think the series is an important read for any philanthropist aspiring to have a meaningful impact on the issues of our day — from climate change to global poverty.

For the philanthropic world, it has become clear: Now is the time to be creative in leveraging impact investing’s full continuum for maximum impact; to activate untapped assets that can make a meaningful difference even in the pursuit of strong financial returns; and to double down on the all-too-scarce subcommercial capital that foundations and wealthy families are uniquely suited to deploy.

Moving Beyond Trade-offs

Omidyar Network brought out the concept of a spectrum of investment opportunities in our 2017 article “Across the Returns Continuum,” which introduced our framework for evaluating financial returns and social impact.

An investment can have both a direct impact on the customers or beneficiaries of a company, and a market-level impact that often drives sector-level change. Understanding these different types of impact led us to different expectations for financial return and risk. When investing in companies pioneering new models, providing industry infrastructure, or influencing policy discussions, we’ve found that achieving market-level impact often requires flexibility on financial returns or risk – sometimes both. While we seek to drive strong direct impact with every investment along the continuum, market-level impact is at the core of our decision-making in those cases where we decide to accept subcommercial returns or make grants.

Many foundations, philanthropists, and investors have already moved beyond the trade-off debate.

The response to “Across the Returns Continuum” revealed that many leading impact investors — from all corners of the market — are eager to move the field beyond the tired and troubling trade-off debate. Toward that end, we came together in Beyond Trade-Offs to collectively advance a set of shared fundamental beliefs.

Investors contributing to the series target different asset classes, social issues, and geographies, and they do so from starkly distinct mandates — and yet they all agree that there is a broad range of viable impact-investment profiles, some of which involve a choice between impact or financial return, and some of which do not. Beyond Trade-Offs explores how family offices, foundations, and institutional investors match their capital with expectations for risk, return, and impact in specific market segments, as well as the rigor they bring to decisions in which they accept below-market returns.

To be sure, there is no single “right” way to do impact investing, but key themes emerged from this group of leading impact investors.

A Continuum Approach

If we learn one thing from Beyond Trade-offs, it is that many foundations, philanthropists, and investors have already moved beyond the trade-off debate to develop sophisticated approaches that deploy capital at multiple points along the continuum.


One prominent example from the philanthropic world is the Ford Foundation, which — building on the foundation’s long-standing program-related investment strategy — recently committed to allocate up to $1 billion of its endowment to mission-related investments over the next decade.

Read more at The Chronicle of Philanthropy