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The Bottom Line: Survey Results

In partnership with the Georgetown University McDonough School of Business, the Aspen Institute conducted a survey of active and emerging players in the U.S. impact investing field. We focused on learning more about investments in education, economic assets, and health and well-being - three of the most powerful levers for breaking the cycle of poverty. Thirty-nine individuals responded, representing 32 institutional investors from across investor types.

Target respondents included:

The survey captured data along six dimensions:

Respondent Profile:

Thirty-nine individuals responded, representing 32 institutional investors across investor types.

Impact investing is not a new practice for the majority of these investors.

Endowment size or assets under management varied among the investors.

Investment Methods: The majority of investments made by respondents are direct investments followed by investments in funds. A slightly larger percentage of target impact area investors use fund of funds or intermediaries compared to the greater sample of investors active in the U.S.

Average Investment Size: Among respondents, the average investment transaction size varied from less than $100,000 to over $10 million. Of target impact area investors, the majority of respondents indicated an average transaction size between $100,000 and $3 million.

Investment Preferences: Non-foundation investors in target impact areas characterize a significantly higher percentage of investments (49 percent) as market-rate compared to foundations (18 percent). Target impact area investors tend to favor ventures that are beyond the proof-of-concept stage.

Investment Perspectives: Target impact area investors are overwhelmingly backed by an institutional commitment to poverty (86 percent). Furthermore, 32 percent reported employing a gender lens in the investment decision process, while 27 percent reported having a racial equity lens.

Education: Among survey respondents, the majority of investment interest and activity in education centers around K-12 and early childhood development.

Economic Assets: Economic asset investments attracted the majority of impact area investors (18 out of 22), who employed a wide range of investment types that help increase financial opportunities for families.

Health: Fourteen respondents invest in health and are seeking investment opportunities related to access to health services, nutrition, and health facilities financing.

Overall Trends Related to Building Family Economic Security

For the purposes of the survey, we examined investments in the areas of education, health, and economic security and inquired about the investor commitment to gender, racial equity, and poverty. We noted the following trends in advancing mobility:


graph - 69% investing in impact areas Investors are focusing on key issue areas to generate impact: The Aspen Institute used the survey to gauge the work of investors to support economic and social mobility. The survey revealed that 69 percent of respondents invest in these areas (educaiton, economic assets, and health and well-being). The majority of investments is delivered via fund of funds or intermediaries and span the U.S.
$2.5 billion committed to advancing economic mobility Significant dollars support strategies that build economic mobility: Survey respondents noted that they have committed $2.85 billion in impact investment capital in the U.S., with $2.52 billion coming from investors active in the target impact areas (i.e., education, economic assets, and health). This data speaks to the opportunity and support for investing throughout a sector, covering real estate, infrastructure, and human capital. For example, investors focused on health put a majority of their dollars in access to health services, food nutrition, and facilities financing.
Investors leverage varied structures Impact area investors leverage varied organizational structures: Investors active in the target areas place a larger percentage of their impact investments in non-profits than for-profits. Investors who indicated having active investments in education or health and well-being invest a higher average percentage of investments in for-profits compared to those who invest in economic security.
Pipeline through social capital The pipeline for investments is based on social capital: As with venture capital, a majority of impact investors find deal flow from peers and other investors. In fact, 52 percent of respondents noted that personal networks were critical in advancing their impact agenda. Twenty-nine percent of respondents use professional networks, and 10 percent use intermediaries.
Deals meet or exceed social and financial benchmarks Good deals exist: Forty-five percent of target area investors establish formal financial and social benchmarks, and 80 percent of this group said their portfolios are meeting or exceeding the established financial metrics, and 90 percent are meeting or exceeding the social metrics. This provides evidence that good deals exist. During the course of the study, we asked respondents to share their most successful deals. Collectively, 13 respondents provided 33 “successful deals.” This contradicts the concern about viable deal flow that warrants investment.




Beyond the Survey: Trends in the Field

Impact investing in the U.S. is transitioning from a phase of exploration and experimentation toward maturity. Demand for impact investment capital is shifting and moving beyond philanthropy toward market rate expectations. Signs of activity include the following:

Based on our research, the top five trends among institutions related to impact investing in the U.S. include:

Impact investing is not just for private foundations: Over the past one to two years, an increasing number of people have been engaging in impact investing. While a number of foundations have been investing for more than 10 years, more individuals and larger institutions have recently begun to enter the space. The Aspen Institute survey reflects this emerging interest — 56 percent of the respondents are not private foundations. Many of the new entrants remain cautious, but with new products like pay for success (or social impact bonds), coupled with the emergence of new funds focused on impact, there are now more options for consideration and portfolio diversification.

Foundations are moving from experimenting to institutionalizing: Foundations that have been doing this work are now increasing and institutionalizing their efforts. Historically, many “experimented” and made a few investments with no expectations of a return, often leveraging grant/program staff to add this work to their grant portfolios. Now, many foundations are thinking beyond silos, creating capacity on staff, and establishing training and internal systems to manage grants and investments in a formal and distinct way.

These new investments are very much aligned with their existing grant-making portfolios in terms of sector and/or geographic focus but now offer a broad range of investment tools to support impact on individuals and in communities. In fact, many institutions are supplementing investments with grant dollars to help increase capacity and reinforce larger investments in institutions or communities. It is important to note that part of this shift is due to incremental success that has enabled many board members of impact investing institutions to endorse and support more proactive investment strategies.

Increased focus on place: Another trend highlighted in the survey is an increase in focused, place-based efforts. Investments are no longer scattered across communities within a sector. Now investors are conscious of the power of place and the need to improve the interdependent systems that impact poverty rates, incarceration, and graduation statistics. Places like Detroit epitomize this investment thesis — placing concentrated and strategic investments across sectors in one place will generate significant economic, social, and environmental impact for all. By leveraging new actors in the sector — like investment banks — to work with foundations with long track records and expertise in the community, stakeholders are betting on greater impact and return on investment.

Investors are leveraging community development financial institutions (CDFIs) to increase efficiency: Support for institutions and infrastructure must happen alongside investments in capital in place-based strategies. More impact investors — excited by the opportunity but still skeptical of scale — recognize that there is a limit to what they can do to ensure the success of these investments. Therefore many are relying on intermediaries — CDFIs and the like — to make investments, establish social capital, build trust, and leverage their unique understanding of the local ecosystem to drive smart investments that have impact. In the Aspen Institute survey, 58 percent of respondents noted that they use intermediaries or other funds to administer their investments.

There is an emerging interest in metrics: Many investors still await improved systems for tracking impact investing. However, while new tools emerge in the field that strike a balance between social and financial evaluation, many investors are developing their own metrics. As more than 50 percent of survey respondents give equal weight to social and financial metrics, many are baking metrics into the decision-making process, where the metrics are being created in partnership with the investee or receiving organization. They believe current market tools are insufficient. The proprietary tools allow for a focus on the return but recognize the need for patient capital and the interdependencies of policy, infrastructure, leadership, and investment, which all contribute to generating individual and community impact.

Survey respondents: