Key Takeaways
- Impact investing puts capital toward projects that deliver measurable social or environmental good and a financial return, bridging the gap between philanthropy and traditional investing.
- Unlike ESG or SRI, which mainly screen for a company engaging in responsible practices, impact investing actively funds target social solutions, explicitly targeting and tracking measurable reported outcomes.
- Benefits include dual returns, values alignment, measurable results, and recyclable capital; in loan-based models, repaid funds are reinvested to extend every dollar.
- A trusted, community-based partner like a community foundation makes it easier to get started, especially one focused on your own region.
- The Baltimore Community Foundation’s Invest for More program lets you fund low-interest loans or other types of investments to local nonprofits and projects, with your gift redeployed year after year to strengthen Greater Baltimore.
More and more people want their money to do more than sit in a portfolio. Impact investing offers a way to pursue a meaningful return on investment and measurable social or environmental good at the same time — reshaping how individuals, foundations, and institutions think about profit and purpose.
What Is Impact Investing?
An impact investment is capital deployed with the deliberate intention of generating positive, measurable social or environmental impact alongside a financial return. That definition challenges a long-held assumption that social and environmental problems are concerns only for governments and philanthropists, while investors should focus only on financial returns. Impact investing bridges the two.
It shows up across sectors like affordable housing, clean energy, healthcare, small-business lending, and others. When impact investment funds focus specifically on social challenges or addressing social needs, they’re considered social impact investing (a subset of impact investing).
Impact investing can involve many asset types, from bonds to private equity to loans. Returns range from below-market to market-rate, depending on an investor’s goals. In practice, most impact investors pursue competitive, market-rate returns, and their portfolios often meet or exceed expectations for both impact and financial performance. This may be different for investors like community foundations who engage in social impact investing.
How Is It Different From ESG or SRI?
Impact investing is often used as a catchall for values-aligned investing as a whole, but it’s actually a distinct type of what is more broadly known as responsible investing. Other types include environmental, social, and governance (ESG) investing and socially responsible investing (SRI). However, ESG and SRI mostly screen investments — avoiding harmful companies or favoring responsible ones — while keeping financial return as the primary aim.
Impact Investing Has Clear Measurable and Quantifiable Outcomes
What sets impact investing apart is its explicit goal of achieving measurable outcomes, not simply avoiding harm. The impact that this type of investing empowers is intentional, tracked, and reported.
The Benefits of Impact Investing: A Breakdown
Investors are drawn to impact investing for several reasons:
- Dual return. You can pursue competitive financial performance and social good together without treating them as trade-offs.
- Values alignment. Your capital supports causes you genuinely care about.
- Measurable results. Outcomes are tracked with real data, so you can see how your money is working.
- Recyclable capital. In loan-based models, repaid principal and interest can be reinvested, extending the reach of every dollar.
Because of this, there has been significant impact investing growth: the Global Impact Investing Network now sizes this market at more than $1.5 trillion, with a new generation of donors and investors driving the momentum.
How To Get Started
Getting into impact investing generally follows a few steps. First, determine your desired area of impact, or the causes or outcomes you most want to advance. Second, weigh your risk tolerance and time horizon, since some impact investments carry more risk or take longer to show results than traditional ones. Third, select investments aligned with those goals, ideally with guidance from a financial or philanthropic advisor.
One challenge is that the field is still relatively young, and it can be hard to find opportunities that align perfectly with your goals — or to navigate them alone. That’s where a trusted, mission-driven partner can make the difference, especially one rooted in your own community.
Bringing It Home: Invest for More at the Baltimore Community Foundation
For those who want their impact investment to strengthen Greater Baltimore, the Baltimore Community Foundation (BCF) offers a direct path through its Invest for More program.
When you give to the Invest for More fund, or direct capital from your donor-advised fund into BCF’s impact pool, your money is disbursed across Baltimore as low-interest loans and lines of credit that fund vital community projects. As those loans mature, principal and interest flow back into the program and are redeployed for the next round of high-impact work. Your gift keeps working, amplified with each cycle.
BCF invests as a mission-focused partner, weighing governance, community involvement, and long-term feasibility alongside the financial aspects of every deal. Many of its partners are nonprofits that, by taking on affordable debt, can pursue larger and bolder strategies than grants alone would allow.
The results are tangible. For example, at the time of its 2024 annual report, BCF had $11.5 million available for impact investments and had deployed or committed $9.6 million across 17 active investments, supporting 53 small businesses and helping create or preserve 665 housing units and five community amenities. Partners include a variety of local nonprofits, including those that work to strengthen Baltimore schools and neighborhoods.
Ready To Invest in Baltimore?
You can co-invest alongside BCF in the Baltimore causes you care about by giving directly to Invest for More, allocating part of your donor-advised fund to the impact pool, or participating in a specific impact investing deal. BCF’s team handles diligence and management. Give once; grow Baltimore for years.
Discover the Power of Impact Investing With BCF
Since 1972, BCF has supported a better future for our region. We are working to build a vibrant Baltimore with a growing economy, where all have the opportunity to thrive. To accomplish this, we’re helping donors to achieve their charitable goals, generation after generation, while improving the quality of life right here in Greater Baltimore through grantmaking, enlightened civic leadership, and strategic investments.
Reach out to our team to learn more about partnerships, giving to the causes you care about, applying for a grant, and more. BCF can create safe spaces for meaningful conversations, help families articulate their goals, and advise on charitable tools that can continue to engage future generations.
