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Inching to Impact: The Demand Side of Social Impact Investing

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  • Susan D. Phillips

    (Carleton University)

  • Bernadette Johnson

    (Public Policy, Imagine Canada)

Abstract

Social impact investing (SII) is transforming the availability of private capital for nonprofits and social enterprises, but demand is not yet meeting supply. This paper analyzes the perceived barriers faced by nonprofits in engaging with SII, arguing the need to assess differences using a policy field framework. Four parameters of a subsector are conceptualized as shaping participation in SII: the scale of investment required, embeddedness in place, the need for radical innovation, and the configuration of intermediaries (such as loan funds and market brokers). Based on 25 interviews with leaders of nonprofits and intermediaries in affordable housing and community economic development in Canada, the study finds that significant barriers are a lack of knowledge of the market, inadequate financial literacy, and the challenges of measuring and valuing social impacts. In addition, nonprofits report that, in spite of the inherent importance of social impact in this form of investing, they currently make limited use of evaluation and impact metrics, and perceive that intermediaries and investors, particularly in affordable housing, still put a greater emphasis on financial over social returns.

Suggested Citation

  • Susan D. Phillips & Bernadette Johnson, 2021. "Inching to Impact: The Demand Side of Social Impact Investing," Journal of Business Ethics, Springer, vol. 168(3), pages 615-629, January.
    • Handle: RePEc:kap:jbuset:v:168:y:2021:i:3:d:10.1007_s10551-019-04241-5
    DOI: 10.1007/s10551-019-04241-5
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    References listed on IDEAS

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    1. Philip Roundy & Hunter Holzhauer & Ye Dai, 2017. "Finance or philanthropy? Exploring the motivations and criteria of impact investors," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 13(3), pages 491-512, August.
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    Cited by:

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    3. David Aristei & Manuela Gallo, 2021. "Financial Knowledge, Confidence, and Sustainable Financial Behavior," Sustainability, MDPI, vol. 13(19), pages 1-21, September.
    4. Irene Bengo & Alice Borrello & Veronica Chiodo, 2021. "Preserving the Integrity of Social Impact Investing: Towards a Distinctive Implementation Strategy," Sustainability, MDPI, vol. 13(5), pages 1-19, March.
    5. Migliavacca, Milena & Patel, Ritesh & Paltrinieri, Andrea & Goodell, John W., 2022. "Mapping impact investing: A bibliometric analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    6. Leah Feor & Amelia Clarke & Ilona Dougherty, 2023. "Social Impact Measurement: A Systematic Literature Review and Future Research Directions," World, MDPI, vol. 4(4), pages 1-22, December.
    7. Kumari Juddoo & Issam Malki & Sudha Mathew & Sheeja Sivaprasad, 2023. "An impact investment strategy," Review of Quantitative Finance and Accounting, Springer, vol. 61(1), pages 177-211, July.
    8. Federica Bandini & Helen Chiappini & Francesca Pallara, 2022. "Fund managers acting as impact investors: Strategies, practices, and tensions," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 1084-1095, July.

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