Impact investing is an extension of socially responsible investing, which focuses on avoiding investments in companies that are perceived as doing harmful things, such as negatively affecting the environment. Impact investing goes a step further by actively seeking investments that can create a significant, positive impact.
Impact investing focuses on investing in companies or organizations to create a measurable societal benefit and generate a financial return. Impact investing is typically centered around addressing a social issue, such as poverty or education, or an environmental issue, such as clean water.
The top five impact investing firms on the basis of assets under management are Vital Capital Fund, Triodos Investment Management, The Reinvestment Fund, BlueOrchard Finance S.A. and Community Reinvestment Fund, USA.
Vital Capital Fund
Vital Capital Fund is a private equity fund with approximately $350 million in assets. The fund invests in developing areas, principally sub-Saharan Africa, in businesses and projects designed to enhance quality of life and that also offer substantial investment returns. The primary investment focus of the Vital Capital Fund is on development of infrastructure, housing projects, agro-industrial projects, renewable energy, health care and education. Among the fund's investments are the Luanda Medical Center in Angola and WaterHealth International.
Triodos Investment Management
Triodos Investment Management is a subsidiary of Triodos Bank, headquartered in the Netherlands, which manages over a dozen sustainable investment funds. Triodos has been actively engaged in impact investing since 1995 and has approximately $335 million in assets. Primary areas of interest include renewable energy, arts and culture, sustainable real estate projects, health care, and organic farming. Triodos is one of the founding members of the Global Impact Investing Network. Its investments are spread throughout Europe, South America, Africa, India and Southeast Asia.
The Reinvestment Fund
The Reinvestment Fund, headquartered in Philadelphia, Pennsylvania, is a non-profit community development financial institution. With over $300 million in assets under management, the fund finances housing projects, access to health care, educational programs and job programs. It operates primarily by assisting distressed towns and communities in the United States. It also provides U.S. cities with public policy advice and data analysis services to assist in developing community programs.
BlueOrchard Finance S.A.
BlueOrchard Finance, with principal offices in Geneva and Zurich, Switzerland, operates in more than 50 emerging and frontier market areas in Asia, Latin America, Africa and Eastern Europe. Created as part of a United Nations initiative, since its inception in 2001 BlueOrchard Finance has provided microfinancing for more than 20 million entrepreneurs worldwide. It provides both debt and equity financing to businesses and institutions, with an emphasis on alleviating hunger and poverty problems, fostering entrepreneurship, establishing food production and education programs, and working on climate change issues. BlueOrchard Finance has approximately $280 million in assets under management.
Community Reinvestment Fund, USA
Community Reinvestment Fund, USA was founded in 1988, in Minneapolis, Minnesota, as a non-profit certified community development financial institution. Operating in 47 states throughout in the U.S., the Community Reinvestment Fund partners with local private lenders to provide financing capital for community development projects. These include small business loans for the purpose of growing a business, expanding staff or increasing energy efficiency. The Community Reinvestment Fund also provides funding assistance for community housing projects, schools, day care centers and community facilities.
The fund has over $250 million in assets, along with access to additional loan capital through the CDFI Bond Guarantee Program. Through the Bond Guarantee Program, the Community Reinvestment Fund can access long-term capital that it can, in turn, use to help finance eligible community projects such as charter schools, community health care centers and small businesses.