Impact investing: in pursuit of a positive, measurable social or environmental impact alongside financial returns.
In the last several years, impact investing has emerged as a promising tool for tackling some of the world’s most complex and enduring social problems.
These types of investments span across asset classes and occur in both emerging and developed markets. Impact investments are financing diverse efforts throughout the social sector, including education, agriculture, financial services, the environment, and healthcare.
Wharton's Latest Impact Investing Research
The Wharton School of the University of Pennsylvania announced on October 7, 2015 the release of a new report, “Great Expectations: Mission Preservation and Financial Performance in Impact Investments.”
The new study provides an objective, rigorous look at two of the most important aspects of impact investing: financial returns and long-term impact.
Both a puzzle and a promise, we believe impact investing sits squarely at the intersection of Wharton’s renowned financial expertise and its commitment to social impact.
Wharton’s strong history with financial research and the financial services industry provides a unique opportunity to examine impact investing with the same rigor it has used with other investment tools and strategies.
This multifaceted program advances the science of impact investing by training students—the next generation of investors—to combine financial expertise with an understanding of social problems, change strategies, and impact evaluation.
Specific examples of our work in action:
Impact Investing Research
In collaboration with faculty from Wharton’s Department of Finance, in February 2014 WSII launched a research project designed to collect and analyze financial performance data on private equity impact investment funds.
The resulting report, released on October 7, 2015, is titled “Great Expectations: Mission Preservation and Financial Performance in Impact Investing,” and published with support from Skopos Impact Fund, EMPEA, Halloran Philanthropies, Omidyar Network, Blue Haven Initiative, B Lab, and the MacArthur Foundation. This groundbreaking research challenges assumptions about potential trade-offs between maximizing financial returns and ensuring the preservation of portfolio companies’ social missions.
Despite increased awareness around impact investing, the industry remains a nascent field, often limited to specialized, niche players. While impact investing is gaining traction in practice, the industry faces a major hurdle in attracting significant investment from large institutional investors.
In traditional investment practices, academics have conducted rigorous, reliable research on financial performance, and the resulting evidence base is used extensively by large institutional investors in the development of their portfolio strategies. The impact investing industry does not currently enjoy this resource, and there is precious little academic research published on impact investing in top journals. The major barrier to research is a lack of a robust, accessible database of fund and transaction-level performance.
WSII is committed to creating a robust database for transformational academic scholarship now and for years to come. Such research can fill critical gaps in knowledge for investors to better assess risk and inform investment strategies in impact investing.
The Wharton Social Venture Fellows (WSVF) is an award-winning student-led group operated under WSII.
WSVF sources and conducts diligence on early and expansion-stage companies with venture-grade growth potential and intentional, measurable social impact.
WSVF looks to:
- Support and promote early stage companies that create positive social or environmental impact
- Prepare students to become leaders in the impact investment community, where sound investment principles are applied to complex social and environmental problems
Each year, WSVF (formerly known as the Wharton Social Venture Fund) selects first-year Wharton MBAs based on commitment, experience, and industry knowledge, and provides high quality training on the investment process, impact investing, and portfolio management. Second-year MBA students become project leaders, charged with managing project workflow and knowledge transfer. A select group of talented Wharton undergraduates are also hand-picked to participate in the program.
Founded in 2007, WSVF has focused on companies in education, energy, health and wellness, food and nutrition, environmental sustainability, and financial inclusion.
WSVF also annually competes in the MBA Impact Investing Network & Training Program (MIINT) where it has an impressive track record of success.
Merrill Lynch is the lead sponsor of MIINT for the 2015/2016 academic year, and The Moelis Family Foundation is the founding sponsor of the MIINT.
MBA Impact Investing Network & Training (MIINT)
MIINT equips students—the next generation of impact investors—with both theoretical and hands-on experience with the impact investment process.
In this annual program and competition, MIINT engages more than 200 students from top business schools—including Wharton, Harvard, Stanford, Columbia, Ross, Kellogg, Haas, Booth, Darden, Goizueta and University of Utah—to source and conduct diligence on early stage impact investments and present them to an investment committee of leading venture capital professionals.
Students create teams at the start of an academic year, and follow training modules via online communities, one-on-one advisory session, and network-wide calls. Teams from each of the participating schools then present their final analysis and selection in a final competition at the University of Pennsylvania each spring.
The company presented by the winning student team wins a potential real investment of up to $50,000, which is made by an individual independent investor and subject to independent review.
Wharton Social Impact Initiative co-produces MIINT with its founding organization, Bridges Ventures. Bank of America Merrill Lynch is the lead sponsor of MIINT for the 2015/2016 academic year, and The Moelis Family Foundation is the founding sponsor of the MIINT.
Capital for Social Impact Series
The Capital for Social Impact series provides Wharton and Penn alumni with a trusted platform through which they can explore the topic of impact investing. Through events in cities around the globe, we focus discussion on how innovative finance tools can be used to make a positive social or environmental impact.
WSII takes an interdisciplinary approach to examining topics such as risk and externalities, impact investing in philanthropy (e.g., mission- and program-related investments), industry- and sector-specific topics, and mainstream investing.
The series explores both the current state of impact investing activities and the next stages for investing in social impact. We also looks at how individuals and organizations can implement and assess impact investing strategies in their own work and how the field can play a valuable role in building resilient communities, including a strong civil society and sustainable global economy.
WSII produces the Capital for Social Impact series with support from the Rockefeller Foundation.