All Posts Tagged: family offices

Impact investments: Bridging generations through shared values

Steve Prostano
Family Wealth Advisors

This blog post is part of a year-long series that examines key concepts in our glossary of philanthropy services terms.

Impact investments are made in companies, organizations, or funds with the intent to generate and measure social and environmental impact alongside financial return. Rear view of young female traveler wearing large backpack and walking on a wood-plank bridge in the midst of sunny, heavily-wooded area.

They are included in the broader category of purpose investments. Impact investments have the following characteristics:

  • Intentionality – an investor’s clear intention of making a positive social or ecological impact; for example, investing in companies that engage in fair labor practices.
  • Return – an expectation to generate a financial return while making the said impact.
  • Range – the potential for concessionary to above-market rates across all asset classes; in other words, not having the expectation that making a positive social or ecological impact comes at one’s own financial expense.
  • Measurement – not only of the dollars allocated, but also of the investment’s results in terms of return and the desired social or ecological impact.
Impact investments are:
  • A vastly growing market. Sustainable, responsible and impact (SRI) investment assets have risen to $8.72 trillion in the United States, according to the US SIF Foundation’s Report on US Sustainable, Responsible and Impact Investing Trends 2016; that’s a 33% increase from $6.57 trillion in 2014.
  • A growing portion of family offices’ investments. Nearly 30% of family offices have made impact investments since 2010, compared to 15% prior to 2000, a doubled percentage in only 10 years (source: 2013 Financial Times survey).
  • A means of connecting family values and perpetuating wealth. Family wealth tends to get lost after the third generation in a whopping 90% of cases, a Time Money article reports. Impact investments may mitigate this by engaging the values of younger generations, who then may be more likely to preserve the wealth. To put this in perspective, 67% of millennials believe that their investment decisions express their social, political, or environmental values versus only 36% of baby boomers, according to a U.S. Trust Insights on Wealth and Worth study.
Impact investments are not:
  • New. Numerous foundations have been making loans to nonprofits, with expectations of returns and social impact, since the 1970s.
  • Characterized by lower returns. People tend to think they have to sacrifice positive returns in order to make an impact, but that is not necessarily the case. In fact, by definition, impact investments are made to seek both financial return and social and/or environmental impact.
  • Not an interchangeable term. Sometimes impact investing is used interchangeably with terms such as socially responsible investing (SRI); however, interchangeable terms can be confusing and diminish the differences between concepts that are similar but not the same.
What are the benefits of impact investing?

Along with the benefit of making younger generations more emotionally invested in their family’s wealth and investment decisions, impact investments are a way for all investors to make a difference and progress the social, political, and environmental values that they hold dear.

Indeed, impact investing is a way for philanthropists and investors of all types, ages, and sizes to help nonprofit or for-profit social and environmental enterprises get the capital they need to innovate, grow, and bring solutions to scale.


Investing involves risk, including the possible loss of principal and fluctuation in value. This information is for educational purposes only and is not intended to be investment advice or a recommendation to buy or sell a specific investment.

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SRI: Investing and feeling good about it

Steve Prostano
Family Wealth Advisors
Young, bearded man in a business suit discussing plans with an African American female colleague holding a tablet.

This blog post is part of a year-long series that examines key concepts in our glossary of philanthropy services terms. Socially responsible investing (SRI) – also known as sustainable investing, as well as socially conscious, green, or ethical investing — encompasses any investment strategy which seeks both financial return and positive social outcome. SRI is […]

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